The industry of outsourcing in Vietnam has seen a spot after the COVID-19 pandemic period. And has become an attractive destination for many companies. In recent years, there have been positive changes that have affected the outsourcing market. So, we will explore the general industry and what makes Vietnam a hotspot.
I. Outsourcing in Vietnam: An Appealing Offshore Destination
Vietnam's journey as an offshore outsourcing destination had long-term developments, such as
1. Historical Development
Vietnam's outsourcing industry has seen significant growth over the past few decades. It has evolved from a poor economy to a thriving outsourcing hub. First of all, the technology in Vietnam began to develop in the 2000s. Manufacturing played an important role in this industry. Yet, there was a shift towards offering services in the next few years. Outsourcing in Vietnam has emerged as IT, BPO, and R&D services.
2. Current State of the Industry
Vietnam takes pride in a robust outsourcing ecosystem, encompassing various sectors. For example, in IT, BPO, manufacturing, and R&D.
According to Vietnam General Statistics, the IT industry reached 136.1 billion dollars in revenue in 2021. It increased 148 billion dollars in 2022, doubling its 2016 number. Moreover, Vietnam ranked 6th following Kerney’s 2021 Global Service Location Index and 7th in 2023. This reflects the outstanding development of the software industry in Vietnam.
Besides, giant tech companies such as Intel, Samsung Display, LG, IBM, Microsoft, etc. have invested in Vietnam. These contributed to the country’s rising reputation and prestige as a technology hub in Vietnam. All these achievements have supported the growth of Vietnam as an ideal destination for IT outsourcing.
Read more: The Trend Of IT Outsourcing In The 2023 Economic Recession
II. Pros and Cons of Outsourcing in Vietnam
Vietnam is a hotspot for outsourcing services, with many pros and cons, like
1. Advantages
Outsourcing in Vietnam presents a range of advantages that have attracted businesses from around the world. Here are some key strengths of this market:
High-working efficiency
Vietnam has young, dynamic, and well-trained human resources in the IT, engineering, and service fields. Businesses often have experience working with international clients. They follow international quality standards such as ISO, CMMI, or Agile. So, they have high working efficiency and optimize projects for customers.
Highly-skilled workforce
Vietnam has made significant investments in education, particularly in IT fields. Vietnam has more than 400 universities and centers teaching programming and software development. These institutions produce around 57,000 tech freshmen every year. It creates an abundant workforce with good professional knowledge.
As a result, the country boasts a growing pool of skilled professionals. It includes IT specialists, engineers, and experts in various domains. This skilled workforce is well-equipped to handle complex and specialized outsourcing tasks.
Diverse services
Vietnam provides a wide range of outsourcing services, catering to various industry needs. From IT services like software development to BPO services like customer support and data entry. So, businesses can find diverse solutions to suit their requirements.
Cultural and language adaptation
Employees can adapt to Western countries, along with high skills in foreign languages among its workforce. It can foster seamless communication and collaboration between offshore teams and clients. This minimizes language barriers and cultural differences, leading to effective project management.
Socio-economic stability
Vietnam has enjoyed a period of relative socio-economic stability in the business environment. The government committed to fostering economic growth and appealing to foreign investment. This makes it a reliable and prestigious outsourcing destination.
Read more: What Is The Software Development Life Cycle (SDLC) And Its Models?
2. Disadvantage
Although Vietnam offers advantages, it has some cons as well.
Timezone gap: One significant cons of Vietnam is the timezone gap among Western countries. particularly those in North America and Europe. This time difference will lead to challenges in real-time exchange and collaboration.
Language barrier: Vietnam has a growing number of English-speaking professionals. Language skills will vary among individuals and organizations. So, the language barrier is also what business leaders worry about the most. Especially when they find outsourcing businesses in Southeast Asian countries like Vietnam.
However, these were improving compared to before. The outsourcing workforce in Vietnam has equipped many with knowledge and language skills. The Vietnamese ranked 66th on the Global English Proficiency Index in 2021. The situation quickly escalated in 2022 when Vietnam climbed to 6th position to land at #60th. Moreover, they are also hard-working individuals, which helps them adapt to working hours in other countries.
III. Types of Main Outsourcing Services in Vietnam
Nowadays, the market for outsourcing in Vietnam has diverse and different services, but there are three main styles, such as:
1. IT Outsourcing
Vietnam is a hot destination for IT services. Skilled software developers and engineers provide a wide range of IT solutions. It includes web and mobile app development, software maintenance, and system integration. Nowadays, Vietnam focuses strongly on technology, and with a deep talent pool, this sector continues to expand.
2. Business Process Outsourcing (BPO)
BPO services in Vietnam have various non-core business functions. For example, customer support, data entry, finance and accounting, human resources, etc.
Companies put in place processes for cost savings, efficiency, and access to a proficient workforce. The BPO industry in Vietnam offers multilingual support. We are making it an attractive choice for global businesses.
3. Offshore outsourcing
Offshore projects involve doing specialized tasks. For instance, software development, digital marketing, data entry, design, etc. These services combine work efficiency with a commitment to quality and innovation. This has made Vietnam a popular choice for companies worldwide.
Related article: Hotspots For Leading Offshore Outsourcing Countries In APAC
With a lot of advantages, Vietnam is still striving toward the goal of becoming a leading country. In general, outsourcing in Vietnam has positively changed and improved. The goal is to meet international businesses’ needs.
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