While India has long been the major outsourcing destination in the world, companies also look to other Southeast Asian countries like Vietnam for their software outsourcing needs. Indeed, the software outsourcing market in the country is blossoming.
The IT industry in Vietnam has made great strides in the past few decades, according to Saigon Technology. In 2019, the revenue of the industry reached $120 billion, which is 400 times higher compared to the year 2000. The number of employees in the IT field is more than one million people, which accounts for 1.88 percent of the workforce. Compared to the year 2000, this figure has ballooned twenty times.
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Vietnam’s Software Outsourcing Market
Under the pressure of Covid-19, the digital transformation wave exploded, making the global software market grow by 6 percent in size in 2020 when the pandemic started, reaching $632 billion. It is forecasted that the market will reach $969 billion in 2024. Although the country has suffered from server market conditions that put a limit to technological expansion, a significant number of its growing IT industry was driven by outsourcing services.
English-speaking markets tend to outsource their software development requirements to Vietnam instead of India and China because it’s more cost-effective. The demand for software outsourcing services has increased, particularly since organizations have a hard time keeping their teams running smoothly. In recent years, Vietnam has embraced positive digital transformation.
With the growth of its IT industry, the country is considered an ideal IT outsourcing destination on a global scale. Every year, colleges and universities train more than 50,000 IT students. With a young population, Vietnam has climbed five places in the Global Services Location Index.
The Growing IT Industries in Vietnam
During the past decade, Vietnam has seen growth in its IT outsourcing market. According to a report by BetterCloud, a US-based software company, 73 percent of businesses outsource their software development requirements to Vietnam. Now, the country accounts for around 21 percent of the market, surpassing India. Vietnam has become a more affordable software outsourcing destination compared to other traditional markets.
Furthermore, the government is building high-tech parks. Also, it provides a lot of incentives to support the industry. Da Nang, in particular, has been a software development hub, especially for Japanese firms.
The AI industry in Vietnam has so much potential. Although it’s still in its infancy stage, artificial intelligence in the country has adopted international trends in its use in human resources, education, healthcare, eCommerce, human resources, agriculture, and so on. Moreover, the technology has alleviated traffic congestion, advanced e-government, and helped people with disabilities.
The government of Vietnam has recently passed a resolution encouraging FDI by raising the number of companies in the advanced tech industry to 50 percent by the year 2025. This could help in the further advancement of Artificial Intelligence in the country.
Based on research by the Vietnam eCommerce Association, the country’s eCommerce market could reach third in the field by the year 2025. Hanoi and Ho Chi Minh City are the two biggest eCommerce cities in the country. 70 percent of the total sales in the nation come from these urban areas. Furthermore, since more people live in rural areas with a good internet connection, there’s a greater chance to expand in these regions.
Many big organizations in Asia choose Vietnam to build their development team. Furthermore, big firms have relied on and continue to trust Vietnamese service providers for more than five years now to build eCommerce websites as well as eCommerce migration.
The financial holding company Robocash Group in Vietnam is expected to reach $18 billion by 2024. A growing middle class, a young population, and increased internet usage are ideal conditions for Vietnam’s fintech industry to prosper. Over 100 business organizations and brands offer different services, such as blockchain, digital payments, and wealth management among others.
In the country, the three most popular and rapidly expanding sub-sectors are peer-to-peer lending, digital payments, and cryptocurrencies and blockchain.
Consumers, parents, in particular, are responding in a positive way to the EdTech market in Vietnam and changing their educational perspectives. Educational technology in the country has received significant investments from international firms. Primarily, the investment is motivated by the ability of EdTech centers to bridge the gap between private-sector learning needs and traditional education environments.
Furthermore, the improved infrastructure has led to more trust since the foundation of the technology system is significantly better than others in the area. Both students and parents strongly need an independent and effective education as well as foreign language learning services. Moreover, since Vietnam is competitive and abundant in human resources, organizations should train their employees in a more effective and convenient way, which boosts the demand for Education Technology.
Old-fashioned business standards have become obsolete in the ever-evolving and interconnected world that we are in. Today, data should be processed and analyzed fast and accurately. Upgrading and migrating to cloud computing is converting outdated systems into cloud computing.
This helps business organizations lower their operating expenses, boost their growth potential, and look for new capital sources. Determining and taking advantage of opportunities, like cloud computing to stay on the competitive edge would be a major trend in the market in the years to come.
Vietnam is no doubt a key regional market for technology vendors and entrepreneurs all over the world. Furthermore, the Information Technology industry in the country is rapidly expanding because of skilled workers and affordable labor costs. The software outsourcing market in Vietnam is one of the best markets that meet the highest quality standard and cost-saving criteria.