India and China have been well-known as leaders in the software development outsourcing industry. 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, let’s see the advantages as well as disadvantages of Vietnam and India in providing offshore software development services to the English-speaking market.
What are the pros and cons of software outsourcing to Vietnam?
Labor force: 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.
Development cost: 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 India. 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
Strong investment in IT education: Vietnam is an ideal destination for those who are seeking technology advancement and software outsourcing companies. In order to meet the demand for tech engineers, Vietnam education is investing in building a firm foundation in the STEM field. Universities are investing in more academic courses and majors related to real-life requirements and catch up with new technologies. Many IT companies cooperate with government and educational organizations to create more opportunities to help improve software developers in their technical skills.
Government support: 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.
Vietnam’s Stability During Covid-19: Vietnam has been one of the best countries in the world to handle the Covid-19 situations so far thanks to the quick and effective actions taken by the government. As a result, most Vietnamese Tech Companies will be back to normal work soon, which significantly boosts work enthusiasm and communication. In addition, Vietnam has not had any instability politically for more than 30 years with the same party in power, which makes the country still retain steady economic growth even during Covid-19.
Benefits of software outsourcing to Vietnam
Language: The English Proficiency Index from Education First (EF), English skill of Vietnamese people is not too low but it is not too high. The main problem of Vietnamese people is pronunciation and being comfortable in communication. However, unlike many Asian languages, Vietnamese uses the Latin alphabet, just as English does, which could make it a bit easy for Vietnamese people to improve English.
Different time-zone: When a company located in the US or UK hires a software outsourcing company in Vietnam, they would face a different time-zone challenge. However, it could turn into an advantage- it could be very time efficient. For instance, you can have the tasks prepared in the afternoon before leaving the office and send them to the outsourcing team. While you are sleeping, developers are working on it and then they can send completed-tasks back to you the following morning. That will make the work flow so smooth.
Drawbacks of software outsourcing to Vietnam
India Destination in term of comparing to Vietnam
Larger Labor Pool: India’s huge talent pool makes the country the biggest outsourcing hub and has been a leader in custom software development. More than 95% of the developers are aged 18-35 years, and most of them have a Bachelor’s or a master’s degree. And with more than 200,000 software graduates that are willing to join the workforce every year, it makes India always dominate the software outsourcing industry.
Language: With almost 125 million English-speaking people, India is the world’s second-largest English-speaking country, only second to the United States. Also, India ranks third in Asia on English proficiency according to the EF English Proficiency Index. Therefore, there seems like no language barrier when working and communicating with Indian developers.
Time-zone advantage: When working with a company from the US, Europe or Australia, it is very easy for Indian companies to arrange meetings and calls during the sufficient overlap period of the countries. The difference is even lesser and dealing with a time zone difference is even easier in India than in Vietnam.
Advantages of software outsourcing to India
Alongside those above advantages, India still faces a lot of challenges with software development services distribution.
Lack of Privacy and Security Laws: There is a big issue that many outsourcing projects face with copyright and licensing when hiring Indian outsourcing companies. The risks of getting a copy are quite large and what is bad about this is that these projects could get sold again and again, and you do not have a guarantee that you will be kept secured.
Not so investor-friendly taxation: India is known for complicated taxation policy compared to Vietnam. Although the Indian economy plays an important role on the international arena, it is still labeled with a developing country tag.
Regional and Culture Differences: Working with a software outsourcing company in India can also be difficult due to culture and regional differences. You will have to adjust to the social and cultural norms according to the particular region and practices of your targeted partner.
Unreliable Infrastructure: Unfortunately, even in 2020 India still lacks proper infrastructure in a few largest cities within the country. This results in unstable electricity and internet connection, poor logistics, and land acquisitions among others.
Challenges of software outsourcing to India
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.
To be our partner, please do not hesitate to contact Kyanon Digital for more information.