Vietnam software outsourcing: The top 6 benefits

Vietnam software outsourcing

Written by Roxanne

July 12, 2023

Outsourcing is a tried-and-true technique for simplifying operations, lowering costs, increasing productivity and gaining specialized talents, particularly for small and medium-sized enterprises (SMEs) with resource constraints.

One of the advantages of outsourcing is that you can choose any provider in the world to partner with. Offshore outsourcing is often associated with Asia, and countries like India or the Philippines are most likely to come to mind. But Vietnam is rapidly emerging as the preferred outsourcing hub and should not be underestimated.

The IT industry in Vietnam has grown tremendously over the last decade, making it an attractive outsourcing destination for international corporations. In fact, the city of Ho Chi Minh (the country’s economic centre) is one of the world’s top software outsourcing cities.

But what are the factors that put Vietnam on the outsourcing map and make it an ideal outsourcing destination?

Keep reading to find the answer to this question. We will outline six of the key benefits of Vietnam software outsourcing, as well as share a few tips on how to select the ideal vendor.

Key benefits of Vietnam software outsourcing

1. Growing information technology industry

With full support from its government, Vietnam’s IT industry is growing every year. Expanding the industry is a high priority and it is a key driver of the economy. Substantial investments have been made in improving digital infrastructure, including connectivity speeds, modern technology parks and dedicated development zones. The government offers tax incentives, a simplified regulatory framework and supportive policies for companies that engage in software development outsourcing, which further enhances the attractiveness of Vietnam.

Vietnam’s software development sector has gained a reputation for being committed to excellence and delivering high-quality solutions. The thriving IT industry, combined with a sound political and cultural climate, makes it an ideal offshore destination for all kinds of projects.

According to MarketInsider, Vietnam is one of “the 5 best countries to outsource to”, which is why “Microsoft, Intel and IBM all invest in software development in Vietnam”. Many high-profile corporations take advantage of Vietnam software outsourcing, proving that it is more than capable of handling such projects.

2. Skilled, enthusiastic talent

Alongside its vibrant and rapidly growing IT industry, Vietnam has a large pool of highly skilled talent. The country places great value on education and technical training, nurturing talent capable of meeting the demands of complex projects.

Vietnamese developers in particular are known for being highly motivated, innovative and resourceful. This, combined with their high level of proficiency in a variety of programming languages, is just one of the reasons why they are in such great demand.

3. Affordable labor costs

One of the main motivations for outsourcing is the opportunity to reduce costs. Generally speaking, outsourcing allows you to reduce expenses by gaining access to specialized skills without incurring the high fixed costs of an in-house employee or the time-consuming process of training existing employees.

This is exactly why Vietnam is a great choice, as it is among the most affordable outsourcing countries. Compared to other popular outsourcing destinations, Vietnam offers significantly lower hourly rates, making it an attractive option if you are looking to optimize your budget.

The cost advantage is primarily due to the lower cost of living and competitive salaries in Vietnam, which means you have access to top-quality development services at a fraction of the cost of other destinations. The cost of hiring a senior developer in California, for example, would be roughly $65-$130 per hour, but hiring a Vietnamese developer costs around $20-$50 per hour. 

4. Cultural compatibility

Due to historical, trade, and collaborative influences, Vietnam shares a cultural compatibility with Western countries. This compatibility promotes efficient communication and a shared understanding between in-house and offshore teams.

Vietnamese professionals are known for their dedication, hard work and adaptability. They are excellent partners on IT projects because they are accustomed to working in fast-paced environments, meeting stringent deadlines and managing limited resources effectively.

5. High English proficiency 

A common obstacle with outsourcing is language. The thought of communication issues may even deter you from outsourcing altogether. However, this is not a concern with reputable vendors in Vietnam.

English is widely spoken as a second language and is the medium of instruction in many educational institutions. Since most Vietnamese professionals are fluent in English, there is no language barrier and communication is a breeze.

6. Time zone advantages

Vietnam is in the Indochina Time Zone (GMT+7) which means Vietnam is twelve hours ahead of California. Essentially, when it is midnight in Los Angeles, it is already 2pm in Vietnam. This means that by strategically placing development teams in different time zones, you can extend your operating hours to orchestrate a full 24-hour offshore software development cycle. It will take careful organization and management, but it demonstrates the power of offshore outsourcing.

Take note: Sometimes the time zone difference can be a disadvantage. If your project requires real-time collaboration, you should be very mindful of the time zone difference as it may hinder communication.

How to select the best outsourcing partner in Vietnam

Now that you have made the decision to outsource, you may be wondering how to select a reputable and reliable outsourcing partner.

