5 reasons for web businesses to offshore to Vietnam
Everybody knows that India and China are still the biggest players in the outsourcing industry. However, Vietnam is coming fast to become a new hot spot for web development offshoring (also other kinds of outsourcing). I strongly believe so, and in this post I’d like to share with you the top 5 reasons why web businesses, especially in Finland and Europe, should think about offshoring to Vietnam.
Talents
Talented IT employees are in short supply everywhere. Vietnam offers around 80 thousands IT graduates per year in 2007. With an increase of 12% each year, giving some self-study freelancers, there are roughly 100,000 new IT workers/ year now. Most of them live in big cities like Ha Noi and Ho Chi Minh city, or in smaller ones around these regions.
Just like in India or China, there is always high demand for quality knowledge workers. Anyway, things are getting better in Vietnam. Universities, colleges and institutes such as Aptech are churning out thousands of high quality developers each year. Nevertheless, some of the brightest minds can be found “underground”, deep inside self-learning geek communities *grin*.
Culture
Vietnamese culture emphasizes on education and credibility. Business partnerships in Vietnam are established base on the education level and commitment to keeping one’s promise of each side. Also there is a way of self-studying and perfectionism in every Vietnamese. That said, these traits are not promoted heavily due to another aspect of Vietnamese culture: “always keep a humble attitude”. So I can consider myself more boastful than a normal Vietnamese here, since I’m doing all this shameless promotion for Vietnam *big grin*.
Cost
Salary for a web developer in Helsinki region can go from 24000 up to 48000 Euros per year. While in Vietnam 3000 to 6000 Euros is enough an annual salary for someone with the same skill set and IQ. That said, an annual salary for 1 (ONE) developer in Helsinki can sustain a talented team of 8 (EIGHT) developers in Vietnam for a whole year! Roughly speaking, if we take other costs such as traveling, special bonuses and other operational costs into account; outsourcing to Vietnam is still a highly cost-efficient solution that would save you at least 75% of development cost.
While the payment scale in India and China is increasing, Vietnam still offers lower cost of IT salaries. At least, for the next 10 years IT salaries in Vietnam will remain 1.5 to 3 times lower than in India and China.
CC attribution creativesam@flickr
Communication
Even though English is not native language, it is the most popular and widely studied foreign language in Vietnam. Unlike Chinese, Vietnamese is written with alphabet character set, so learning English is easier for Vietnamese people. Hell, we even have “specialized classes for talented students in English/French” in public schools in Vietnam. No joke!
If you are familiar with blogging and think of blog as a better way of communication, then fyi Vietnamese are among the largest market for blogging services. The Yahoo360 community in Vietnam is so large that Yahoo even released a specialized version name Yahoo360 plus only for the Vietnam market. What does this mean? It mean that you can easily find enthusiastic bloggers for your online branding strategies in Vietnam, or technicality writing and community moderation stuffs.
Strategic market
Last but not least, Vietnam is a considerably big market of 86 millions people, with young, tech savvy and web oriented population. Offshoring to Vietnam can also facilitate your market expansion in the South East Asia region. And there are many good opportunities for any type of business, not just for web companies.
Even though I was born in Vietnam, it is not the reason why I’m writing this post. I want to share my point of view as an entrepreneur who’s living here in Finland, building up a web business in Finland, and planning to do so within Europe for at least the next 3 years. Any other perspective is all welcomed.
Well said. But what if there isn’t any trusted partner in Vietnam and the traveling costs are too much?
There are many ways to find trusted partners, either by searching online, contacting the Vietnamese embassy in your country or asking associations specialized in internationalization, such as Finpro in Finland.
For traveling cost, let’s say you have a 30,000 Euros project, which is enough to pay 3 developers working for maximum 6 months (provided that each accept 1500 Euros/month and the rest for equity). By outsourcing to Vietnam, the development cost is reduced to 4500-9000 Euros. Let’s say you spend 1,500 Euros at max for flight ticket to Vietnam and 2500 Euros for all the accommodation there in 2 weeks…the total cost you would spend haven’t exceed 50% of your budget. That is the calculation assuming minimal development cost in countries like Finland, and maximum cost for outsourcing in Finland to Vietnam .
Perfect ads, Trung.
Contact me when you get back to Vietnam. I will graduate around Spring 2010. I can see a high chance for us to cooperate in a joint-venture in Vietnam.
Hieu Le
Sure. I look forward to it. Will send msg on Facebook
Hi, cool post. I have been wondering about this topic,so thanks for writing.
Pretty shameless, indeed (sarcasm).
There are alot talents in Vietnam, but they’re all require professional training. I don’t really trust their IT University to do the job.
Kim, neither do I. Honestly, I know that Vietnamese universities suffer from one common sickness, the bureaucracy and lacked innovation.
However, there are, as I also mentioned in the post, non-governmental IT institutes such as Aptech. Vietnamese people are entrepreneurial and self-taught. If the university can not do the job, we will seek other ways to get the knowledge and experience. We may even value the certificate from Aptech more than that from other universities.
Of course, things can be improved. I believe there in the near future there will be more for-profit institutes such as Aptech appearing along the way. And in the further future, our government will find a way to cure the IT universities.
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