S3Corp. Tech Blog

The Promise of Outsourcing to Vietnam: A Rising Global Tech Hub

Vietnam is quickly emerging as a formidable alternative in the global outsourcing landscape, especially as traditional giants like China and India face escalating costs and high attrition rates. Bolstered by annual GDP growth of nearly 6% in 2014, according to the General Statistics Office of Vietnam, the nation has attracted tech powerhouses like Samsung, Microsoft, LG, and Intel to establish substantial operations here. Ho Chi Minh City, with its thriving startup scene and palpable entrepreneurial energy, is positioning Vietnam as a compelling destination for software outsourcing.

Why Vietnam? The Attraction of a New Outsourcing Frontier

Vietnam’s ascent in the outsourcing world was first recognized in 2010 when Gartner ranked it among the top 30 countries for offshore services. Since then, steady growth, an influx of foreign investment, and a new generation of skilled graduates have helped Vietnam mature as a hub for tech services. Today, Gartner rates Vietnam among the top emerging markets, standing shoulder-to-shoulder with India and China.

For companies looking to build agile, high-performing teams, outsourcing software Vietnam offers an attractive balance of talent, cost-effectiveness, and cultural compatibility. The country has proven strengths in IT skills, often matching or even surpassing those seen in India. English proficiency is also widespread, with the language integrated into Vietnam’s education system, helping IT professionals communicate effectively and engage in consultative roles—a crucial factor for delivering high-quality software solutions.

A Culture of Loyalty and Commitment

A standout feature of the Vietnamese workforce is its dedication and loyalty, traits highly valued in Vietnam’s professional culture. Unlike the high attrition rates seen in other offshoring centers, where turnover can exceed 20%, attrition in Vietnamese IT services typically ranges from 6-8%. This low turnover rate reflects a deep commitment to employers and a sense of job stability that’s rare in the outsourcing world.

Our experience in Vietnam over the past two decades has shown that this loyalty is cultivated through a combination of cultural values and strategic internal efforts. Providing career growth opportunities, maintaining open communication channels with management, and fostering a collaborative environment all contribute to a workforce that’s both motivated and reliable. Companies operating in Vietnam find that investing in a positive work culture not only strengthens loyalty but also enhances productivity and morale.

Skill Development and Vietnam’s Talent Pipeline

Vietnam’s IT industry is relatively young compared to outsourcing leaders, which presents both a challenge and a remarkable opportunity. According to the 2015 Global Talent Index, Vietnam ranked 53rd globally in talent competitiveness, marking a need for continued skill development to meet the demands of large-scale tech operations.

The country’s educational institutions, however, are rising to the occasion, placing strong emphasis on computer science and technical skills. As Vietnam’s technology sector matures, the talent pool is set to expand significantly, with thousands of new graduates entering the job market each year. Although Vietnam may not yet have the sheer scale for multinational corporations seeking 5,000+ employee hubs, this gap is gradually closing. Industry experts anticipate that within five to ten years, Vietnam will be capable of supporting major tech operations, thanks to a more robust talent pipeline.

Challenges in the Vietnamese Outsourcing Landscape

Despite Vietnam’s advantages, establishing an outsourcing operation here isn’t without hurdles. Unlike more mature outsourcing destinations, Vietnam’s IT industry is still evolving, which means there’s a gap in support for legacy platforms like mainframes and AS400s. Companies relying heavily on older technologies may find the available support infrastructure insufficient.

Setting up an operation in Vietnam also requires a nuanced approach to local regulations and business practices. For instance, understanding tax requirements, securing the right licensing, and navigating Vietnam’s recruitment landscape demand local expertise and a long-term commitment. Companies entering the market need to invest in building strong local partnerships with universities and government entities to optimize recruitment and operational setup. Having a local team with deep-rooted experience is key to successfully launching and scaling operations in Vietnam.

A Look Ahead: Vietnam’s Promising Future in Tech Outsourcing

As Vietnam’s tech ecosystem continues to evolve, its appeal to international companies only grows. The government’s strong commitment to developing technology education is already bearing fruit, with computer science programs expanding across the country. This will not only widen the talent pool but also fuel the growth of a new generation of Vietnamese tech entrepreneurs and developers.

One shining example of Vietnam’s potential is Dong Nguyen, the developer of the viral mobile game Flappy Bird. Designed and launched in mere days from Ho Chi Minh City, the game became a global sensation, earning Nguyen $50,000 per day at its peak. This entrepreneurial spirit, combined with increasing opportunities in the tech sector, is inspiring a wave of innovation across Vietnam, laying the groundwork for a thriving startup ecosystem that attracts both local and foreign investment.

Why Vietnam is the Ideal Choice for Outsourcing in the New Era

For businesses seeking a reliable outsourcing partner, Vietnam offers several distinct advantages:

- Competitive Costs: With labor costs still relatively low, Vietnam provides an economically viable option for small to mid-sized companies seeking quality tech services without the high price tag of more established markets.

- Growing Talent Pool: Although still developing, Vietnam’s talent pool is expanding rapidly, with a strong focus on English proficiency and modern IT skills, making Vietnamese teams both technically capable and communicative.

- Cultural Compatibility and Work Ethic: Vietnamese professionals bring a unique blend of dedication, respect, and commitment to their roles, with a particularly strong emphasis on loyalty. For companies looking for long-term partnerships and lower turnover rates, this is a significant advantage.

While it may still be early days for Vietnam’s large-scale IT outsourcing potential, the country’s steady development in both infrastructure and talent speaks volumes about its future as a competitive outsourcing destination. In the next decade, as educational institutions continue to produce skilled graduates and the technology sector matures, Vietnam is poised to rise as a leading player in the global outsourcing market.

For companies willing to invest in Vietnam’s unique strengths and navigate its challenges, the rewards are likely to be substantial.