WHY OUTSOURCE
TO VIETNAM

Price

In Vietnam, labor costs 90% less than in the U.S., 50% less than in China, and 30% lower than India, which means more funds for development. According to MarketsInsider, Vietnam is ranked 5th in the “Best countries to outsource to in the World in 2019” list.

Labor force

The Vietnamese government recognizes and promotes the importance of education and training. Today the country has a 96% literacy rate, and 80% of the country’s college graduates hold degrees in the sciences (Vietnam Economic Times). This makes Vietnam an exceptional country for outsourcing technological projects because the highly educated population has a high level of scientific and technical literacy. The average age of the Vietnamese IT workforce is relatively young, with 40 to 45% under 35.

Vietnamese young generations are now dispersing over the globe, attending prestigious universities and institutions, and contributing their knowledge to the improvement of the local IT talent pool. The World Education News and Reviews reported that the third largest student population in the U.S. is Vietnamese. It does not stop there; a great number of Vietnamese IT talent is trusted and hired by major Silicon Valley corporations like Google, Apple, Facebook, etc. As Glints stated in 2022, “Vietnamese tech talent is the most sought-after internationally.” This is partially due to the nation’s potentially strong tech talent base that is knowledgeable in cutting-edge expertise, artificial intelligence, blockchain, data science, etc.

The labor force also has a much lower turnover and much higher stability than most other countries that are active in outsourcing. Overall, companies in Vietnam have an IT-related turnover rate of less than 5%, whereas, in many other countries, such as India, this turnover rate can be 10% or even higher. Ho Chi Minh is considered to have “significantly low attrition rate” and “strong labor pool” as two main reasons for the city’s inclusion in its list of the top 50 outsourcing cities in the world.

Socio-economic stability

Common outsourcing destinations in Asia-Pacific are often plagued by instability. Consider, for example, the 2006 coup in Thailand, the Kashmir conflicts between Pakistan and India, and the Sri Lankan military’s struggles against the Liberation Tigers of Tamil Elam. There are many U.S. travel advisories that warn Americans against traveling to these areas, but fortunately, Vietnam doesn’t share these countries’ woes. In fact, Vietnam is a very stable country, which creates a hospitable business environment for outsourcing.

Economic stability

Vietnam boasts a healthy economy that is growing rapidly and stably. In 2021, the GDP growth was estimated at 2.58%, and Vietnam is also one of the rare economies that have two consecutive years of growth during the harshest time of the global pandemic. While countries all throughout the world struggled to contain the economic damage caused by the Covid-19 pandemic, Vietnam was among the best in controlling the virus and preserving the stability of its economy. Up to September 2022, the foreign direct investment (FDI) into Vietnam has increased by 16.3% from a year earlier to $15.4 billion, according to Trade Economics. This makes a favorable comparison with that of other countries that are popular destinations for outsourcing work.

Ethnic/Religious stability

Because 95% of Vietnam’s population is ethnically Vietnamese and more than 80% of the citizens do not identify themselves with any particular religion, Vietnam is largely free of ethnic/religious conflict. A 2003 UNDP (United Nations Development Programme) study concluded that Vietnam had one of the most secure environments for investment, given the conflicts in Iraq and the surrounding region. Likewise, Vietnam was ranked as the safest among the 14 countries in the Asia-Pacific Region by the Political and Economic Risk Consultancy in Hong Kong (Berth of a Nation in Time, autumn 2002).

Political stability

The current government has held power since Vietnam’s 1975 reunification, meaning that there have been more than 30 years of political stability in the country. The last major conflict with a neighboring country was almost 30 years ago, in 1978. Two American presidents (Bill Clinton during his presidency and in 2006, and George W. Bush during the APEC summit) have visited the country, and Bush met with several top officials including the president, prime minister, and Communist Party chief, thereby underscoring the country’s political stability. According to the Global Peace Index 2020, Vietnam was ranked 12th as the safest and socio-politically stable country in the Asia Pacific region.

Business environment

Vietnam has had a free market since its centrally-planned economy was reformed through “doi moi” thirty years ago. Today, Vietnam’s policies create a warm and welcoming business environment for foreign investment. Along with the Free Trade Agreements (FTAs) signed with the EU in 2019 and the successful containment of the Covid-19 pandemic, Vietnam has been luring a massive influx of investment from international technology giants and manufacturing groups, typically Apple, Canon, Microsoft, Nokia, Intel, LG, and Samsung. Not to mention that other tech corporations from Japan (such as Sharp, Nintendo, and Komatsu) and Hongkong (such as Lenovo) are planning to make their ways to Vietnam for production, according to a report by Savills Vietnam.