6 Reasons Why Vietnam is America’s Next Big Software Outsourcing Hub
In recent years Vietnam has become an increasingly attractive market for software development services. Political and economic forces have driven business away from traditional technology labor sources in India and China. Business leaders are reevaluating the ROI of outsourcing as the cost of labor rises in India and the US-China trade war heats up. In the last 5 years US tech giants like IBM, Apple, Microsoft, and Intel have been reallocating massive resources from India and China into Vietnam. Here’s 6 reasons why:
Rising Wages of Indian and Chinese Developers
The average wage in India and China increased by 13% and 9% respectively in 2020, compared to only 5% in Vietnam. Tholon’s global software outsourcing index ranked Vietnam 3rd among Asian countries in 2019, behind India and Singapore. However, Vietnam’s outsourcing rates are 20% cheaper than India’s, on average. Outsourcing wages of Vietnamese developers range between $20 and $40 per hour, compared to $25 and $50 for Indian developers.
Strengthening Technology Infrastructure
Vietnam is rolling out 5G networking in major cities in 2021, and plans to provide nationwide 5G coverage by 2030. Meanwhile, the government of Ho Chi Minh City, Vietnam’s economic hub, has announced plans to build a dedicated technology industry zone in the developing area east of the City.
Large Population of Skilled Technical Workers
Coursera’s 2020 Global Skills Index ranked Vietnam 2nd in technology capacity among Asia Pacific countries. Vietnam’s highest technical skill proficiency is operating systems, which is essential for development in sectors such as automotive, manufacturing, media, and telecommunications. Vietnam was also ranked relatively high in cloud computing, which positions the workforce well as we see a precipitous transition to cloud hosting and computing in nearly every industry.
Chinese Tariffs Drive Economic Growth in Vietnam
The US-China trade war has pushed companies to find new manufacturing sources in the region. Vietnam has become potentially the largest beneficiary of these tariffs, with a number of large technology companies like Samsung, Apple, and Intel setting up production facilities in the south of Vietnam.
Young & Highly Educated Workforce
The average age of Vietnamese is 29.8, which lends itself to higher rates of technology literacy than older populations. The education framework in Vietnam is geared towards hard sciences, with an emphasis on math, science and technology. Tertiary education institutions in Vietnam have seen an increase in demand for technology programs in the past decade.
Increases in English Proficiency
Vietnam is catching up with India’s English proficiency, respectively scoring 473 and 496 on EF’s English Proficiency Index. While Vietnam’s overall English proficiency is moderate to low, many foreign-facing IT companies are investing in English communication education for their staff.
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