Is Hiring a Software Development Company in Vietnam as Affordable as You Think?

Vy Le | 16/07/2024

Is Hiring a Software Development Company in Vietnam as Affordable as You Think?

Have you ever heard of the term “software outsourcing” before?

There are countless reasons why business owners seek software outsourcing services. Some people want quick access to a specialized expert pool without the hassle of hiring. Others need to free up resources to focus on core competencies. However, with up to 59% of businesses using software development services to cut costs, cost saving is still the leading reason explaining the rise of this service in recent years.

Finding software development companies in today’s digital landscape has become more accessible than ever. However, this diversity also poses many challenges for businesses in making the right choice. It is undeniable that tech hubs such as Silicon Valley, USA, and Kyiv, Ukraine, are popular destinations for qualified services; they often have pricing models that are difficult for the majority of customers to access.

Financial pressure drives clients worldwide to seek cost savings by turning to software outsourcing companies based in Southeast Asian countries, particularly Vietnam.

Is this really an ideal alternative for individuals and organizations that have never cooperated with a software development company in Vietnam before? Does a reasonable price go hand in hand with a commitment to outputs? All will be revealed in this article.

A Brief Introduction to Vietnam

Location: Southeast Asia
Timezone: GMT+7
Population: 99.5 million (as of July 2, 2024)
Largest cities: Ho Chi Minh City, Hanoi, Danang
Number of developers: 530,000 developers (as of September 2023)
Key programming languages: Python, PHP, Java, JavaScript, C#
Hourly rate for software development services: $20 - $50 per hour

Software Outsourcing Market in Vietnam: An Overview Picture

Although countries in North America will continue to dominate market share in the next few years, Asia-Pacific is considered a potential region that is expected to record the highest CAGR globally at 10.2%.

Vietnam has been experiencing steady growth in recent years despite being a newcomer to the global outsourcing market. Based on the benefits of cost-effective labor, a skilled workforce, and government support for the tech industry, the outsourcing market in Vietnam is predicted to grow to 544.8 billion USD in 2032, reflecting an 8.5% compound annual growth rate (CAGR).

As global companies increasingly seek cost-effective software development solutions to minimize expenses, Vietnam stands out as an optimal option as it ranks among the best offshoring locations to outsource in 2019, along with China, the Philippines, Taiwan, and Ukraine.

With ongoing investments in talent development, infrastructure, and industry collaborations, Vietnam is well-positioned to further establish itself as a prominent player in the outsourcing landscape.

How Much Does Outsourcing Software Development Cost in Vietnam?

Like other countries, Vietnam’s software development outsourcing services pricing structures are formed based on various factors.

Complexity of the project
Required technology stack
Team composition
Tools for communication and collaboration
Additional project requirements
Market competition

Despite having similarities in project estimates, the price of using outsourcing services in Vietnam is considered much cheaper than other countries in the same Asian region or other continents. We can take an example of the annual budget for paying software developers to better clarify the cost-saving benefits when cooperating with custom software development companies in Vietnam.

While employers have to pay $67,000/year for experts from the United Kingdom (UK), they only pay about $17,000/year for Vietnamese developers of the same level. This means the cost of hiring developers in Vietnam is nearly four times cheaper than in European countries. This significant difference in salary helps customers who need outsourcing save most of their costs, further optimizing the company’s financial plan.

The following table displays the average annual salaries for software engineers in different regions:

Region	Country	Average Annual Salary (USD)
Europe	United Kingdom (UK)	$67,000
	Poland	$45,000
	Ukraine	$48,000
The Americas	United States (US)	$144,000
	Canada	$80,000
	Mexico	$22,000
Asia	China	$57,000
	Japan	$52,000
	Vietnam	$17,000
	Taiwan	$42,000

The Favorable Conditions When Partnering with Software Development Companies in Vietnam

Looking at the economic picture in Ho Chi Minh City, Vietnam (the biggest city in Vietnam), it is evident that this is still a developing economy with great potential. Although there are still many difficulties in digital infrastructure and technological advancements as a developing area, Vietnam presents various benefits and opportunities that attract a large number of customers and investors every year.

Cost-effective Labor

Vietnam has a relatively lower cost of living compared to many countries around the world. These economic benefits significantly contribute to cost-saving benefits of Vietnam. With the same budget for a senior web development developer position, employers can hire up to 5 experts in Vietnam instead of only hiring 1 person with the same level in the US.

Besides, the favorable exchange rate between the Vietnamese dong (VND) and major foreign currencies can also translate into a cost-saving factor. Businesses operating in Vietnam, using local currency to pay, can provide employees with more competitive packages and incentives without incurring high costs.

While software engineering wage rates may fluctuate in the future, Vietnam’s labor costs remain more attractive to foreign investors compared to its regional counterparts.

