Despite being a moderately new concept that was started more than one decade ago, the software outsourcing industry in Vietnam has grown quite significantly. Some of the earlier entrants into the country include Intel and Oracle who saw the potential that the country had in developing software solutions. Also, the government has implemented attractive policies to attract IT entrepreneurs along with substantial investments in the STEM fields to create robust and qualified technical engineers.
The technology industries in Vietnam and subsequent outsourcing services have experienced remarkable growth over the last few years. The country was recently ranked among the most attractive destination for outsourcing countries in the GSLI 2017 report. That favorable data shows that more businesses are choosing to use Vietnam over other competitors like India.
Dedicated Labor Force
Vietnam has plenty of tech-savvy, young citizens that are exceedingly interested in pursuing IT-related careers. Also, the government encourages continued investment in software parks, dedicated tech zones and provides tax incentives for the establishment of IT firms. Today, Vietnam is gradually developing its young workforce to obtain the necessary technical skills and easily compete with other Asian countries. The IT workforce continues to increase every year with more than 40,000 graduates across the over 290 universities in the country.
A Culture of Loyalty
An important factor that contributes to many outsourcing software development firms choosing Vietnam is the remarkable staff loyalty. Most people practice the base concepts of Buddhism within the country. An important principle here is the importance of loyalty, and the local people immensely value it. That means that you should expect reduced staff turnover rates. The employee retention data in the IT industry varies between 92% and 94%. In comparison, India has an 80% retention rate, with many Indian skilled engineers willing to relocate outside the country to pursue IT careers abroad.
Economic and Political Stability
Vietnam is considered as the black horse within the software outsourcing industry, as it is one of the famous, most consistent and fastest growing BPO markets. The country’s GDP has also snowballed every year by about 7% during the last decade of globalization. Also, Vietnam enjoys a safe and peaceful working environment with minimum conflicts in religion and social politics. All these factors add up to create a stable ecosystem for international companies to thrive with minimal risks once they outsource their software development to Vietnam.
Presence of Major Companies
IBM, Intel, Canon, and Fujitsu are some of the leading investors that have already made their way into the Vietnam outsourcing industry. These companies and many others have helped to improve the country’s IT infrastructure and also assisted in increasing the interest about the IT field.
- IT-Specialized Education Institutions
Vietnam has massively invested in its education system with multiple IT-related courses and easily accessible universities and vocational schools. There result is that more students now have the chance of pursuing IT careers like software development.
- High Level of Education
Besides having considerably high literacy rates, Vietnam also boasts of up to 300,000 college and university graduates annually. Outsourcing companies, therefore, have more than 50,000 fresh talent to choose from every year.
- Young and Vibrant Population
A significant benefit of outsourcing development of software to this country is the access to its vibrant, young population. Over 70% of Vietnamese are below 35 years, which means that more active people are ready to work. Additionally, the high literacy rate means that nearly all these people are well educated and skilled in their respective areas.
- Proficient English Communication
A huge challenge that faces the outsourcing sector is communication. The Vietnam government has tackled this issue by heavily investing and incentivizing its citizens to speak in English. There are numerous native English teachers hired across the country, and there has been a considerable improvement in English proficiency in the country over the last decade. Also, most of the young Vietnamese people can communicate fluently in English.
- Affordable Labor Costs
You can quickly hire experienced software developers in Vietnam for a significantly lower price as compared to American developers. Since cutting costs is part of outsourcing specific tasks, Vietnam developers are more cost-effective as they cost up to 30% less compared to Indian developers.
- Calm and Stability
Compared to other Asian countries like Sri Lanka, Vietnam doesn’t have any political instability. The past three decades have been quite calm and stable, which has a positive impact on the countries ever-rising GDP.
- Attitude and Motivation
For most young adults in Vietnam, the IT sector is highly valuable as it guarantees better job opportunities along with greater pay. Hence, most students are choosing IT jobs when selecting their future work life and careers because it is a trend and not because they are passionate about this sector.
When these students complete their college or university training, most enter IT and make lots of money. That makes some to become easily satisfied and arrogant in their line of work. It also explains the reasons why some software engineers in Vietnam are falling behind when it comes to keeping up with current trends. Hence, if they don’t have sufficient dedication and stronger work ethics, then they could end up losing out to their Indian counterparts.
- Lack of Soft Skills and Practice in Education
Despite all the extensive efforts to improve the Vietnam education system, the country still lags in overall soft skills and practice. The educational teaching methods used in most schools, particularly in rural regions could significantly affect students’ creativity and motivation. The result is that students aren’t entirely equipped with the necessary soft skills that will be critical in their future careers, such as negotiation, presentation and teamwork skills. These soft skills have become crucial in the software development outsourcing industry.
