Outsourcing Software Development Vietnam: Peculiarities and Alternatives

What are these problems? Do the advantages offered outweigh all the disadvantages of software development companies in Vietnam? Qubit Labs has extensive expertise in finding the best specialists around the world. In this article, we will provide critical insights into Vietnam’s software outsourcing market, outline potential opportunities for Vietnam software outsourcing, and explain why it is better to focus on cooperation with experts from Eastern Europe and Latin America rather than Vietnam.

Navigating the Decision to Outsource to Vietnam: A Strategic Guide for Companies

Vietnam has become a prominent destination for software services as it offers a competitive blend of cost-effectiveness and a skilled workforce. Experienced specialists and renowned outsourcing companies can meet various IT needs. What factors should companies consider before software outsourcing in Vietnam, known as the “dragon of Asia”?

Project Scope and Complexity

If you have a small project that does not have a complex architecture and does not require the involvement of many specialists, then outsourcing to Vietnam can be beneficial. Vietnamese outsourcing service providers know how to manage small and medium-sized projects. 

What types of projects are best suited for outsourcing to Vietnam? Vietnamese developers are skilled in using popular technologies and programming languages. Software testing services, Salesforce consulting services, technology consulting, system performance optimization, web application development, mobile app development, and custom software development are best suited for Vietnam software outsourcing. Additionally, the sector has witnessed increased complexity of successful projects utilizing blockchain, machine learning, and artificial intelligence. 

Communication and Cultural Fit

Understanding the local culture is vital to flourishing business relationships. Vietnam’s business culture places a strong emphasis on hierarchy and respect. Therefore, businesses worldwide must establish polite and transparent communication channels to achieve mutual understanding with a software development company from Vietnam.

Technical Skills and Expertise

According to data from the Vietnam Tech Talent Report, Vietnamese developers have been ranked among the top ten developers in the world according to their skill value. They are skilled in Java, Swift (this indicates a focus on iOS and Android platforms), Kotlin, Flutter, and React Native. It doesn’t matter if you plan to outsource web or mobile development. Here, you’ll find skilled experts to tackle your tasks.

Cost

Vietnam offers cost-effective software solutions. Therefore, it’s a perfect spot for companies who want to optimize their IT costs without sacrificing quality and lean startups that want to save costs.

The Benefits of Outsourcing Software Development to Vietnam

Vietnam’s economy has been among the fastest-growing in the world recently, thanks to a stable political climate and a government encouraging the development of an IT sector. In addition, several factors, such as Vietnam’s younger and highly skilled labor force and cheaper labor costs compared to other countries, have propelled the country’s IT outsourcing business. Thus, software outsourcing in Vietnam has its benefits.

Solid Technical Expertise & Vast Engineering Pool

Vietnam has a 96% literacy rate, and strong government support for the education sector is a high priority. In 2023, Vietnam’s labor force grew to 52.4 million people. Besides, by 2025, Vietnam plans to develop 1,800 vocational education centers. This means that Vietnam will have a diverse network of vocational schools to meet the country’s development needs, especially for highly skilled workers. Therefore, highly skilled laborers can acquire the necessary knowledge and skills. Vietnam cultivates a large number of tech experts. More than 400 educational institutions churn out 57,000 tech graduates annually, and the country’s top software development companies hire many IT experts. 

Also, it is easy for companies to find highly qualified contractors for software development. Сlutch states that there are 292 software development firms in Vietnam. The average age range of developers is 20-34, which is the golden age for the labor market of any country. The companies’ experts are well-versed in popular technologies such as JavaScript, Java, Python, C#, and PHP and modern technologies such as machine learning, blockchain, and artificial intelligence. In addition, Vietnam is home to software engineers specializing in specific technologies. Vietnam software outsourcing is your win-win option if you are looking for top Java, React, MySQL, .NET, AWS, React, Node.js, and Angular specialists. However, if you need Ruby or Scala developers, you will unlikely find specialists with specific skill sets in Vietnam.

English-Speaking Country

Due to recent modifications to the English language policy, the necessity of political and economic innovations, and the need for higher education reformations, the Vietnamese authorities have implemented the CEFR (The Common European Framework of Reference for Languages). Therefore, to be admitted to any college, IT graduates must achieve Common European Framework of Reference (CEFR) level B1. Completion of an advanced program requires B2 proficiency. Therefore, 90% of software developers speak English, with around 67% proficient in English or having an upper-intermediate level.

