Vietnam is a great option for outsourcing software development, thanks to its fast-growing economy, large talent pool, amazingly affordable prices, and high-quality standards. The recruitment demand for IT staff in Vietnam has quadrupled in the last decade, and multiple multinationals like Intel, IBM, Nokia, and Microsoft have chosen Vietnam to outsource their software projects.
How can you benefit from the Vietnamese software market for your projects? What are the current trends and challenges in this sector? This guide will answer these questions and more. No more delays, let’s get straight to the point!
1. The rising software development market in Vietnam
1.1. Growing economy
GDP Growth (%)
Outsourcing software development to Vietnam allows you to tap into the country’s rapidly growing economy. Vietnam has one of the fastest-growing economies in the world, with an average GDP growth rate of 8.02% in 2022, the highest since 2018. This is reflected in the growth of its software development and ICT industry, which recorded $148 billion in revenue for 2022, up by 8.7% year-on-year
Furthermore, Vietnam’s government has made it a priority to develop the country’s IT industry and has created favorable policies and incentives for foreign investors. For example, Vietnam has reduced corporate income tax for IT companies from 25% to 10% and has offered tax exemptions for up to four years for new IT projects. But please note that these incentives are available for certain criteria like the location, size, and revenue of the enterprises.
Plus, the country has invested in improving its infrastructure and internet connectivity. It ranks 52nd in global mobile speed and 39th in fixed broadband speed, according to Ookla’s February 2023 Speedtest Global Index.
1.2. Higher recruitment demand
As the tech sector in Vietnam flourishes with more investment, companies have recruited 175,370 IT staff this year, a 36.2% increase from last year. The Vietnam IT Market Report 2022 also predicted that the demand for IT staff will surpass 229,000 in 2023 and 290,000 in 2024.
Moreover, the annual growth rate of demand for IT staff was impressive, with artificial intelligence developers leading the way at 27%, followed by mobile developers (19%) and embedded system developers (16%). These figures indicate that Vietnam is keeping up with the global development of new technologies and innovations.
1.3. Skilled workforce
Vietnam is home to a large group of talented software developers (about 480,000 software engineers & IT developers), as per the 2022 Vietnam IT Market Report. Many of them have received high-quality K12 and University education (with an average schooling period of 10.2 years, the second best in the Association of Southeast Asian Nations countries, as cited by the World Bank) and have engaged with global clients and enterprises.
Besides, the Vietnamese workforce has a solid culture of diligence and commitment, which shows in the work attitude of its software developers. You can benefit from outsourcing software development to Vietnam when accessing a competent workforce that is focused on producing high-quality software within the deadline and budget.
1.4. Salary offer
The salary offer for IT staff in Vietnam has also increased significantly over the years, reflecting the high value of their skills. The average monthly salary offered to IT staff in Vietnam has almost doubled from $784 in 2010 to $1,466 in 2019. For software developers, it has almost tripled from $549 to $1,527.
1.5. Welfare status
The welfare status of software development staff in Vietnam is satisfactory and diverse, as most employers provide various benefits and incentives to retain their talent. According to a survey of 2,000 IT employees, less than 10% are not satisfied with their current welfare status.
The most common benefits offered by employers are an annual 13th-month bonus (78%), a Lunar New Year holiday (Tet) bonus (33%), health insurance (31%), and a performance bonus (30%). Some employers also offer other benefits such as flexible working hours, training courses, travel allowances, and stock options.
The average employee stays with a company for 4.5 years. When they leave, the main reason is to pursue a higher salary (89%), followed by a better chance for promotion (67%) and better welfare (66%).
2. Implications and recommendations for your business
2.1. How much can you save by outsourcing software development to Vietnam?
We think you already know that one of the main reasons why many businesses choose to outsource software development to Vietnam is the significant cost savings they can achieve. By hiring software developers in Vietnam, they can reduce their labor costs by more than 30% compared to hiring in-house developers or software engineers in the local markets of developed countries like the USA or EU.
The cost of living in Vietnam is much lower than in developed nations, and the salary of Vietnam software developers reflects this. For a software developer with 3 years of experience, the monthly salary that they earn in Vietnam ranges from $697/per month (HTML/CSS) to $1,775/per month (cloud technologies like AWS engineer). This is significantly lower than the amount that software developers with 3 years of experience or more make annually in developed nations like the US. According to Indeed, software developers in the US, on average, can earn more than $116,000 per year.
That is, by outsourcing software development to Vietnam, you can save more than $8,000 per month per developer, or more than $96,000 per year per developer. This results in significant savings for your businesses, which you can use to invest in other areas of the company, such as marketing, research and development, or customer service.
2.2. How to communicate across time zones and working hours?
One of the challenges of outsourcing software development to Vietnam is the difference in time zones and working hours between you and your Vietnamese software developers. Depending on where you are located, there can be a gap of several hours or even a day between you two. This can affect your communication and collaboration, as well as your project management and delivery.
How to overcome this challenge? We suggest:
Planning and scheduling regular meetings and updates with your Vietnamese software developers.
Finding a time slot that works for both of you and stick to it.
Using effective communication tools and platforms like email, chat, video call, or project management software to keep in touch and share information.
Setting clear expectations and deadlines for each task and milestone.
Following up on the progress and status of the work.
2.3. How to overcome language barriers?
One of the potential issues that you may face when outsourcing software development to the country is the language barrier. Some software developers in Vietnam struggle with English fluency.
To address this issue, you need to:
Work with a software outsourcing partner that provides you with effective communication and language support, and that ensures its developers have strong English skills.
