The Global Top Ten of Software Outsourcing Market

Nowadays, Vietnam becomes popularity on the global map of sourcing destinations, and gradually reach

Nowadays, Vietnam becomes popularity on the global map of sourcing destinations, and gradually reaches the top of manufacturing location in the world. In fact, Vietnam attracts foreign investment because of cheap labor. In the process of developing, that is very important for Vietnamese market when Vietnam became a member of the World Trade Organization (WTO) in 2007. That slow start has not prevented Vietnam from becoming one of the world’s fastest-growing economies. In the past decade, Vietnam’s economy has boomed, with an average 7.3 percent gross domestic product (GDP) growth per year. As production costs in other countries rise, more manufacturers are gradually moving production to Vietnam.

In 2011, Vietnam was ranked the eighth position in the global software development outsourcing, among the 50 countries which were most attractive for their software outsourcing, according to the US-based AT Kearney consulting group.

Based on the contours of the offshore landscape in 55 countries across three major categories: financial attractiveness, people skills and availability, and business environment, AT Kearney’s research showed that Vietnam remained in the global top ten for software outsourcing rising two places to 8th from 10th position in 2010 but a massive 11 places since 2007.

The ranking list was based on consideration of the following criteria in 50 countries: services and IT supporting, customer service and IT application support. The three major standards were financial attractiveness, human resources and business environment. Vietnam took the lead in the financial index.

2016 A.T. Kearney Global Services Location Index™ Top 20

Vietnam moves up one spot in the index as it creates a strong base of BPO service centers and moves into IT-related functions too - serving as a destination for companies from both Asia Pacific (especially Japan) and Europe. Costs have increased in line with economic growth, but Vietnam’s move up the value chain has been able to compensate for the loss in economic competitiveness.

To capitalize on the loyal low cost resource, most of European, USA and Australian clients are moving to Vietnam. India maybe the biggest but Vietnamese staff are loyal, staff retention is outstanding, and productivity is high.

According to Research and Markets in February 2016, the development of Vietnam's local IT industry, with software development and outsourcing services firms developing rapidly and positioned to benefit from large foreign enterprises seeking lower-cost locations over the medium-term. We forecast the IT market in Vietnam will expand at a compound annual growth rate (CAGR) of 11.7% forecast for 2015-2019, and the market is expected to reach a value of almost VND 103.8 Trillion in 2019.

The information provided herein has been obtained from reliable sources to provide a holistic survey on the market dynamics.

By Thuy Le