- Too Many Outsourcing Vendors
As the popularity and profitability of software outsourcing increases in Vietnam, more vendors are now entering this industry. Nevertheless, that haste causes most new software sourcing firms to make multiple wasteful mistakes. Most vendors try to grab lots of money while sacrificing on the delivery of quality outsourcing solutions. Also, there is minimal knowledge sharing going on such that various software offshore startups are lagging far behind.
Eastern European countries are highly ranked when it comes to outsourcing software development services. Poland is the leading country in Eastern Europe and mainly across the world for efficient software outsourcing solutions. Here are some of the critical facts about this outsourcing destination and why it continues to attract numerous multinational organizations.
Highly Educated Society
The primary reason for the increasing interest in offshoring software development to Poland is having access to the best educated and youngest society. Poland trains over 2 million students annually, and nearly 500,000 graduate out of higher learning institutions per year. These students become highly successful in the IT sector, which is seen by how they beat other countries at prestigious software and programming competitions.
Poland Has the Latest Cutting Edge Tech Solutions
The technologies and tools used in Poland are quite modern, and the vendors there work with the most up to date products. Most importantly, these firms use scrum and agile methodologies to provide timely, high-quality results.
No Cultural Differences
For companies located in Europe or the US, working with Poland is a no brainer as there aren’t any cultural differences, particularly when compared to India and Vietnam. That means simple communication, and the result is successful collaborations with outsourcing agencies or teams.
An Acceptable Time Difference
There is a nine-hour difference between Warsaw and San Francisco. Even when dealing with US companies, Polish companies will still find the right time for communication that fits both teams. For closer outsourcing destinations, you will see that the time difference is quite smaller, which allows for smooth cooperation and an excellent experience for all who are involved.
- Strict Security Standards
Data protection is a huge worry for most companies that are considering outsourcing software development, mainly when dealing with critical customer details or financial records. Choosing an EU country like Poland which has stringed data protection laws is, therefore, a smart decision. Poland follows strict guidelines regarding how the vendors manage and operate the data.
- Relatively Low Prices
Even though the cost per every working hour in Poland are not necessarily quite low as those in India, Polish contractors provide higher skill levels along with better quality products. Also, since Polish developers use better procedures and technologies, they can complete projects quickly and significantly help to keep the overall costs very manageable.
- Well-Established Software Development Process
It is likely that the agency you choose in Poland has completed numerous software development projects. That extensive experience means that the vendors here have already created good practices and methodologies for communication, product design and also ensuring that the results fit your needs. Also, the country has highly advanced technology infrastructures in place ready to support a wide range of software requirements.
- A similarity in Work Ethics and Culture
Polish people have a similar work ethic and culture to most Western countries like the America, Germany, France and the UK. It is why communication and cooperation tend to go more smoothly in software projects that are outsourced to Poland.
- Healthy and Stable Economy
Poland was recently ranked the seventh position globally by Ernst & Young with regards to investment attractiveness. Also, during the period from 1990 to 2015, the country experienced the largest per capita GDP growth among OECD and European countries. The GDP increased more than seven times during that period, which was quite remarkable.
- Eye-catching Tax Incentives
Most Polish states, including the major ones like Katowice or Krakow, are considered as distinct economic zones that grant some attractive tax benefits and exemptions. These states offer technology incubation, tax exemptions and even land to companies that are interested in setting up IT services in the country. The entire market is geared towards supporting innovative technologies.
- High Turnover Rates
Due to the increased competition in the outsourcing software development industry in Europe, many local agencies struggle with retaining software developers. Most developers are always looking for better job opportunities due to the high costs of living, which mean high turnover rates. For local vendors, it’s also easier to replace employees than retaining the existing labor.
- Higher Developer Costs
When compared to other Eastern European countries, Poland vendors pay their developers up to $1,000 more than their neighboring countries. For instance, while developers earn $2,000 per month in Ukraine, the same professionals would make over $3,000 in Poland. Nevertheless, most Polish companies dedicated lots of attention to developing their employees, which is done through organizing workshops, training, and other professional development courses.
Finally, you should consider visiting the vendor or country before initiating the project. That allows you to examine the quality of work and working conditions of your future software engineers. It also gives you a better feel of that vendor’s work ethic to check if it aligns with your project and even the surrounding culture of the area. Most importantly, think of software development outsourcing as more than external resources to use, but strategic partners that share your goal for building top quality products.
The success of your outsourcing project for software development services will ultimately depend on how well you communicate your requirements and have them adequately fulfilled. There are several pros and cons of all the various outsourcing destinations you can choose, from Poland and India to Vietnam and the Philippines. Hopefully, you know have a clearer picture of what you should expect when dealing with the countries mentioned above.