Why Vietnam should be your first offshoring destination

Looking to cut costs and access a talented workforce? Then, look no further than the country of Vietnam, which is rapidly emerging as a top destination for outsourcing.

With exceptional technical talent, high retention rates and business confidence, a lot of major companies have already turned to the rising Asian tiger to set up operations.

While the usual offshore locations such as China and India see an important rise in their costs, major companies such as Microsoft, Intel or IBM have turned to Vietnam for a much better cost-effective outsourcing destination.

In this article, Remote Resources will unveil the key factors behind Vietnam’s success, including competitive labor rates, a growing pool of skilled professionals, and a government committed to economic development. 

Join us in this exciting adventure and learn how Vietnam compares to other outsourcing hubs in the region.

Vietnam’s rise to World Factory Status

Vietnam’s ascent to World Factory status commenced decisively in 2007 upon its accession to the World Trade Organization (WTO). This pivotal move, following extensive preparations, marked a turning point by opening Vietnam’s economy to global competition and trade. The ensuing impact was profound and enduring.

Over the span from 2007 to 2022, Vietnam’s economy experienced a remarkable transformation, with its GDP being multiplied by 5 during this 15-year period, from $77.4 billion to $408.8 billion.

Notably, exports surged from $48 billion to an impressive $399 billion, underscoring Vietnam’s rapid integration into the global supply chain, entering the top 20 nations of biggest exports, in particular thanks to the following sectors: 

• Broadcasting Equipment ($58.5B), 
• Telephones ($24.4B), 
• Integrated Circuits ($16.9B), 
• Office Machine Parts ($16.7B)
• Textile Footwear ($13.2B)

This export boom firmly established Vietnam as a pivotal player in international trade, fortified by a persistent trade surplus that continues to drive robust economic expansion.

Vietnam’s strategic location, coupled with favorable demographic trends and a proactive approach to economic reform, positioned it as an attractive destination for outsourcing and offshoring. 

This allure has been further bolstered by a conducive business environment and a skilled workforce, making Vietnam increasingly indispensable to global manufacturers seeking cost-effective production and efficient supply chain solutions.

As Vietnam solidifies its position as a key hub for manufacturing and export-oriented industries, its significance in global markets is poised to expand further, cementing its reputation as a linchpin of the world economy.

How Vietnam compares to neighboring Outsourcing destinations 

Vietnam distinguishes itself significantly from neighboring outsourcing destinations. 

Vietnamese professionals are eager to collaborate globally, proud of their achievements, and value foreign investments, which have fueled the country’s rapid development. International companies frequently partner with Vietnamese universities to cultivate skilled talent tailored to global business needs. This collaborative approach enhances Vietnam’s appeal as an outsourcing hub.

In contrast, neighboring countries like Thailand and Cambodia are increasingly competing for outsourcing opportunities, inspired by Vietnam’s success. However, Vietnam maintains a unique advantage due to cultural factors. Unlike China and India, where staff retention can be challenging due to high rates of migration for career advancement, Vietnamese culture emphasizes familial and local ties. 

This stability and commitment make Vietnam an attractive choice for businesses seeking stable, long-term partnerships in offshore business processing, web development, and dedicated offshore teams.

Moreover, Vietnam excels in technical talent, surpassing Malaysia and the Philippines in many aspects. While Malaysia faces challenges in scaling offshore teams due to varying skill levels, and the Philippines excels primarily in call centers, Vietnam boasts superior technical excellence, making it ideal for Information Technology Outsourcing (ITO). The presence of major global IT giants like Microsoft, Intel, and IBM further underscores Vietnam’s reputation for technical competence.

For businesses, cost-effectiveness is crucial. Recent data shows that Vietnam offers competitive advantages compared to its neighbors: Average annual salaries are significantly lower in Vietnam compared to China, India, and even Malaysia (see Table 1). Similarly, office space prices in Vietnam are more affordable than in major regional hubs, enhancing cost efficiency for businesses of all sizes (see Table 2). These factors, combined with Vietnam’s flexible and responsive approach to meeting the needs of SMEs, underscore its status as a premier outsourcing destination.

Table 1: Average Annual Salary Costs (USD)

Country	Average Annual Salary
Vietnam	$7,200
China	$15,000
India	$9,000
Malaysia	$12,000
Thailand	$8,400
Cambodia	$6,000

Table 2: Average Office Space Price (USD per sq. meter per month)

Country	Average Office Space Price
Vietnam	$20
China	$30
India	$25
Malaysia	$22
Thailand	$18
Cambodia	$15

The Pros of Outsourcing to Vietnam: Why you should jump on the train?

