Outsourcing Software Development to Vietnam

August 30, 2018

By Alex Gilbert

For many tech and business leaders, the first (and only) image of Vietnam is the war-torn country from the 1960’s. Vietnam has changed – for the better. Decades later, instead of soldiers, we send software development projects to Vietnam. In our analysis, Vietnam deserves its growing reputation as a software outsourcing destination for businesses in the west. On our proprietary outsourcing readiness scale – we score Vietnam as “High” (VERY outsourcing ready).

Our conclusions on Vietnam comes from our constant analysis of the global software outsourcing landscape. For over two decades, we have traveled the world to investigate the leading software outsourcing firms, both offshore and nearshore.

Why We Like Vietnam for Software Development

If you look into software development outsourcing in Vietnam, you will be pleasantly surprised at the current opportunities there. Based on Accelerance research and interviews with top software development companies in Vietnam, here’s what you need to know.

Economic Outlook

Vietnam’s economy is expected to grow 6.5% in 2018, and 6.6% in 2019. The dynamic growth is not unnoticed. Economists are bullish on Vietnam, most believe it is one of a handful of Asian countries that could soon rival larger competitors, such as China and India.

Political Conditions

Ironically, Vietnam’s one-party Communist state helped make it one of Southeast Asia’s fastest-growing economies. Since 1975, Vietnam has been ruled as a unified nation under the Communist Party. The government’s economic reforms made Vietnam a stable, secure country – and a great IT outsourcing destination.

Government Investment for IT

New, government-sponsored “technoparks” are springing up around the country to support IT and software outsourcing. These are modern facilities with telecom and electrical infrastructure essential to serve a global client base.

Talent Pool, Education, and Expats Returning Home

Half the population of Vietnam is under 30 years of age, born after the Vietnam War. They’re optimistic, intelligent and well-educated. The education system in Vietnam is excellent, with a focus on study in mathematics and technologies that support the IT industry. Many Vietnamese expatriates previously worked as programmers and engineers in the west. Now, they’ve returned home as facilitators. They help overcome cultural and language barriers for the use of Vietnamese software developers as outsourcing partners.

Language

Although we rank English-language skills of the Vietnamese as “Moderate”, it’s improving, especially among the younger population. Engineers can usually read and write English; therefore, written communication is an effective collaboration tool. The Vietnamese often speak with a heavy accent which can be difficult to understand over VoIP.

Women in Tech

Vietnam has a notable amount of gender diversity in tech jobs. While female developers are certainly visible in other countries, Vietnam has done especially well in closing the gender gap. Female IT professionals are quite commonplace in Vietnam.

Hourly Rates

Last, but not least, hourly rates for programmers are very favorable to US and Western European companies. Our investigation shows that typical partner rates for outsourcing in Vietnam is between $26 - $37 per hour.

How Can You Be Effective with Software Companies in Vietnam?

Our analysis and experience tells us that going to Vietnam for software outsourcing services is a good strategy. Having said that - be aware that all offshore outsourcing engagements have risks that need to be carefully managed. Here are  a few things to consider.

Cultural Dynamics

Unlike software professionals in India, Philippines, and other emerging tech countries - Vietnam workers tend to stay close to home. This is because Vietnam workers are expected not only to provide for their immediate families but also support their extended families.

Similarly, employees in Vietnam employees tend to be loyal to employers. This tendency is an extension of strong family ties. For better or worse, a good employer will tend to have long-term employees.

Vietnamese occasionally “moonlight” with a second job. Make sure your outsourcing team is fully engaged and attentive to your project as a top priority.

Confirm Language Skills

In the education systems of Vietnam - there is a push to make English a second-language. This will continue to increase the likelihood of an English-speaking outsourcing team. However - be careful to confirm language skills. Make sure you and your outsourcing partner have a plan to ensure collaboration does not suffer due to limited English skills.

Time Zone Differences

Vietnam is 12 hours ahead of Eastern Time Zone. A typical flight from NYC to Vietnam takes 23 hours. Western European businesses are slightly better off; Vietnam is 6 hours ahead of London. With DevOps or Agile development methods, you’ll collaborate often with your business partner in Vietnam. Collaboration can’t be stalled because of time zone issues. A good software outsourcing company in Vietnam will have key techs available during your normal business hours – whether US or Europe.

Where are Top Software Outsourcing Companies in Vietnam Located?

Vietnam has a very healthy economy, stable government, and a growing population of skilled, well educated, young people. From our experience, software companies in Vietnam can provide skilled programmers for mobile app, web, and IOT development. Many companies also have specific expertise in offshore software development topics like business intelligence, big data, QA, and software testing.

Ho Chi Minh City

Also referred to by its traditional name of “Saigon” is the most populous area in Vietnam, with over 12 million residents. Ho Chi Minh City is in the southern region - about 1100 miles south of Hanoi. It is a highly urbanized, international city with many respected universities, including the Ho Chi Minh City University of Technology.

Da Nang

Da Nang is the midpoint between southerly Ho Chi Minh City and Hanoi in the north. Located on an attractive coastline, Da Nang has been a popular tourist destination for many years.  The Da Nang University of Technology is one of the most important and prestigious universities in Vietnam. Plenty of software companies in this area will have alumni from this institution.

Hanoi

This important northern city is second in population to Ho Minh City - with a population of over 7 million. The elite Hanoi University of Science and Technology is located in the city - with over 40,000 students attending it annually. Tech-focused schools in the area turn out well-educated, capable IT professionals each year - often with English fluency.

Who are the top software companies in Vietnam?

In our research, we’ve found that only the top 3% of our exclusive global network meet the requirements you need to be successful. Our analysis comes from investigating 8,000 software outsourcing vendors across the globe (and more are added daily to our analysis). Accelerance uses a 500-data point analysis, including experience with the US or other western clients, English proficiency, size of the company, and more.

How Do You Pick a Good Software Outsourcing Company in Vietnam?

Knowing which are the best software companies in Vietnam is important - but there’s more. To select THE RIGHT software outsourcing company for your company, you need to understand your company as well as the prospective outsourcing partner. “One size does not fit all”... your companies industry, culture, time zone, and - yes - technical skill gaps all should impact your search process.

Due Diligence – With A Customized Search

We help companies like yours every day to find the right outsourcing partner. The best way to find the right partner in Vietnam (or any country) is to perform a customized search, tailored for your company. To be candid, Accelerance is the expert on how to properly outsource.

Make Use of an Onshore Advisor

Companies looking for the benefits of high quality offshore software outsourcing increase their chances of success with an experienced advisor. This advisor helps the Company locate and engage with the best software outsourcing company in Vietnam. Let us tell you more about our Accelerance Coach services. Our goal is to make your outsourcing relationship wildly successful!

Our Specialty is Software Outsourcing

Accelerance, a US-based consulting firm, helps technology leaders create effective strategies for global software outsourcing through better planning, better partner selection and better ongoing management. Unlike do-it-yourself outsourcing, Accelerance delivers a proven methodology for outsourcing that identifies and manages risk and optimizes results so that clients gain all the benefits of high performance global partnerships.

Talk to Accelerance about your software outsourcing needs.

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