outsourcing software development vietnam china comparison

Living in the globalization era, there’s nothing constrained to a single nation only. It is totally possible that a business has people working on the same product or project in different workplaces worldwide, especially during lockdown due to Covid-19. Technology and software development companies can easily implement this since it is easy for all programmers to update the code and share their progress via the internet.

For that reason, software outsourcing companies have recently become popular globally. Software outsourcing not only helps large businesses to approach talent pools in many countries, but it also brings great opportunities for SMEs and startups to stay competitive. According to statistics, with many companies looking to leverage the benefits of software outsourcing, the industry will be expected to exceed $400 billion by the end of 2021.

India and China have been well-known as leaders in the field. However, the picture of the industry has changed. Several new players, including Vietnam, are becoming the rising stars in the market. Businesses now can have plenty of options based on their specific criteria such as language, affordability, cultural similarity, government support, etc… In this article, we will discuss the differences between China and Vietnam, which is showing to be a promising destination for technology generally and for software outsourcing services particularly.

Why software outsourcing?

Due to the high demand for digital transformation, software development is a top priority for business strategy that the majority of companies have adopted or intend to. Unfortunately, not so many businesses can afford an in-house software development team to facilitate a successful development process. This is where software outsourcing comes to play its role. It will be a doorway for businesses to stay updated on the trends by digitizing and optimizing their operational processes. Moreover, it can allow them to access the talent pool in order  to work with tech talents across the globe for both cost-savings and time saving as well as a multitude of other benefits.

Software Outsourcing VIETNAM vs CHINA Comparison

In this section, we consider together five main evaluation criteria: (1) Labor force, (2) Investment cost, (3) Language, (4) Government support, (5) Data security in order to see the advantages as well as disadvantages of  Vietnam and China in providing offshore software development services to the English-speaking market.

1. Labor force

Vietnam: The biggest benefit of software outsourcing to Vietnam is the country’s young population. Approximately 78% of the population is under 35, and about 45 percent is between 15 and 35. The number of senior developers over 5 years of experience accounts for about 30% while those with less than 3 years of experience represents 53.5%. This advantage in terms of age assures that about half of the population is ready to join the workforce. This young generation is well-educated, specializing in technology. According to the report, Vietnam has about 400.000 IT engineers and over 50.000 graduated IT students from over 153 IT institutions per year. This ensures a great pool of talented, dynamic, and skillful software engineers.

China: According to data from the Chinese government, they have a vast talent pool with more than 7 million data scientists, software developers, and AI trainers in China. So it could be easier to find a tech specialist in this country than in other outsourcing destinations. However, China’s working-age population is expected to decline rapidly in the coming years; as well as adding pressure on China’s working-age population will put this country facing an aging nation.

Outsourcing software development Vietnam & China Comparison 1

Developers in Vietnam and China

2. Development cost

Vietnam: Vietnam is ranked 5th in the “Best countries to outsource to in the World in 2020” list, according to MarketInsider, and is well-known as a cost-effective destination for offshore software development outsourcing services. Depending on the developer’s skillset and years of experience, hourly rates for Vietnam developers range from $14 to $40. Using top software outsourcing services in Vietnam can save 90% of the cost of operation compared to outsourcing in the US, the savings would be 50% compared to China. Therefore, investing in the Vietnam software market is a wise financial strategy. You will not only save your money but also have quality software programmers.

China: With average IT salaries in China at approximately $20 to $50 per hour, China offers affordable labor and also has low real estate and power costs compared to other outsourcing destinations. However, a shortage of qualified English-speaking tech professionals permits these workers to request a higher salary. Costs also tend to be higher in special economic zones, as these locations usually have a large number of professionals who can demand higher wages.

Outsourcing software development Vietnam & China Comparison 2

The average IT salaries per hour in Vietnam and China

3. Language

Vietnam: Unlike many Asian languages, Vietnamese uses the Latin alphabet, just as English does, which could make it a bit easy for Vietnamese people to learn English. English is one of the most popular languages in the country, and most of Vietnam’s college graduates have good proficiency in English. Therefore, most IT workers in Vietnam are able to communicate comfortably in English when working with foreigners.

China: According to estimates, only about 1% of China’s population speak English. A lack of English fluency can make it difficult for Western organizations to communicate with Chinese providers. Also, Chinese culture is so much different from the western culture. Apparently, these barriers might lead you to experience some difficulties working with Chinese developers.

Outsourcing software development Vietnam & China Comparison 3

The amount of developers speak English in Vietnam and China

4. Government support

Vietnam: Many foreign companies might fear the communist political system’s rigidity, but it is the stable and safe foundation for this fast-growing economy in which the Vietnamese government is working to make it more modern and business-friendly. Foreign investment worldwide is welcomed, making it simple for foreign organizations to set up their businesses in the country. At present, the government also plans to open more 20 schools teaching IT in Vietnam. From there, the government will partner with businesses to have more short-term training courses for young people to help them have more opportunities to approach real-life requirements and catch up with new technologies.

China: Over the past years, China’s software industry has had massive growth and become a key industry in the country’s economy. The Chinese government is trying to make software one of the strategic industries which will help the country become a world-class, innovation driven and high-tech society. In general, China’s political and economic landscape provides a bit of a mixed bag for organizations interested in outsourcing to this destination.

Outsourcing software development Vietnam & China Comparison 4

Government support for the IT industry in Vietnam and China

5. Data security

Vietnam: Personal data protection is a constitutional right in Vietnam. The right is often reflected in other pieces of legislation as well. The rules for the collection, storage, processing, use, disclosure, and publication of personal data are also set out in Vietnam’s Civil Code 2015 and in sectoral laws. These rules are drafted in broad language and are open to interpretation. That is, the application of these rules is not always clear. There is no repository for precedent.

China: China has historically had issues with Intellectual Property and data security. This is one of the big problems companies face when having software outsourcing this destination. While the government has made considerable strides towards strengthening IP rights, a client cannot be sure of the uniqueness and exclusivity of their product.

Outsourcing software development Vietnam & China Comparison 5

Data security in Vietnam and China

CONCLUSION

There are many different factors to decide on which is the best country and it is based on personal preference. However, taking advantage of the geography, the nature of the talent pool, and the cost-effective rate, you could find Vietnam as an emerging and trusted hotspot for offshore software development outsourcing. Even though there are still many challenges, Vietnam is striving day by day to become a leading country in the field of technology, notably in software outsourcing services.

And Kyanon Digital which is Vietnam-based tech powerhouse providing world-class digital solutions with an agile approach. Our consultant teams are capable of supporting globally and fulfil your technological missing piece with the best-suit advice in any sector.

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