Over the past decade, Vietnam has firmly established itself as one of the world’s leading IT and software outsourcing destinations.
The Vietnamese IT services market has been growing at an impressive compounded annual rate of over 20% and generated revenues of $126 billion in 2021. By 2025, it is projected to reach $200 billion, cementing Vietnam’s status as a global outsourcing powerhouse.
But what exactly sets Vietnam apart and fuels its leadership in the IT services space? Let’s look at some of the key ingredients that constitute the “secret sauce” of Vietnam’s success.
#1. Highly Educated Young Population
Vietnam’s surging youth population has been a catalyst for its booming IT industry. Around 68% of Vietnamese are aged below 35 years. Such a high proportion of youth brings in dynamism, energy and enthusiasm into the workforce.
A large share of the young Vietnamese population is also highly literate and educated. Efforts by the government to boost technical education programs and STEM research have produced a rich talent pipeline. Vietnam produces around 400,000 IT graduates every single year across universities and vocational institutions.
This combustible mix of youth and education has created a vast pool of software developers, testers, designers and other IT professionals perfectly suited for global outsourcing work. Top software outsourcing companies in Vietnam have been leveraging this demographic dividend to expand and meet global demand.
#2. Lower Costs Than Other Outsourcing Hubs
Compared to mature outsourcing destinations like Eastern Europe, Latin America or even India, Vietnam edges past in terms of affordable talent.
Software developers with experience of 3-5 years can be hired for around $1000 to $1500 per month in Vietnam. This is almost 40% to 50% cheaper than the rates of hiring equivalent talent in other global IT hubs.
Apart from lower developer costs, the general cost of living and real estate costs are also quite economical in Vietnam. Thus, companies save heavily on operational overheads by offshoring to Vietnam vs onshore locations.
#3. Rising Language Proficiency
Vietnam has made remarkable progress in English language proficiency over the past few years. It is now placed at #52 globally on the EF English Proficiency Index 2021 with moderate proficiency.
A large chunk of the workforce, especially recent college graduates, are fluent in English. Since software development and IT services requires constant communication with global clients, English skills ensure seamless collaboration.
Leading Vietnamese IT companies also invest heavily in English training programs to enhance the language abilities of their technical teams. This allows them to staff projects for global customers across geographies seamlessly.
#4. Cultural Compatibility
One of the key considerations while choosing outsourcing destinations is cultural alignment and transparency of communication with client teams. Compared to other Asian peers, Vietnamese culture is relatively more harmonized with Western mindsets and business practices.
The Vietnamese are acknowledged for their warm, generous and authentic nature. There is greater openness to sharing feedback, challenging assumptions and communicating transparently. This cultural compatibility and emotional intelligence puts Vietnamese developers at ease in engaging with global clients and teams distributed across time zones.
#5. Government Support
The meteoric rise of IT and software outsourcing in Vietnam has been fueled by strategic government initiatives aimed at developing the country into an innovation and tech hub.
Vietnam has signed multiple free trade agreements with large trading partners to accelerate foreign investment and ease cross-border commerce. The government has also invested into new IT parks, economic zones, incubators and R&D programs focused on engineering and technology.
Income tax breaks have also been offered specially to promote the growth of IT companies and attract new players. Such government endeavors have directly uplifted the software outsourcing ecosystem in Vietnam.
#6. Rich Technical Capabilities
Over the years, Vietnamese IT firms have accumulated rich experience and capabilities across legacy and cutting-edge technologies that are high in global demand. Some of the areas where Vietnamese developers excel include:
– Mobile app development: iOS, Android, React Native
– Frontend stacks: React, Angular, Vue
– Backend frameworks: NodeJS, .NET, Java Spring
– Cloud platforms: AWS, Azure, Google Cloud
– Databases: MySQL, MongoDB, Oracle
– Legacy systems: C, C++, .NET, Python
This allows Vietnam to take on complex, multi-technology projects seamlessly. Vietnamese talent has earned appreciation for its quick learning abilities and enthusiasm to experiment on new domains.
Profiles of Leading Software Outsourcing Companies in Vietnam
The maturity of Vietnam’s IT outsourcing ecosystem is evident in the many globally recognized companies that have emerged from the country, such as:
1. Saigon Technology – Trusted software development partner for enterprises across Australia, Asia and Europe. 250+ developers delivering solutions for banking, e-commerce, logistics and manufacturing sectors.
2. Savvycom – Award winning company rated in top 100 digital agencies with CMMI 3 and ISO 9001 certifications. Domain focus on healthcare, finance, retail and professional services.
3. KMS Technology – Global leader in software testing and QA services for independent software vendors and Fortune 500 firms across sectors.
4. DxBuilder – Specialists in agile development, data analytics and intelligent automation for Australian startups & enterprises.
5. HTD Software – Over a decade of experience in building web/mobile apps and games for over 200 clients spread across 15 countries.
6. Aimtek – IoT, embedded systems, machine learning and automation testing services for enterprises in automotive, logistics and manufacturing domains.
The Bottom Line
Vietnam has leveraged its demographic advantages, cost competitiveness, cultural compatibility and government stimulus to emerge strongly as a global IT and software outsourcing superstar. Continuous investments into education, infrastructure and innovation ecosystems will likely further solidify Vietnam’s positioning as a high-value offshore services destination.
