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Compelling Reasons for Considering Outsourcing to Vietnam

Nov 27, 2017

Companies are looking for ways to cut down their costs as the global marketplace gets more and more competitive. The most common ploy used by companies to control their cost-base is outsourcing their operations. For a long time, China and India have been dominating the business process outsourcing (BPO) activities due to the availability of low-cost labor, natural resources, and highly skilled technical workforce. However, companies are starting to face challenges in such locations due to rising labor costs, high attrition rate, and stringent regulations. In recent times, another destination has shot up as a lucrative alternative for companies looking to outsource their business operations. It may take you by surprise, but yes, Vietnam has been preferred sourcing destination for several companies now due to numerous reasons. A Gartner report in 2015 named Vietnam in the top tier of offshore services SE_Demo2locations, alongside China and India. The success story of Vietnam as a BPO destination has been marked by the $2 billion contribution to the country’s GDP in 2015. So why are companies looking to outsource their operations to Vietnam?

Availability of Technical Talent

The pool of technical talent available in Vietnam is growing at an outstanding rate. First of all, unlike India and China, the English language is not a problem for Vietnamese people as the majority of the schools are in English medium. Also, English is the most popular language in Vietnam after Vietnamese with focus on the proper accent. Such proficiency allows the workforce to excel in the IT industry, where the employees are exposed to foreign customers. However, the talent is not limited only to the knowledge of the language but also expands to technical expertise as well. For instance, the game Flappy Birds, which gathered millions of players within a year was created by a Vietnamese citizen. Additionally, Vietnam also has close to 40,000 IT students graduating each year, which provides ample supply of fresh talent. Over thousands of IT companies are already employing about 80,000 workers in the country. The major factor influencing these IT companies is the impressive literacy rate of 96%, with 80% of the graduates majoring in science.

Higher Retention Rates

The working culture in Vietnam vastly differs from other outsourcing hubs as loyalty is highly prized here. The level of commitment, loyalty, and focus seems to be strong amongst the employees due to attractive internal company culture. Vietnamese companies provide continuous employee development programs, maintains open door policy, and encourages an atmosphere with clubs and weekend parties. For instance, employee attrition rates in IT companies in Vietnam sits at a meager 6%-8% compared to rates exceeding 20% in India. Higher employee engagement, work-life balance, matching pay to performance, and superior benefit programs are among other reason for high retention rate in the country.

Modern Tech Infrastructure

Vietnam has already attracted top IT companies in the world like IBM, Intel, and Microsoft to set up their facilities in the country. The country has invested heavily in its 2020 IT Master Plan, which includes construction of tech parks such as Da Nang Hi-Tech Park, housing offices and factories for global IT companies. The government has passed multiple economic policies encouraging domestic and international entrepreneurs to start a business. In 2013, IBM selected the city of Da Nang to receive a IBM’s Smarter Cities Challenge Grant worth $50 million.

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