[2023] Popular Offshore Development Country Ranking | Where Does Vietnam Rank?

Over the past few years, the COVID-19 pandemic has driven major business-model changes and rising demand for DX adoption. Amid this shift, not only IT companies but many non-IT companies now want to digitize to improve operations and grow their business. But launching an IT department is difficult and costly given the IT talent shortage — hence the growing trend of outsourcing overseas.

In this article, based on the Offshore Development White Paper (2022 edition), we've put together a ranking of popular offshore development countries. We hope you find it useful.

1. What Is Offshore Development?

Offshore development refers to outsourcing the development of software, web systems, or applications to an overseas company. Typically, the work is divided so that planning, design, and delivery are handled in-house, while development and implementation are outsourced to an overseas company.

2. Vietnam Ranks #1 in the Popular Offshore Development Country Ranking

Reference: Offshore Development White Paper 2022

2.1. Reason #1: Vietnam's Laser Focus on Technology

By 2050, Vietnam is projected to become one of the world's top 20 largest economies.

Partnering with a high-quality offshore provider that leverages Vietnam's technological excellence gives you direct access to a "growing population of entrepreneurs, engineers, and technology specialists," plus every opportunity that comes with better productivity and scalable skills.

As a result, you can build an excellent team of IT engineers, deliver better products, and build a better company.

2.2. Reason #2: Affordable, Reliable Workforce

One benefit of offshore development in Vietnam is access to an experienced technical workforce at an affordable price. Salaries are the biggest cost in offshore operations, and many tech startups choose Southeast Asia to take advantage of its low-cost labor market.

The Vietnamese government understands just how important foreign investment is to economic growth.

2.3. Reason #3: A Favorable Investment Environment

Thanks to new free trade agreements with the European Union and the United States, robust IT infrastructure, improved logistics, lower labor costs, and a young workforce, Vietnam has become a hotspot for foreign direct investment (FDI).

Over the past 10 years (2010–2019), Vietnam attracted a massive $143 billion from foreign investors. In addition, in 2020, it ranked 70th out of 190 countries in the Ease of Doing Business ranking.

According to Trading Economics, foreign investment inflows have remained strong: $2.68 billion was poured into the economy from January to February 2022 (up 7.2% year-on-year). Singapore remains the top source of FDI into Vietnam, followed by South Korea and China.

3. Philippines Ranks #2 in the Popular Offshore Development Country Ranking

3.1. Reason #1: The Philippines Trains Large Numbers of Software Engineers

While the U.S. produces an estimated 54,000 computer science graduates each year, the Philippines reported 73,000 new IT graduates in 2017. A few years ago, there were even concerns that the local market would become saturated with software developers. Cebu and Manila are home to an enormous pool of talent.

Still not convinced? How many applicants did your last developer job posting get? A position we posted last month received around 1,000 applications. We've built a reputation in the Philippines as a great employer and an exciting place to work, which lets us secure top talent.

3.2. Reason #2: 24/7, 365-Day Operations

Outsourcing companies in the Philippines understand that some businesses must run around the clock, so they staff operations 24 hours a day, keeping your station running at all times.

3.3. Reason #3: Flexibility　

This pandemic proved the flexibility of Filipino workers, who not only worked graveyard shifts to match daytime hours overseas but also adapted to hybrid work environments.

While many worked from home, others kept working in the office despite the risks — showing just how resilient Filipino workers are.

4. India Ranks #3 in the Popular Offshore Development Country Ranking

4.1. Reason #1: Workforce Skill Set

According to a report by University World News, India is one of the countries producing the most engineers in the world. In India, more than 1.5 million engineering students graduate from university every year.

In addition, India is home to top institutions for engineering, science, mathematics, and technology education, such as IITs, NITs, and IIITs.

Graduates and engineers hired at an offshore development center in India by a parent company can benefit from the skill sets that Indian talent brings.

Indian workers are dedicated and have no intention of doing anything unnecessary for the company.

4.2. Reason #2: Expense Reduction and Cost Benefits

One of the biggest reasons companies set up offshore development centers in India is cost savings.

Setting up a company in an urban area comes with costs such as the following.

• Rent
• Electricity bills
• Employees
• Customers

As a result, this process becomes costly and affects average profits.

4.3. Reason #3: Support From the Indian Government

The Indian government is committed to developing the IT sector. It is eager to create jobs domestically. The Indian government offers benefits to companies that set up offshore development centers in India.

India welcomes outsourcing from foreign companies, and setting up a center in India offers benefits such as the following.

• Tax incentives
• Special economic zones and investment incentives
• Exceptionally low-cost development locations
• 100% foreign ownership

5. How to Choose the Right Offshore Development Company

Outsourcing services overseas is easy, but finding the right offshoring partner can be difficult. Since companies rush to enter the market quickly, simply relying on offshoring success stories isn't enough.

Here are a few suggestions to help you find the best offshore provider for your company.

5.1. Choose Your Favorite Vacation Spot

Start by looking for an offshoring location that fits your needs.

Besides India and the Philippines, many other offshore countries, such as Vietnam and Malaysia, are steadily building their credibility and appeal.

5.2. Shortlist at Least 3 Organizations Specializing in Business Process Offshoring (BPO)

Don't rely solely on the first BPO company that comes to mind or the easiest one to find. Doing so will prevent you from getting the most out of outsourcing services.

We recommend including at least 3 BPO businesses on your shortlist. Then, evaluate them in terms of quality, price, and effectiveness.

5.3. Choose Quality and Cost

Just because an offshoring partner is cheaper doesn't mean you'll get the best service. Check testimonials from previous clients to see how their cost and service compare with the quality of their work.

You can also request a free trial of the service to determine whether it meets your needs.

6. Summary

Among offshore development rates by country, Vietnam is a developing market that offers favorable conditions for outside investors. Choosing a Vietnamese offshore software company to accompany your business is a great idea.

Offshore development is a valuable way to address the serious IT talent shortage in Japan, but smooth communication with an outsourcing partner from a different language and culture can be a hurdle.

If you're considering offshore development, we also recommend the following article.

Reference: Why Is Offshore Development in Vietnam So Popular? [2023 In-Depth]

If you'd like to learn more about offshore development, please contact Miichisoft.