Rather than individual developers, hire a team of developers with diverse roles, skills, and communication abilities to ensure quality work.
Assign a dedicated project manager who can act as a bridge between you and the development team, and facilitate regular meetings and updates.
Use clear and simple language when communicating your requirements and expectations for the project.
Use effective communication tools and platforms to keep in touch and share information.
2.4. How to communicate your project expectations and requirements effectively?
We can’t stress enough the clarity and alignment of expectations and requirements for the software development project. You should be clear about what you want from your Vietnamese software developers, and what they can deliver. Also, provide detailed specifications and documentation for the project, such as the scope, features, functions, design, testing, quality standards, and security protocols. Plus, monitor the progress and quality of the work and provide feedback and guidance as needed.
Want to streamline this process? We recommend:
Explaining your vision and goals for the project and listening to their input and suggestions.
Reviewing their work regularly and providing constructive criticism and praise.
Being open to changes and revisions, as the software development process is dynamic and iterative.
Being flexible and adaptable to the changes and challenges that may arise during the process.
2.5. What to look for in a reliable and reputable partner in Vietnam?
Just find a trustworthy and professional partner who can provide you with the best solutions for your needs. Old advice that works is checking their credentials, portfolio, testimonials, and reviews and negotiating a fair and transparent contract. Besides, ensure that they comply with your security policies and protocols, and protect your data and intellectual property.
You’re recommended to:
Looking for a partner who has experience and expertise in your industry and technology domain.
Looking for a partner with a proven track record of delivering high-quality software on time and within budget.
Relying on a partner who possesses good communication skills, cultural awareness, and customer service.
Finding a partner who has a clear contract that outlines the scope, deliverables, payment terms, confidentiality clauses, dispute resolution mechanisms, etc.
Pro tip: Why go through all the hassle and risk when you can hire JT1, the accredited staffing company in Vietnam? We’ll help you find and connect with the best software developers in Vietnam.
JT1 has a network of over 100,000 software developers with experience and expertise in various technologies and domains. We also have a team of consultants, who can help you define your project requirements, select the most suitable candidates, and manage the communication and collaboration process.
By hiring JT1 as your software outsourcing partner in Vietnam, you enjoy:
Cost savings: Save up to 50% on labor costs by hiring software developers through JT1, who offer competitive and flexible pricing models.
Quality assurance: Access a pool of pre-screened and verified software developers who have passed rigorous technical tests and interviews.
Time efficiency: Find and hire professionals in software development within 3 - 5 days, thanks to JT1’s fast and easy recruitment process.
Customer satisfaction: Enjoy a high level of customer service and support from us since we provide 24/7 assistance and feedback.
3. Trends of software outsourcing in Vietnam in 2023
3.1. Agile software development
These software development approaches are becoming more popular and important as a key trend. The methodologies, such as Scrum, are based on iterative and incremental development, where requirements and solutions evolve through collaboration between self-organizing and cross-functional teams. They enable faster development times, more flexibility, and higher customer satisfaction.
Agile software development methodologies have become increasingly popular in Vietnam and are being adopted by software developers. According to a survey, 72% of software developers in Vietnam use Agile software development methodologies, and 52% of them use Scrum as their preferred framework. By outsourcing software development to Vietnam, you’ll benefit from the expertise and experience of Agile software developers who can deliver high-quality software that meets your changing needs and expectations.
3.2. Cloud technology
The use of cloud technology is on the rise as another significant trend. It allows for more scalable and flexible software development and can result in cost savings and improved performance.
Cloud technology has a rapidly growing market in Vietnam, and this is reflected in the rising adoption of cloud technology by many businesses. According to a report by Research and Markets, the cloud service market in Vietnam is expected to reach $291 million by 2024, with a compound annual growth rate (CAGR) of more than 10%. Outsourcing software development to Vietnam means you can access a pool of cloud-savvy software developers who help you leverage the benefits of cloud technology for your software projects.
3.3. AI & Machine learning
More and more software and IT companies in Vietnam are outsourcing projects that involve artificial intelligence (AI) and machine learning (ML). They help businesses improve their efficiency, productivity, innovation, and customer experience.
2023 sees the increasing skill level of software developers in AI and ML. Many universities offer AI courses and lots of Vietnamese entrepreneurs and engineers who worked in the US have come back to assist the National Innovation Center (NIC) with AI training programs, such as Thuc Vu of Viet AI, Hung Tran of Got It, or Kim of Co-host AI. Vietnam is also cooperating with Google to start a program that improves digital skills and distributes over 20,000 AI scholarships across the country. When outsourcing AI and ML projects to Vietnam, you can tap into the talent and creativity of software developers who can solve complex problems and create innovative solutions.
DevOps brings software development (Dev) and IT operations (Ops) into one set of practices that aims to reduce time and increase the quality of software development and delivery. With it, you improve your business collaboration, efficiency, reliability, and security.
DevOps has a growing adoption and popularity in Vietnam’s software development industry as well as Vietnam’s businesses in various industries. For 65% of organizations, DevOps, Business Process Collaboration (BPC), Big data, AI/ ML, and Microservices are the areas where they have defined objectives. Outsourcing software development to the country is equal to working with DevOps practitioners who manage to optimize your software development process and deliver better results.
As the leading IT Recruitment Agency in Asia, JT1 specializes in providing top-notch IT professionals for any business size (startups, SMEs, big firms). Furthermore, due to a thorough understanding of the global IT market, our recruitment experts can supply completely customized recruitment solutions to meet our client's unique needs in a fast hiring process at an affordable price.