Compelling Outsourcing Rates

Hiring a software developer in Vietnam is far more affordable than in other countries in the Asia-Pacific and Western regions. Usually, English proficiency, regional variations in work arrangements, and other factors may influence wages in Vietnam. Let’s take a look at the comparative breakdown. 

The average software developer salary in the USA is $129,818 per year. In Germany, the annual salary of a software developer is €67,000. The average yearly salary for a software engineer in Vietnam is $13,320, 9.5 times lower than in the US and five times lower than in Germany. By outsourcing software development services to Vietnam, firms can save a significant portion of their budget, and startups with limited budgets can scale quickly.

The Abundance of Young, Enthusiastic Talent

Vietnam is a country with a relatively young population and a large number of recently graduated people who are joining the labor force. According to statistics, 51.3 million people aged 15 and above were employed in Vietnam in the first quarter of 2024. Furthermore, according to the report, the most significant percentage of the population in Vietnam is between 25-34 years old, indicating that the country has a relatively young working population. Also, universities graduate more than 57,000 young professionals yearly, contributing to the fact that the pool of tech experts is expanding yearly.

Modern Business Hubs

You can find qualified experts in several cities in Vietnam. For example, Ho Chi Minh City is the country’s economic center and is home to many experts with years of experience. This city offers an excellent ecosystem for small, medium-sized businesses and startups. Technology giants such as VNG and FPT Software are located in this city. Moreover, the capital of Vietnam is also home to a high-tech park, which came into existence due to a government initiative promoting high-tech industries. This park has attracted more than 100 companies, including Samsung and Intel. 

Hanoi is the country’s political center and home to many students. In 2022, Samsung opened a $220 million research and development center in Hanoi. The center has become the most prominent Korean conglomerate’s research center in Southeast Asia. It helped attract foreign investment to the region and employ skilled foreign and local workers. Da Nang is called the “Silicon Valley” of Vietnam and offers an excellent business environment.

Favorable Investment Environment

Vietnam attracts foreign direct investment (FDI) due to its youthful and growing urbanized population, ongoing economic reforms, new free trade agreements, political stability, and low labor costs. Moreover, the Vietnamese Government has issued Resolution 55, which aims to attract 50 billion USD of foreign investment by 2030. To attract investment, it is planned to create an economically beneficial environment: simplify the involvement of foreign investment, implement efficiency and quality criteria, and cutting-edge technologies.

Political Stability

Vietnam is ethnically homogeneous, with an educated population and a stable political landscape. The likelihood of conflicts occurring here is much lower than in other Asian countries.

Geographical Proximity

Traveling in Vietnam is quite convenient, with a well-developed, modern, and safe infrastructure. All international flights land in Ho Chi Minh City, which is convenient for companies from the USA, Europe, and Asia.

Special Culture & Good People

Development companies in Vietnam are hardworking and responsible. They have the patience to work on monotonous tasks, but their passion for innovation allows them to implement creative and customer-centric solutions. In addition, the teams are very flexible and have excellent team collaboration skills, which are essential to deliver outstanding results. 

Challenges of Vietnam Software Development Outsourcing

Vietnam offers numerous advantages to firms that want to outsource software development services. However, Vietnam software development outsourcing has drawbacks that may make cooperation impossible for some companies looking for software development outsourcing services.

Language Barrier

Only 37% of developers in Vietnam have an advanced level of English. This means that, in some cases, companies should engage bilingual staff. Besides, due to cultural peculiarities, older generations make critical business decisions. Usually, they are less fluent in English than their younger colleagues. Language barriers lead to misconceptions, miscommunications, and misinterpretations. This also applies to digital communication, as many firms find providing accurate and efficient responses in English challenging.

Lack of Data Protection Laws

The most critical factor in working with offshore teams is the guarantee of intellectual property protection. Unfortunately, in Vietnam, there is no uniform data protection regulation. Therefore, Vietnam’s fragmented approach to data protection poses a significant risk for companies concerned about intellectual property and data security. Due to this legal gap, they must sign additional legal agreements safeguarding their data. However, this can lead to extra costs and wasted time and resources.

On top of that, in 2024, Vietnam is struggling with cybersecurity. Vietnam has the 12th-largest number of internet users worldwide, but due to frequent cyberattacks, the country’s cybersecurity susceptibility has grown, raising questions about its stability, security, and national sovereignty.

