Why Is Offshore Development in Vietnam So Popular? [2023 Edition]

Forbes calls Vietnam a "small but mighty powerhouse" with "a highly adaptable approach to work and technology," and its solid track record as a new WTO member only confirms that.

This time, we'll introduce the reasons why Vietnam has become a top candidate for offshore development, from the perspectives of education, culture, and government.

1. What Is Offshore Development?

Offshore development means outsourcing software, web system, or app development to an overseas company. Typically, planning, design, and delivery stay in-house, while development and implementation go to the overseas partner.

2. Background Behind the Popularity of Offshore Development in Vietnam

According to a June 2016 "Survey on IT Human Resources" by Japan's Ministry of Economy, Trade and Industry (METI), Japan's IT workforce is projected to peak in 2019, with a shortage of around 580,000 people by 2030.

METI, "Survey Results on the Latest Trends and Future Projections of IT Human Resources"

Companies are trying to make up for the shortage by training cutting-edge IT engineers in-house.

Why is offshore development used to address the IT talent shortage?

Because of a shortage of domestic resources, many companies are turning to offshore development.

Vietnam has a large number of people working in IT-related jobs. This is because Vietnam is a country that has developed remarkably in the field of technology.

As the shortage of IT talent in Japan grows even more severe going forward, more companies are likely to use offshore development to bring in new IT talent from abroad.

For more details on offshore development, please see the article below.

>>>Offshore Development

At Miichisoft, we can provide an experienced team or individual staff members depending on your project. We can also propose from the idea stage, so please feel free to contact us.

3. Reasons Offshore Development Is Popular in Vietnam

3.1 Reason 1: Vietnam's Laser Focus on Technology

With technology a core pillar of Vietnam's economy (over 250 higher education institutions teach IT), more than 40,000 software professionals graduate every year.

This underpins an already well-established software industry that exported US$3.5 billion worth of software in 2018, growing up to 20% a year, alongside 7.1% overall GDP growth over the same period. In short, Vietnam isn't just a technology country — it's a technology epicenter.

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

It makes sense to take part in this progress now, while rewards are plentiful and cost-effectiveness remains extremely high.

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

In turn, you gain an excellent team of IT engineers, better products, and a better company.

3.2 Reason 2: An Affordable, Reliable Workforce

One benefit of offshore development in Vietnam is an experienced technical workforce at an affordable price. Since salaries are the largest offshore expense, many tech startups choose Southeast Asia for its lower-cost labor market.

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

Fortunately, labor costs in Vietnam are also about 15% to 50% lower than in neighboring countries such as Thailand, Malaysia, and Singapore.

Vietnam ranks among the top 10 countries for the number of engineering graduates, according to a 2015 World Economic Forum survey of 128 countries (Forbes).

3.3 Reason 3: A Favorable Investment Environment

Thanks to new free trade agreements with the EU and the US, robust IT infrastructure, improved logistics, cheaper labor, and a young workforce, Vietnam has become an FDI hotspot.

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

According to Trading Economics, foreign investment inflows remain strong, with US$2.68 billion entering the economy in January–February 2022 (up 7.2% year-on-year). Singapore remains the top FDI source, followed by South Korea and China.

The government also introduced Resolution 55, targeting US$50 billion in foreign investment by 2030 — amending rules that restrict foreign investment and codifying quality, efficiency, and environmental standards.

4. How to Choose the Best Offshoring Partner

Outsourcing overseas is easy, but finding the right partner can be hard. Since you'll enter the market right away, relying only on offshoring success stories isn't enough.

Here are a few suggestions for finding the best offshore provider for your company.

4.1 Choose Your Favorite Vacation Spot

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

Aside from India and the Philippines, many other offshore destinations, such as Vietnam and Malaysia, are steadily gaining legitimacy and appeal.

4.2 Choose at Least Three Organizations Specializing in Business Process Outsourcing (BPO)

Don't rely solely on the first, or easiest-to-find, BPO company. Doing so keeps you from getting the most out of outsourcing.

We recommend including at least three BPO businesses on your shortlist, then evaluating them in terms of quality, price, and effectiveness.

4.3 Choose Quality and Cost

A cheaper offshoring partner doesn't always mean better service. Check testimonials from past clients to see how cost and service compare to work quality.

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

5. For Offshore Development in Vietnam, Choose "Miichisoft"

If you're interested in offshore development in Vietnam, please consult "Miichisoft." Here, we'll briefly explain what sets Miichisoft's offshore development services apart.

5.1 An Extensive Track Record in System Development

Miichisoft's strength lies in its extensive track record developing systems for Japanese companies. To date, we've built systems such as:

• A risk management tool for hiring foreign workers
• A stress check program tool
• A matching service connecting manga artists with assistants

With more than 100 projects delivered, we can flexibly respond to our clients' requests.

5.2 Advanced Technology Recognized with the Sao Khue Award

Miichisoft has won the Sao Khue Award two years running as a system development company contributing to Vietnam's economic growth.

The Vietnam Software and IT Services Association recognizes us as a system development company with advanced technology. Among Vietnam's 50,000-plus system development companies, being recognized for contributing to economic development means you can trust us with your offshore development.

5.3 Solving Japan's System Development Challenges

Miichisoft was founded on the belief that we "want to help people through system development." Our founder is an engineer who studied and worked in Japan, and Miichisoft exists to solve Japan's system development challenges, such as rising labor costs and a shortage of talent.

We also have Japanese-speaking bridge engineers on staff, so you can request our services without communication concerns.

6. Summary

Vietnam is an ideal offshore destination — an ever-growing young IT workforce, low costs, and high ambitions for software development. It has everything needed to become a major market of choice in the years ahead.

If you want to expand your business and tap into Vietnam's top tech talent, we recommend finding a trustworthy staffing provider that specializes in Vietnam offshoring for detailed consulting.

In this article, Miichisoft — an offshore development company working with Japanese clients for more than five years — has explained offshore development in Vietnam as a reference for anyone considering it.

The name "Miichisoft" comes from two words meaning "the future's No. 1" and "software," reflecting our goal of becoming the No. 1 company delivering the best software solutions in Vietnam. We support you from new project ideas through implementation and maintenance.

If you have any questions about offshore development, please contact Miichisoft.

Email: sales@miichisoft.com