India and China are well-known 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 of the market. Businesses now have plenty of options based on specific criteria such as language, affordability, cultural similarity, government support, etc. In this article, let’s analyze the advantages as well as disadvantages of Vietnam vs. India in providing offshore software development services to the English-speaking market.
1. What are the pros and cons of outsourcing software to Vietnam?
1.1. Benefits of outsourcing software in 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 with 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 and specializing in technology. According to the Vietnam IT Market Report 2021 by TopDev and the white paper All you need to know about Low-code platform by Kyanon Digital, most developers started coding early with about 8.24% of them started coding before 20. At present, the number of young developers in Vietnam accounts for the majority of 20-29 year olds, or 54.76%. 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 Vietnamese developers range from $14 to $40. Using top software outsourcing services in Vietnam can save you up to 90% of the cost of operation when compared to the US, and the savings are still 50% when compared to India. Therefore, investing in the Vietnam software market is a wise financial strategy. You will not only save 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, the Vietnamese 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 keeping up with new technologies. Many IT companies co-operate with government and educational organizations to create more opportunities to help improve software developers’ technical skills.
Government support: Many foreign companies might fear the communist political system’s rigidity, but it is the stable and safe foundation of this fast-growing economy in which the Vietnamese government is working hard to make it more modern and business-friendly. Worldwide foreign investment 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 than 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 gain real-life experience.
Vietnam’s Stability During Covid-19: Vietnam has been one of the best countries in the world to handle the Covid-19 situation 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 soon, which significantly boosts work enthusiasm and communication. In addition, Vietnam has not had any political instability in over 30 years with the same party in power, which makes the country retain steady economic growth even throughout Covid-19. According to the Vietnam IT Market Report 2021 by TopDev, after 1 year of COVID-19, Vietnam is listed in the top 5 countries that had the best responses to COVID-19 as of March 2021.
Benefits of software outsourcing to Vietnam
1.2. Challenges when outsourcing software in Vietnam
Language: According to the English Proficiency Index from Education First (EF), the Vietnamese people’s English skill is neither low nor high. The main problem of Vietnamese people is pronunciation and being comfortable with communication. However, unlike many Asian languages, Vietnamese uses the Latin alphabet just as English does, which could make it a bit easier for the Vietnamese to improve their English.
Different time-zone: When a company located in the US or UK hires a software outsourcing company in Vietnam, they face a different time-zone challenge. However, it can be turned into an advantage- it can 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. It makes the work flow very smooth.
Drawbacks of software outsourcing to Vietnam
2. Outsourcing software development: Vietnam vs. India
2.1. Advantages of outsourcing software in India
Larger labor pool: India’s huge talent pool makes the country the largest 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 willing to join the workforce every year, it makes India dominate the software outsourcing industry.
Language: With almost 125 million English-speakers, India is the world’s second-largest English-speaking country, second only to the United States. India also ranks third in Asia on English proficiency according to the EF English Proficiency Index. Therefore, there seems to be 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. Dealing with a time zone difference is even easier in India than in Vietnam since the difference is even smaller.
Advantages of software outsourcing to India
2.2. Challenges when outsourcing software in India
Alongside the above advantages, India still faces a lot of challenges with software development services distribution.
Lack of Privacy and Security Laws: A big issue that many outsourcing projects face is 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 they will be kept secured.
Not so investor-friendly taxation: India is known for having a complicated taxation policy when 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 Cultural Differences: Working with a software outsourcing company in India can also be difficult due to cultural and regional differences. You will have to adjust to the social and cultural norms of the particular region and practices of your targeted partner.
Unreliable Infrastructure: Unfortunately, even in 2020 India still lacks proper infrastructure in a few of 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 consider when deciding on the best country to use for your outsourcing, and it comes down to 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.
Kyanon Digital is a Vietnam-based tech powerhouse providing world-class digital solutions with an agile approach. Our consultant teams are capable of providing global support and solving your technological issues with the best-suited advice in the sector.
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