When the time comes to choose the ideal outsourcing partner, bigger and cheaper is not always better. Instead, you should focus on fit. Although there are many outsourcing companies, it is likely that only a handful will be a good fit for your company and deliver successful results. You need an experienced partner who is detail-oriented and attentive to your specific requirements, not one who just focuses on getting paid and moving on. 

Choosing the right outsourcing partner involves several steps:

Define requirements

Prior to looking for an outsourcing agency, you should identify the specific needs and requirements for your project, as this will help you determine what to look for.

Research agencies

Look for outsourcing partners that have a strong portfolio and proven experience in the type of project you are looking to outsource. Read their client testimonials and reviews to gauge their reputation and level of client satisfaction.

Evaluate skills

Ensure that the agency you are considering has the necessary skills, tools and technologies required for your project. Review their portfolio and test drive any digital products if possible.

Assess cultural fit

Aligning values, communication styles, and work culture can foster better understanding and teamwork. Evaluate the vendor’s cultural fit, responsiveness, language proficiency and communication skills to ensure effective collaboration.

Evaluate project management ability

Have a look at their project management processes and their ability to deliver projects on time and on budget. They should be able to give you a clear scope and timeline based on your requirements.

Review their pricing

Determine if the agency’s pricing is transparent, fair and fits within your budget. Be weary of hidden costs and pricing that is suspiciously cheap.

Schedule a meeting

Once you have narrowed down the prospective vendors, schedule a meeting with each one to discuss your project goals and get a sense of whether you are a good fit for each other. Here are five important questions you could ask: 

  1. What is your experience with similar projects?
    Understanding the outsourcing company’s experience with projects similar to yours will provide insight into their expertise and ability to meet your requirements. Inquire about their industry experience, relevant case studies, and success stories that demonstrate their capabilities.
  1. What is your approach to communication and project management?
    Successful outsourcing partnerships require effective communication and project management. Ask about their preferred communication channels, frequency of updates, and project management methodologies. Clarify how they address potential communication gaps and ensure transparent collaboration throughout the project lifecycle.
  1. How do you ensure data security and confidentiality?
    Data security and confidentiality are paramount when entrusting sensitive information to an outsourcing partner. Inquire about their data security measures, such as encryption protocols, access controls, and confidentiality agreements. Understand their commitment to protecting your intellectual property and mitigating any potential risks.
  1. What is your scalability and resource allocation strategy?
    It is essential to gauge the outsourcing company’s scalability and their ability to allocate resources effectively. Ask about their capacity to handle project growth or sudden changes in requirements. Inquire about their contingency plans and how they ensure resource availability to meet project deadlines and maintain service levels.
  1. Can you provide client references or testimonials?
    Request client references or testimonials to gain insights into the outsourcing company’s reputation, client satisfaction, and the overall quality of their work. Speaking with current or past clients can provide valuable feedback and help you assess their reliability, professionalism, and ability to deliver on promises.

Make your decision

After conducting thorough research and due diligence, it is time to make your final decision with all of the above factors in mind. The right outsourcing partner will be committed to the success and growth of your project, regardless of size or scope.

Tips for a successful outsourced project

In addition to selecting the ideal partner to outsource your project to, ensuring the success of the project requires careful planning and execution. The following tips will help you achieve optimal results:

  • Clearly define your objectives and expectations.
  • Conduct feasibility studies and perform market research.
  • Draw up comprehensive project documentation that will serve as a point of reference throughout the project.
  • Establish clear and effective communication channels.
  • Respect cultural differences by being mindful of cultural norms, values, holidays, customs, and communication styles.
  • Foster a collaborative partnership by treating your outsourced team as an extension of your in-house team and actively involving them in decision making.
  • Utilize a robust project management system to track progress, assign tasks, set milestones, and monitor project timelines to promote transparency, accountability, and effective project coordination.
  • Schedule regular progress reviews to assess project status, address any challenges, or make necessary adjustments. 
  • Implement stringent quality assurance processes to ensure the deliverables meet your standards.

Outsourcing to Vietnam summary

Vietnam has emerged as a highly desirable destination for outsourcing due to its wide range of benefits. With its skilled talent pool, affordable cost of labor, favorable time zone, cultural compatibility, high English proficiency and growing IT industry, Vietnam stands out as a prime choice for outsourcing in Southeast Asia. You can expect to save costs and initiate your project faster by tapping into Vietnam’s abundant pool of talented experts.

Prominent technology giants such as Intel and Microsoft are already taking advantage of these benefits. As Vietnam continues to invest in its IT industry, its appeal will only increase. 

We hope the insights provided here will help you make an informed decision about leveraging the country’s outsourcing potential for your next project.

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