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Vietnam for IT Outsourcing: All you need to know
4 min read

In recent years, influenced by the general situation of the world, the “IT Outsourcing” market has gradually undergone significant changes. The increasing strength of the ‘China exit’ wave is creating a premise for the IT Outsourcing market to move to Southeast Asia. And among them, Vietnam is always the top country in the rankings. With the advantage of more than 90 million people and an average age under 30, the number of graduates each year is more than 40,000 people and continuously increasing rapidly, Vietnam has become a potential destination, attracting investors from all over the world.

Specifically, Vietnam is considered a reliable partner for Japanese and Asian businesses in general. By 2023, Vietnam will still maintain its performance with a ranking of 7th out of 55 attractive countries in IT Outsourcing, according to consulting firm AT Kearney

 

I. General perspective of the IT Outsourcing market in Vietnam

Currently, the IT Outsourcing market in general and the Asia-Pacific market in particular are very competitive. We must mention giants like China and India, with a large number of personnel, equipped with thorough IT knowledge, and reasonable labor costs. However, with the political situation and price fluctuations, the IT Outsourcing market has gradually shifted its focus to Southeast Asia, typically Vietnam.

Besides, among business sectors, information and communication technology is one of the fastest expanding industries in Vietnam. The IT industry in general and the IT services industry have witnessed positive growth in recent years and achieved many significant achievements. 

The Government also promotes the implementation of the “National Digital Transformation Program” to 2025 and the “National Strategy for Developing Vietnam Digital Technology Enterprises” to 2030 through focusing on building plans. and arrange resources to support businesses, especially small and medium enterprises. Vietnam’s IT sector revenue is continuously growing, from nearly 103 billion USD in 2018 to more than 124.67 billion USD in 2020 and increasing sharply to 136.15 billion USD in 2021. And in the Change Index table GII 2021 global innovation, Vietnam ranked 44/132 countries/economies in the world

II. Vietnam: A Magnet for IT Outsourcing Investment

With the general situation and many advantages, it is no wonder that Vietnam has emerged as a bright star in providing IT Outsourcing services.

1. The abundant workforce – High professional proficiency

As of early 2024, Vietnam’s population is expected to exceed 99 million people, which accounts for 1.23% of the world’s population and territories, ranking third in the Southeast Asia region after Indonesia and the Philippines. Furthermore, Vietnam’s population is considered to be in the “Golden Population” period with the proportion of people of working age accounting for 67.5%. Every year, the IT industry alone has about 57,000 IT graduates.

Up to now, the workforce of Vietnam’s IT industry is about 530,000 employees, most of whom are in the age group (2012-1981). It can be seen that Vietnam possesses abundant and numerous labor resources with high professional qualifications

Vietnam abundant workforce
Vietnam abundant workforce

2. Affordable costs for IT outsourcing services

Not only that, compared to the general level, Vietnam’s IT Outsourcing services have averagely low labor costs compared to other countries

it-outsourcing-unlocking-opportunities-human-resource-cost
VIET HUMAN RESOURCE COST

 

3. Cultural similarities and work styles

Furthermore Vietnam’s rise as a prominent IT outsourcing destination is largely credited to its cultural alignment and work ethic. With a culture that prioritizes respect for authority, diligence, and teamwork, Vietnam reflects values sought after in outsourcing partnerships. Moreover, its education system emphasizes technical skills and adaptability, generating a sizable pool of skilled IT professionals capable of meeting global clients’ needs. The Vietnamese workforce is also known for its flexibility and eagerness to learn, traits highly valued in the dynamic tech industry. These cultural affinities and work ethics foster an environment conducive to collaboration and innovation, making Vietnam an appealing choice for companies seeking dependable and cost-effective IT outsourcing solutions.

 

4. Support from the Government

The Vietnamese government’s support has been crucial in cementing Vietnam’s status as an IT outsourcing hub. Furthermore, through various initiatives like establishing economic zones and technology parks with tax incentives, investing in education for a skilled workforce, and implementing regulatory reforms, the government has fostered an environment conducive to IT industry growth and foreign investment.

 

II. Challenges for Vietnam to overcome

Yet Vietnam still faces numerous challenges that need to be overcome such as:

  • Difficulty in integrating outsourced teams with in-house processes and systems
  • Dependency and Control Issues
  • Potential impact of economic fluctuations on outsourcing partnerships

 

III. Conclusion

In conclusion, Vietnam has been a rising star in the IT outsourcing market in the past decade. Vietnam is a major player in global IT outsourcing, focusing on software development, digital content, and business processes.

  • Vietnam making it an attractive option for IT outsourcing with ¬†plentiful pool of skilled professionals with high expertise
  • Offers affordable costs for IT outsourcing services
  • The Vietnamese government provides support for IT outsourcing initiatives
  • Vietnam’s cultural affinity and work style have positioned it as a prominent destination for IT outsourcing

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