Cultural Differences

Cultural clashes can make a big deal. If you want to establish flourishing relationships, navigating the intricacies of Vietnamese business culture is crucial. Here are some aspects you should be aware of:

• Vietnamese people are very respectful of superiors and honor hierarchy. Decisions are often not made by the collective but by the most senior member, who is usually the oldest.
• Unlike Western companies, the Vietnamese have a great reverence for titles and positions.
• Vietnamese have a different perception of time. Being 15-30 minutes late for a meeting is normal for them. However, for overseas businesses that are implementing remote team management strategies and planning time clearly due to time zone differences, this can be a severe problem.
• Multiple generations of a family usually work within one company. However, some people claim that nepotism is quite common for them. Therefore, they value family ties over professional backgrounds.
• Small talk is essential for Vietnamese. So, before starting negotiations, it’s customary for them to foster a personal connection. It differs from other companies that prefer to cut to the chase from the beginning of a conversation.
• Decision-making is based on a consensus. However, it can be time-consuming to reach them. Consequently, it may result in missed deadlines and broken communication.
• Vietnamese software developers may adjust their work schedules to prioritize relationship building. If your project has fixed deadlines, the professionals in Vietnam may be unable to meet them.

Qubit Labs’ Insights:

Once, a European client addressed us with a request to find highly skilled software developers in Ukraine. The company had a negative experience of cooperation with developers from Vietnam. They discovered that many resumes of specialists turned out to be untrue. The resumes contained information that did not correspond to the candidate’s extensive knowledge and experience. As a result, the company lost time and money searching for suitable candidates in Vietnam. After that, they contacted Qubit Labs with precise requirements for candidates. We found two developers within three weeks.  These experts are still successfully working with the client.

Time Zone Differences

Due to Vietnam’s location in the Indochina Time Zone (GMT+7), you may need to modify your communication schedule to cooperate with your outsourcing partners.

Outsourcing to Vietnam vs Eastern Europe vs Latin America

Although Vietnam has many talented professionals and cutting-edge software development outsourcing companies, we recommend choosing Eastern Europe or Latin America for software development outsourcing. Specialists in these regions have excellent technical knowledge and skills, can boast unique knowledge in specific industries, offer great results at a competitive rate, and will be a great cultural fit for US and Western European clients. Our company previously conducted a study highlighting the main pros and cons of outsourcing to Eastern Europe and Latin America. We offer you a comparison table of three regions in the outsourcing industry: Vietnam, Eastern Europe, and Latin America.

Key Takeaways:

• The undeniable advantage of outsourcing software development to Vietnam over other regions is the affordable rates. However, the cost of offshore software development services should not be the primary criterion for selecting a contractor.
• Vietnam has a limited pool of specialists compared to Eastern Europe and Latin America.
• Developers from Vietnam have a limited technical stack, while developers from Eastern Europe, such as Ukraine, have massive expertise in popular and specialized technologies.
• Unlike Eastern European companies, Vietnam does not have a well-developed culture of remote team management. Consequently, this can negatively affect communication, task completion, workflow efficiency, deliverables, and deadlines.
• The lack of data protection laws in Vietnam puts the security of cooperation with local companies in question.
• Business culture peculiarities, such as unpunctuality, ineffective communication, long decision-making processes, and missed deadlines, can be critical factors in refusing to cooperate with a Vietnam software outsourcing company.

Bottom Line

Vietnam can become a global technology powerhouse, but essential issues must be addressed. Lack of intellectual property protection laws, cybersecurity issues, limited stack of technologies used, and linguistic and cultural differences may be factors that will influence the decision not to consider outsourcing software development to Vietnam. However, you can explore some excellent alternatives. For example, Eastern Europe and Latin America offer superior expertise, affordable rates, seamless communication, excellent cultural fit, and practical remote team management skills. 

Qubit Labs has hired more than 450 professionals for 37 global clients worldwide. We hire in Ukraine, Poland, Romania, Bulgaria, Moldova, Georgia, Portugal, Azerbaijan, Brazil and Mexico. Our cooperation process is straightforward, transparent, and efficient. If you need a dedicated software development team, we will find a perfect match for you in 4-6 weeks. Book a free consultation call to discuss any questions you may have.