Market Insights – Why IT Outsourcing To Vietnam?

Why IT Outsourcing To Vietnam

 

Since the launch of the economic reform Đổi Mới in 1986, Vietnam has taken huge steps into global economic integration and an open business environment. As of 2021, Vietnam ranks 6th globally in software services and Global Services Location Index, according to 2021 report of Kearney, being among the most attractive destinations for IT outsourcing.

So, why do companies outsource to Vietnam? Let’s discover Vietnam’s tech abilities as well as what you will get when IT outsourcing in Vietnam.

Vietnam – An Emerging Global Destination For IT Outsourcing

With a coastline of 3,260 miles, Vietnam spans the center of Southeast Asia – an emerging tech hub and hot market for tech start-ups. The strategic location has contributed to making Vietnam a strategic partner in Asia. But that’s not all! Vietnam’s presence has been continuously expanding on the global IT map, reaching Australia, Europe, and North America, as well.

Vietnam's largest global IT markets

In recent years, the outbreak of the COVID-19 pandemic has brought negative impacts to the global economic sentiment, yet Vietnam was able to maintain positive GDP and IT sector growth rates.

Vietnam's IT sector vs. GDP growth rates 2017 - 2021

More specifically, Vietnam IT outsourcing market has witnessed sustainable growth the recent years, reaching over 7M USD in 2021. It is expected to grow at a CAGR of 11.93% during the 2022-2017 period, via Statista forecast.

Vietnam IT services revenue growth

With proven stable economic growth, Vietnam is confident to be among the top sustainable countries for IT outsourcing. Next, let’s see what aspects have brought Vietnam to where we are on the global IT outsourcing map!

Also read:

3 Reasons For Software Outsourcing

Pros and cons of IT outsourcing in Vietnam

 

Why IT Outsourcing To Vietnam?

Vietnam’s IT outsourcing market has been fueled by solid IT infrastructure, competitive pricing, great efforts to adopt emerging technologies, open business environment, and supportive policies from the government exclusively for IT enterprises.

1. Strong and comprehensive IT infrastructure

IT Human Resource Infrastructure

As of 2021, Vietnam had 1.08 million IT personnel, including 430,000 IT engineers. Vietnamese developers rank 8th out of 83 countries in terms of performance according to Topcoder statistics

Vietnamese IT Labor 2017 - 2021

At the same time, 148 universities and 412 IT vocational colleges are available to ensure IT education, adding 62,000 IT human resources to the market annually. The training program is being adjusted and enhanced annually for AI, Data Science, Big Data, Cloud Computing, IoT, VR / AR, Blockchain, 3D Printing…

IT services enterprises and IT parks

The number of enterprises in Vietnam IT outsourcing market has steadily increased the recent years even in the 2020-2021 period, reaching 9,796 companies in October 2022, creating numerous choices and resources for global clients.  

In addition, the government has invested in high-tech parks to facilitate the technology industry in Vietnam. As of 2022, we have 6 IT parks located in major tech centers of the country like Ha Noi, Da Nang, and Ho Chi Minh city, being home to 830 IT enterprises that are working on creating endogenous capacity in science-technology for socio-economic development.

Security infrastructure

According to the 2020 Global Cyber Security Index publicized by the International Telecommunication Union (ITU), Vietnam scored 94.59/100 in information security, excelling 25th among 193 countries worldwide, 7th in the Asia-Pacific, and 4th in the ASEAN regions. 

2. Cutting-Edge Technology

Visioning to become one of the leading countries for IT outsourcing, Vietnam has invested in education and other resources to develop abilities for emerging technologies like blockchain, IoT, AI & machine learning, and cloud computing. Particularly, blockchain and AI are two key technologies for the 4.0 digital revolution.

Artificial Intelligence (AI)

Vietnam is ambitious to build a National AI Research and Development Program with an AI Valley located in Quy Nhon. Also, in 2019, the Hanoi University of Science and Technology brought AI into official education programs.  

Some highlighted Vietnamese AI startups include Elsa, Kambria, Kampa, and Gotit. Apart from that, we have numerous AI communities mentioning VietAI, AI4Life, Artificial Intelligence Community, etc.

Blockchain

Vietnam has been highly appreciated in the global blockchain development market. According to Chainalysis, Vietnam ranks 1st in 2022 Global Crypto Adoption Index. Also, many Vietnamese blockchain start-ups are widely-adopted, mentioning Axie Infinity (Sky Mavis), KardiaChain, Kyber Network, Coin98, and TomoChain.

In April 2022, the Ministry of Home Affairs officially approved the establishment of the Vietnam Blockchain Association (VBA) to further facilitate blockchain research and adoption. Also, in August recently, VBA and the Banking University of Ho Chi Minh city formed a strategic collaboration to promote blockchain education at the university.

