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In the past few years, we have been witnessing the incredible disruption of software outsourcing in Vietnam on a global scale. In particular, the total revenue of the Vietnamese IT service industry hit 7.32 million U.S dollars in 2020, which was a million higher than the previous year. Additionally, it is projected to keep or even speed up its pace of development in the following years.
It looks like the world’s IT outsourcing demand is changing its direction from giants like China and India to other destinations with more competitive advantages, and Vietnam is one of the top-rated options. This partially explains the booming of Vietnam IT outsourcing companies across different regions of the country and the massive increase in software outsourcing services within Vietnam.
In this article, we will delve deep into the current status of the software outsourcing industry in Vietnam, as well as its potential to become one of the world’s leading destinations for outsourcing services. Before jumping into the main points, it is helpful to understand the basics of software development outsourcing.
What Are the Basics of Software Development Outsourcing?
Software development outsourcing is widely known under various terms, including software outsourcing, IT project outsourcing, IT outsourcing, and offshore software development.
At its core, it is the act of delegating to an external third-party software outsourcing company the responsibility for designing, coding, testing, and maintaining software products on behalf of a business. The decision to outsource software development is usually made by companies that have little or no in-house expertise or insufficient resources to complete a specific project internally.
Software outsourcing is no longer new. On the contrary, it has become extremely popular in today’s IT landscape, especially due to the aftereffects of the Covid-19 pandemic and globalization.
According to Statista, the global IT outsourcing market was valued at $1.2 trillion worldwide by 2022. Spending was predicted to exceed $1.3 trillion by the end of 2023, and growth is expected to continue steadily in the coming years.
Although the concept of outsourcing has existed for more than 40 years, its exact origin remains unclear. However, one thing is certain: software outsourcing brings undeniable benefits to businesses worldwide. That is why companies across industries are turning to custom software development services as a shortcut to sustainable growth.
Previously, India and China were considered the two dominant giants in the ITO industry. Today, their positions are being gradually complemented by emerging outsourcing destinations such as Thailand, Cambodia, and the Philippines. Among them, Vietnam stands out as the most promising.
The Rise of Vietnam as a Software Outsourcing Powerhouse in Asia
Vietnam is consistently listed among the top countries for outsourcing software development. The country has become a major IT outsourcing hotspot in the Asia-Pacific region and on the global IT map.
Vietnam has achieved impressive international rankings, including:
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#1 Global Outsourcing Destination (by C&W in 2015)
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#5 in the Global Services Location Index by A.T. Kearney in 2019
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#13 in the Top 50 Digital Nations by Tholons in 2019
Vietnam has become a preferred IT hub for multinational technology corporations such as:
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Intel
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Samsung
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Nokia
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Microsoft
These corporations leverage offshore software development services, custom software development, web and mobile application development, IT staff augmentation, quality assurance (QA), and digital transformation services in Vietnam to drive business growth.
Foreign Direct Investment in Vietnam’s IT Industry
Vietnam’s software development industry continues to attract strong foreign direct investment (FDI).
According to Vietnam Software Association (VINASA), more than 1,600 foreign enterprises are investing in the Vietnamese IT sector, with total registered capital exceeding $13 billion. The United States leads investment, followed by Japan, South Korea, Singapore, and China.
Additionally, a report by NTT indicates that 45% of global corporations planned to outsource more work during the pandemic. This created further opportunities for Vietnam as a rising IT outsourcing hub, even during one of the most challenging periods in global business history.
While many industries suffered severe setbacks during Covid-19, the global ITO industry — including Vietnam’s IT outsourcing sector — continued to grow. In fact, the pandemic accelerated digital transformation, opening more opportunities for software outsourcing in Vietnam.
Why Outsourcing Software Development to Vietnam Is a Good Choice
1. Competitive Production & Service Costs
One of the biggest advantages of software outsourcing in Vietnam is cost efficiency.
According to CIO Magazine, outsourcing costs in Vietnam can be:
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Up to 90% lower than in the United States
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Around 50% cheaper than China
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Approximately 30% lower than India
The cost advantage stems from lower living expenses, office rental costs, employee salaries, and operational expenses. This makes Vietnam a highly affordable and cost-efficient outsourcing destination.
2. A Vast, High-Quality IT Workforce
A Rich and Sustainable Talent Pool
Vietnam boasts an estimated 430,000 software developers and more than 1,030,000 individuals working in the ICT industry. Each year, around 50,000 IT graduates enter the workforce from approximately 149 colleges and universities nationwide.
Additionally, hundreds of IT training institutions contribute thousands of new developers annually, ensuring a sustainable and growing talent pipeline.
This makes hiring developers in Vietnam easier compared to many other outsourcing destinations.
Young, Dynamic, and Skilled Developers
Vietnamese software engineers are young, motivated, and fast learners. The average age of IT professionals is under 30, particularly in major tech hubs like Ho Chi Minh City.
They are well-versed in emerging technologies such as:
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Artificial Intelligence (AI)
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Big Data
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Blockchain
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Machine Learning
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Cloud Computing
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VR/AR
Vietnamese developers possess strong expertise across multiple tech stacks:
Backend: C, Java, .NET, PHP, Python, NodeJS, Ruby on Rails, Golang
Frontend: Angular, ReactJS, HTML, CSS, JavaScript, WordPress, Magento
Full-stack & Database technologies
This diversity allows them to handle projects of various scales and complexities.
3. Culture, Communication & Business Environment
Vietnam is known for its friendly and hospitable culture. These traits contribute to a positive business environment and smooth collaboration with offshore teams.
English proficiency among Vietnamese IT professionals is steadily improving, facilitating effective communication with international clients.
Hiring developers in Vietnam provides not only technical capability but also cultural adaptability and teamwork spirit.
A Business-Friendly Government
The Vietnamese government actively supports the IT industry through:
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Tax incentives
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E-government initiatives
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Relaxed visa policies
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Policies encouraging foreign investment
A key initiative is the National Digital Transformation Program (2025–2030), which aims to position Vietnam among Southeast Asia’s leading digital economies.
Combined with political stability and steady economic growth, these factors make Vietnam a secure and attractive destination for IT outsourcing and business expansion.
Conclusion
Outsourcing software development to Vietnam offers businesses of all sizes significant advantages compared to onshore outsourcing or hiring offshore teams in other countries.
Vietnam combines:
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Competitive development costs
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A large, skilled, and youthful workforce
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Strong FDI inflows
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Government support
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Political and economic stability
With many top software development companies based in Vietnam, businesses have a wide range of outsourcing partners to choose from.
The key is selecting the right software outsourcing company that aligns with your project requirements. Carefully reviewing portfolios, references, and previous work will help ensure a well-informed and successful outsourcing decision.