1. Unleashing Cost Savings: A Budget-Friendly Advantage

Vietnam stands out as a cost-effective outsourcing destination compared to established players. Take the IT industry, for example. 

A 2023 report by IT recruiter Robert Half shows average software developer salaries in Vietnam ranging from $1,800 to $4,000 per month, significantly lower than the $6,000 to $10,000+ commanded by US developers. 

This translates to substantial cost savings for companies seeking skilled development teams. But it’s not just IT – Vietnam offers competitive wages across various sectors, making it an attractive option for a wider range of outsourcing needs.

2. A Young Talent Pipeline: Building for the Future

Vietnam boasts a young and rapidly growing population with a strong emphasis on education, particularly in STEM fields. 

The Vietnam Software Association (VINASA) reports that the country produces over 40,000 IT graduates annually. This influx of fresh talent ensures a steady pipeline of skilled professionals to meet the evolving needs of the tech industry. 

Additionally, English proficiency is steadily improving with a growing number of universities offering English-language programs. While not on par with native speakers, a significant portion of the workforce possesses business English communication skills as evidenced by the English First EF EPI. 

Furthermore, Vietnam consistently ranks high in international student assessments like TIMSS and PISA, demonstrating a strong foundation in core subjects that are crucial for success in technology careers.

3. A Connected Future: Infrastructure on the Rise

Vietnam is actively investing in infrastructure development, creating a more connected and efficient business environment. 

Major cities like Ho Chi Minh City and Hanoi are undergoing rapid development with metro systems currently under construction, as reported on the Saigon Metro and Hanoi Metro websites. 

These projects will significantly improve urban mobility and streamline transportation within these key business hubs. Additionally, new airports are being built across the country. 

This enhanced connectivity positions Vietnam as a potential future hub in Asia, making it an ideal location for companies seeking a central and accessible outsourcing partner.

4. Global Recognition: A Hub for Tech Giants & FDI

The presence of a large number of multinational corporations in Vietnam is a strong testament to the country’s business climate and talent pool. 

Companies like Samsung, Intel, Microsoft, and LG have all established significant presences in Vietnam, building factories and research centers.

This influx of global tech giants underscores Vietnam’s rising importance in the global tech landscape and signifies its ability to cater to the needs of major international players.

5. Stability and Shared Values: A Foundation for Success

Vietnam’s one-party system, often cited as a concern, paradoxically contributes to its political stability. This translates to a long-term business environment, highly attractive to foreign investors. 

The World Bank recognizes the government’s consistent pursuit of economic reforms and strong international partnerships as key drivers of this success. 

Vietnam’s impressive ranking of #7 for Ease of Doing Business among lower-middle-income countries further underscores this commitment. 

This stability, with predictable regulations and a focus on streamlining processes, instills confidence in companies. 

It allows them to make long-term investment decisions with a clear understanding of the business landscape. 

Additionally, Vietnamese culture emphasizes values like respect, hard work, and a strong work ethic. These values resonate well with diverse business cultures, as comprehensive studies have shown. This shared foundation contributes significantly to fostering a productive and dependable workforce – a crucial asset for establishing smooth and successful partnerships.

Partner with Remote Resources and get access to the best talents in Vietnam.  

Vietnam has firmly established itself as a premier outsourcing destination, celebrated for its substantial cost savings, exceptionally skilled workforce, and modern infrastructure. Today, it stands as an indispensable choice for international companies seeking competitive advantages.

In this landscape of opportunity, Remote Resources emerges as your one-stop shop for harnessing Vietnam’s unparalleled technical expertise and vibrant creative talent. We bridge the gap between your vision and reality by providing dedicated remote teams across a vast spectrum of disciplines.

 

• Digital & IT: From mobile app development (iOS, Android, Windows, cross-platform) and web development (Java, Magento, Node.js, Python, ASP, Joomla, PHP, Drupal, WordPress, Ruby on Rails) to software development (.NET, Java, C#, C++, application & QA testing) and Adobe AEM development, our skilled IT professionals bring your digital ideas to life.

• Creative & Design: Our team of artistic minds encompasses 2D & 3D design, animation, concept design, product & packaging design, technical design, graphic design, UI/UX design, illustration, game development, QA/QC, digital content creation, and toy design.

 

Whether you’re scaling operations, innovating product designs, or enhancing digital content, Remote Resources offers the agility and talent essential for sustained growth and competitive advantage in today’s dynamic market!

Choose Remote Resources as your strategic partner to unlock Vietnam’s flourishing tech ecosystem and unleash the full potential of your creative vision.