Technology is one of the most important assets of a country and is a crucial driving force behind the economic development of a country. Behind the technological growth of all the industries lies software development and Vietnam is emerging as one of the hottest destination for software development not only in South east Asia, but in the entire world.
With a population of over 100 million in 2022, Vietnam is the 16th most populous country in the world. Hanoi is the capital of Vietnam and the largest city is Ho Chi Minh City (commonly known as Saigon), where most of the corporates are located and is the business city of the country. Vietnam is a member of prominent organizations like the United Nations, WTO, ASEAN, APEC, IFI, IMF, World Bank Group, Asian Development Bank etc. Vietnam is a growing favourite for FDI, with Singapore being the largest investor.
The outsourcing services in Vietnam offers a range of services from custom software development to dedicated offshore teams. The key factors which makes Vietnam a favorable destination for software development outsourcing are:
- Education
- Skillset and workforce
- Initiative by the government
- Work Culture
Education: Education in Vietnam is primarily run by the state and it has an extensive network of schools, colleges and universities which provides quality education at affordable price. There are 419 institutions for higher education with more than 250,000 students graduating every year. Science, Technology, Engineering, and Math (STEM) is the most preferred branch of study by Vietnamese students, followed by Business & Management and Physical/Life Science. Overall Literacy rate of Vietnam is 94.52% and youth literacy rate is 98.06%
Skillset and Workforce: The Median Age of Vietnam is 32.5 years, which means that it has a young work force. According to the Global skills Index Report, published by Coursera, Vietnam is ranked 35th globally in skill trends among 102 participating countries. Vietnam is progressing from a low-tech manufacturing economy to a service-oriented economy and hence, fintech, artificial intelligence, ecommerce and software development has become important, as more and more people are adopting digital means. Vietnam has become a tech hub for technology such as the Internet of Things (IoT), Big Data, Artificial Intelligence (AI), Machine Learning, Blockchain, Cloud Computer, etc.
Initiative by the government: Developing a skilled workforce is one of government’s top priority. With this aim, the government has launched the National Digital Transformation Programme by 2025 with a vision towards 2030. The country is taking measures to attract FDI to accelerate a digital shift and automate processes. Some of the prominent goals included are:
- Online banking operations - 50 percent of banking operations by customers to be fully online; 50 percent of population to have a digital checking account; 70 percent of customer transactions made through digital channels.
- Digitalization of Govt. Services - 80 percent of online public services at level 4 to be online with access on mobile devices; 90 percent of work records at ministerial and provincial levels are online while 80 percent of work records at district level and 60 percent of work records at commune level are processed online
- All national databases including those for population, land, business registration, finance, and insurance are to be made online and connected with shared data on a government reporting information system
The government wants the digital economy to contribute 20 percent by 2025 and 30 percent by 2030 to the country’s economy. It also aims to be in the top 50 countries on the UN’s ICT Development Index as early as 2025.
Work Culture: Just like any other country, Vietnamese people have their own way of doing their work. Their traits include virtues such as punctuality, dutifulness, reliability, and responsibility. In business building, trust and relationship plays an important role. A typical work week in most of the companies is 40 hours/weeks. Some companies also work for 48 hours/week. A typical workday begins at 8am-9am and ends at 5pm-6pm. The time difference of 12hr with the western countries enables the availability of 24 hours of productivity. Since Vietnam is a developing nation, the billing rates are moderate and can result in a huge cost saving and thereby, making it a favorable destination for businesses looking for cost-effective solutions with cutting edge technologies.
Conclusion: Vietnam provides an excellent balance between cost-effectiveness and productivity, making it a favorable destination for outsourcing software development, for both an established enterprise as well as startups. The quality of the employees, the initiatives by the government and the work culture all help towards the common goal of making it as one of the most powerful hubs for software development outsourcing in Asia and the world.
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