Young and Educated Workforce

According to statistics from Statista, Vietnam recorded the population exceeding 100.3 million inhabitants in 2022. Of which, the working-age population accounts for 75.9 million people. With a workforce largely of working age, Vietnam ensures a continuous supply of young talent into the labor market , fueling its booming IT industry.

The young generation in Vietnam not only has the ability to quickly absorb new theories and adapt easily to changing market demands, but they are also individuals with a solid knowledge background. The education system constantly improves quality and adds new occupations as technological advancements lead to improved literacy, attracting attention from clients worldwide looking for skilled developers of all levels.

English Proficiency

Besides the mother tongue of Vietnamese, English is an indispensable language in any study program in Vietnam. While it is a compulsory subject at the elementary level, most universities in Vietnam require students to earn English credits as a mandatory requirement for graduation at the university level.

Some Vietnam-based companies in sectors like IT, outsourcing, and customer service even prioritize hiring individuals with strong English skills to cater to international clients.

As it is a mandatory language in the curriculum from elementary school to university, most people in Vietnam consider English as their second language and are able to use it fluently in a communication environment. English proficiency helps international customers when cooperating with software companies in Vietnam to eliminate language barriers, effectively leverage communication, and bridge cultural gaps in outsourcing projects.

Government Support

Being a country with a developing economy, the Vietnamese government offers many good policies to support and foster a favorable environment for outsourcing activities. Any Vietnam software outsourcing company, before going into official operation, must adhere to regulatory standards and compliance requirements prescribed by the government.

With strict industry-specific policies and guidelines for outsourcing services in areas like IT, software development, customer support, and back-office operations, Vietnam gains confidence in global clients regarding data protection, intellectual property rights, and high-quality services.

Watch Out These Top Software Development Companies in Vietnam to Maximize Your Business Potential

The software outsourcing market in Vietnam is becoming more open as companies of various scales emerge. Below is a list of top software development companies you can refer to when choosing Vietnam as your next destination.

CMC Global

CMC Global is a major division of CMC Corporation specializing in providing outsourcing services and digital solutions with an agile approach. Founded in 2017, it has decades of experience in serving global clients across various industries like finance, retail, healthcare and supporting business growth on an international scale.

Founded in: 2017
Average hourly rate: < $25 / hr
Number of employees: 1,000+

Kyanon Digital

Kyanon Digital is a leading software development company in Vietnam with more than 10 years of experience in the IT industry. Cooperating with Kyanon Digital, customers do not simply receive managed services. Instead, experts guide customers to help them find the most suitable and effective solution for successful projects.

Founded in: 2012
Average hourly rate: $25 - $49 / hr
Number of employees: 250 - 999

Orient Software

Orient Software is a software development company headquartered in Vietnam with nearly 20 years of experience operating in the technology field. It has been the trusted IT partner for numerous global organizations, ranging from large enterprises to small businesses seeking cutting-edge and transformative technology solutions and beyond.

Founded in: 2005
Average hourly rate: $25 - $49 / hr
Number of employees: 250 - 999

TMA Solutions

TMA Solutions is recognized as one of the oldest software outsourcing companies in Vietnam. With a large engineering team and a wide range of skills, TMA Solutions focuses on providing end-to-end solutions for clients worldwide who need to develop customized software products and utilize existing processes.

Founded in: 1997
Average hourly rate: < $25 / hr
Number of employees: 1,000+

Savvycom

Savvycom is a Vietnam-based outsourcing company known for its client-centric approach and strong emphasis on quality assurance. By staying abreast of the latest technological trends and following best practices, Savvycom commits to providing clients of all sectors with innovative solutions and quality service delivery.

Founded in: 2009
Average hourly rate: $25 - $49 / hr
Number of employees: 250 - 999

Rikkeisoft

With years of experience in the IT sector, Rikkeisoft is a reputable destination for customers who wish to optimize development processes and kick off projects of diverse sectors. The company includes many different custom services from software testing to web and mobile app development.

Founded in: 2012
Average hourly rate: $25 - $49 / hr
Number of employees: 1,000+

Conclusion

Outsourcing software development in Vietnam is a strategic move for businesses of all sizes seeking both cost and quality advantages. With the same budget, clients can now hire up to three to five professionals in Vietnam instead of only one to two developers in other countries from Europe. Larger development teams can surely lead to increased productivity, faster development cycles, and shortened time to market, further creating a better competitive edge for customers.

While the competitive landscape in Vietnam’s outsourcing market may impact service pricing models in the future, clients worldwide can rest assured that Vietnam-based software companies always offer one of the best affordable solutions in the world.

If you are still concerned about the quality of software development companies in Vietnam, it is recommended that you first test their abilities with small aspects of your projects. Contact Orient Software to see how we can leverage your development process.

Topics: Software Outsourcing Company