In February 2016, Gartner Inc. has published the report: “Evaluate Offshore/Nearshore Countries for Outsourcing, Shared service and Captives in Asia/ Pacific, 2016”, in which Vietnam is one of 6 primary locations of Global Delivery Country Destinations in the APAC Region. 5 other countries are China, India, Malaysia, Philippines and Sri Lanka.
That’s true that Hanoi and HCM City are the two most potential cities/destinations in Vietnam, you can know more about 2 these cities through this factual report.
Low labor cost
By a step by step development, nobody can deny that HCM and Hanoi, Vietnam are typical places which has the lower labor cost than many countries in the world. The pay to Vietnamese BPO (business processing outsourcing) workers is 75 percent lower than that in Beijing, Shanghai and Shenzhen on average, while the pay to ITO workers is 45 percent lower.
Strong labor force
A strong labor force is among the top reasons that Fortune 500 technology corporations brought their outsourcing operations to Vietnam, especially HCM and Hanoi. The country is in a period of “demographic bonus”, when the labor force participation rate (population aged 15 – 64) is over 50%. With a young, dynamic, and well educated workforce, Vietnam is becoming a new outsourcing powerhouse of the technology world.
Furthermore, with improved business environment and qualified labor force, all are the reasons that many companies decide to set up their distribution centers in HCM City and Hanoi, Vietnam, such as:
- Intel and IBM in HCM City, Vietnam.
- Teleperformance in Hanoi
- Siemens in both HCM and Hanoi
Especially, HCM City still can see its name in the list of the top 10 newly outsourcing emerging destinations (the nations from the 11th to the 20th in the top 100 are considered the most redoubtable rivals to the nations in the top 10). Tholons reserved a whole page in its report to analyze the capability of HCM City.
Otherwise, Hanoi, Vietnam is ranked fifth in the list of the world’s most optimistic countries on economic prosperity in 2017, according to a survey by WIN/Gallup, the world’s leading association in market research and polling.
In common with English, Vietnamese developers/staffs have abilities to communicate in French, Japanese.
With Japanese communication skills together with low cost and political stability being its key strong points, Vietnam has become Japan’s second largest IT partner.
Especially, French language skill proves to be a big advantage of HCM City, which was a former French colony for a long time, from 1850 to 1950. Therefore, HCM City may catch the eyes of many French information technology groups.
Meanwhile, thanks to a long period of French rule, Vietnam has an advantage in the French language, which can attract French firms such as ESI, Mega International, Sysun and Worketer, etc. Some firms have already visited HCM City and Hanoi to find business opportunities.
In short, the factors such as quality of workforce, cost, and infrastructure determine its attractiveness. Rather than that, the service provider should view the evolution of the city as a direct result of a country’s inherent capabilities as an outsourcing provider. For example, Ho Chi Minh City for IT Outsourcing (ITO) processes highlights the respective country’s strengths.
Based on the fact of all promised factors/advantages, Tholons forecasts that Vietnam will emerge as one of the major providers of IT services outsourcing in Southeast Asia, and could replace China and India. Let’s expect to see the better position of Vietnam Software Outsourcing in the nearest future!
Synthesized by Thuy Le