3. Competitive costs

Geographical pricing advantages are a great reason for offshore development. Fortunately, Vietnam with competitive overall costs has successfully seized this advantage to become the 6th-greatest destination for software development and rank 6th in The 2021 Global Services Location Index.

Besides, according to the US News report, Vietnam scores 100/100 in Cheap manufacturing costs. Another report by Singapore-based business transformation consultancy TMX showed that Vietnam has the 2nd lowest production cost in Asia with $79,280/month for a manufacturing company. This is higher than in Cambodia only. 

4. Open business environment

Nearly 40 years since the Đổi Mới reform period, Vietnam has become an ideal destination for foreign investments with 430 billion USD allocated to 35.539 projects valid as of Aug 2022. We are also a member of major trade organizations like AFTA, WTO, APEC, ASEAN, FAO and have 56 FTA trading partners around the world.

As of 2022, Vietnam ranks 21st out of 78 countries in Open For Business published by US News. This high ranking not only comes from social stability but from great efforts of the government toward global economic integration that we will discuss right below.

5. Legal support

In an effort to power IT as a spearhead economic sector, the government provides tax credit and rental reduction/exemption exclusively for software projects and IT enterprises.

IT enterprises are allowed 0% tax for the first 4 years and a 50% tax reduction for the next 9 years. Land rental reduction and exemption are also available in almost all provinces to encourage FDI companies, plus import duties are exempted. In addition, 0% tax is applied to software products, contributing to a lower cost consumed when IT outsourcing to Vietnam.

Top IT Outsourcing Companies In Vietnam

Top 5 IT outsourcing companies in Vietnam 2022
Top 5 IT outsourcing companies in Vietnam 2022

1. FPT Software

FPT Software has been Vietnam’s leading IT outsourcing company for many years. As a pioneer in digital transformation, FPT delivers world-class services in Smart factories, Digital platforms, RPA, AI, IoT, Enterprise Mobility, Cloud, AR/VR, Business Applications, Application Services, BPO, and so on.

FPT Software is also one of the professional IT providers that can offer IT consulting services. As of 2022, the company has served over 700+ customers worldwide. 

2. LTS Group

LTS Group is a global IT services & solutions provider headquartered in Vietnam with two branches in Japan and the U.S. Over 6 years, the company has served clients and partners in 9 countries, naming Japan, Korea, Singapore, Hong Kong, Australia, and America. LTS Group’s domains range from general ones to domains that require expertise, such as Education, Automotive, Fin-tech, and Healthcare. 

IT services that LTS provides:

  • Offshore development center
  • Custom software development
  • Blockchain development
  • Software testing
  • Digital transformation

3. CMC Global

CMC Global is another company pioneering the Vietnamese IT outsourcing market with 200+ clients worldwide and a current workforce of over 1,500 people. The company strictly follows international standards, including CMMi and ISO 27001:2013, to guarantee the quality of its delivery. 

IT services that CMC Global provides:

  • Custom software development
  • Cloud migration
  • Cloud managed services
  • RPA implementation

4. Rikkeisoft Corporation

Established in 2012, Rikkeisoft has become a trusted IT provider in Vietnam with 1,300 employees and over 500 clients worldwide. They assist clients of all sizes and from all industries to adapt and implement digital technologies. Their core market has been Japan but they are going global as well.

IT services that Rikkeisoft provides:

  • Software development
  • Web/Mobile development
  • Business process management
  • CAD
  • UI/UX design
  • QA & Testing 

5. HBLAB

HBLAB is a reliable Vietnamese IT partner of many of the world’s leading enterprises, SMEs, and Startups. The company has experience with clients in many fields, such as E-commerce, E-Health, E-Learning, FinTech, Media & Entertainment, Start-ups & Innovation, Business Automation.

With a team of 300+ dedicated tech talents, HBLAB helps businesses with:

  • Custom software development
  • Blockchain development
  • Web/Mobile development
  • AI & Machine learning
  • QA & Testing

That’s A Wrap!

So, is Vietnam good for outsourcing IT? The answer depends on your priorities. If you are seeking high-quality IT outsourcing services at a reasonable cost and especially a stable business environment for your long-term offshore development center (ODC), Vietnam is definitely worth considering.

Are you considering IT outsourcing to Vietnam? Don’t hesitate to tell us your story and get dedicated consultation from our experts!

  • Website: https://ltsgroup.tech/ 
  • Tel: (+84) 24-6660-7474 
  • Fanpage: https://www.linkedin.com/company/lts-group-vietnam/

 

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