The essential guide: Selecting the perfect software outsourcing partner in Vietnam

Vietnam’s IT outsourcing in 2024 is expected to reach US$0.69 billion as businesses of all sizes choose Vietnamese partners to create and manage the software needed to thrive in today’s digital world. 

We’ve witnessed firsthand the advantages of a productive and respectful outsourcing relationship. However, the outsourcing industry also has its share of failed partnerships, projects gone off track, and damaged reputations. 

To avoid these pitfalls, it’s crucial to choose the right software development partner that fits well with your organisation. 

5 reasons Vietnam is an ideal software outsourcing destination

Technical expertise

Software outsourcing companies in Vietnam are rapidly adopting and mastering various technologies used globally. Outsourcing firms in Vietnam employ engineers who are proficient in emerging technologies such as Blockchain, cloud computing, IoT, and Machine Learning, along with other commonly used software development tools. 

In Vietnam, some tech stacks are more prevalent than others. For instance, you’ll find it easier to hire .NET, JS, and Quality Assurance engineers compared to Ruby and Scala developers. This doesn’t mean there are no skilled developers available in those areas; it’s just that there’s less formal training, so hiring might take longer unless you’re working with an established vendor who already has those skills within their team.

Young and talented IT workforce

What’s more, Vietnam’s IT industry currently employs over 550,000 developers, most of whom are from Generation Z (born between 1997 and 2012) and Millennials (born between 1981 and 1996). Each year, more than 50,000 fresh graduates from over 100 IT institutions join this vibrant workforce, bringing with them highly skilled abilities to innovate on various projects. 

These younger generations seek a better work-life balance, a healthy lifestyle, and more information about companies, products, and services. They also want to play an active role in the business process, contributing value to their company and society as a whole. 

With this large talent pool and an increasing number of English-speaking IT professionals, Vietnam has emerged as an excellent destination for outsourcing software development.

Competitive pricing

When considering Vietnam for software outsourcing, the main thing most people think about is the price. They want to know: 

• How much will it cost? 
• Can I afford it for my project? 

According to CIO magazine, Vietnam has become a top choice for cost-effective IT outsourcing. You could save up to 90 per cent compared to providers in the United States, Australia, and other European countries. Prices in Vietnam are also 30-50 per cent lower than in India and China. With these significant cost advantages and a commitment to high-quality processes, many global companies are turning to Vietnam for top-notch IT services at competitive rates.

Socioeconomic stability

Vietnam is mostly made up of one ethnic group, and most people aren’t openly religious. This creates a stable socio-political environment that’s good for business and progress. Compared to some other countries in Asia and Southeast Asia, Vietnam tends to have fewer conflicts and unrest. 

Also Read: 6 common questions about establishing a fintech company in Vietnam

With a well-educated and ambitious population, plus support from outside, Vietnam has everything it needs to succeed. During the COVID-19 pandemic, Vietnam showed how disciplined and efficient it can be. The country quickly organised resources and reduced risks.

Favorable environment for investment

Vietnam is one of the fastest-growing economies in Southeast Asia. It’s becoming a top choice for foreign investment, with a stable economy focused on exporting goods. According to the World Bank, in 2019, the country received US$16.12 billion from foreign investments in businesses, projects, and infrastructure. The Vietnamese government even launched Resolution 55, aiming to attract US$50 billion in foreign investments by 2030. 

Businesses worldwide are realising that outsourcing development to Vietnam is a golden opportunity. Many multinational companies are moving their operations to Vietnam because it’s safe and wise to invest there. With its stable political and cultural environment, Vietnam is perfect for long-term investments. Plus, after going through a digital transformation, it now has a large pool of IT talent, making it an ideal place for offshore software development projects.  

Key considerations for choosing a software outsourcing company in Vietnam

Industry expertise and experience

Experience is invaluable, especially when it comes to technical knowledge in outsourcing. The success of a software development outsourcing company hinges on the skills of its team. 

That’s why it’s vital for companies to thoroughly assess a vendor’s technical know-how. Software firms should be ready to share portfolio work, client feedback, and even connect with previous clients if needed. It’s also wise to check how the outsourcing company hires and vets its team. Those with rigorous vetting processes usually have top-notch talent. 

Great software outsourcing companies are usually adept in various technologies. While some focus on specific ones, those with broader expertise can better adapt to clients’ needs. 

To gauge a provider’s technical prowess further, companies should ask about accreditations, case studies, and business continuity plans. Understanding how a vendor manages quality control, project management, and problem-solving helps hiring companies decide if they’re the right fit for the job. 

Scope of project

Many software projects run into trouble because the initial scope is vague, making it hard to communicate what the project requires. 

Before reaching out to a software outsourcing company in Vietnam, put together a detailed project scope. It’s helpful to get input from your colleagues and fill in any gaps. Once you have a fleshed-out scope, start discussions with potential software development partners. 

A good software partner will review your project scope and schedule a follow-up meeting to clarify any questions their team may have about the project details. The best partners often have plenty of questions to ensure they fully understand your needs. 

Also Read: Vietnam’s language learning, test preparation platform Prep raises US$7M in Series A

Together, you and your partner will refine the scope to determine costs and resource needs more accurately. Be cautious of companies that avoid defining the scope, as they may try to add hidden fees. 

The top software development partners will work closely with you to create a comprehensive project scope, leading to more accurate costs and higher client satisfaction. And, a reliable software partner will know how to ask the right questions and assist you in defining your project requirements. 

Data security

When you find a software outsourcing company in Vietnam, you often have to share user data and copyright info with other companies. That’s why having clear rules and standards for data security is crucial.

Trustworthy outsourcing services create security policies to keep your data safe. This policy ensures your data is completely secure during the outsourcing process. Every outsourcing company worries about data protection and security. 

Also, make sure the partner’s IT infrastructure is reliable. It’s essential to pick an outsourcing location that follows strict data security measures and matches your cybersecurity standards. That way, you can be sure your data is always safe and secure, no matter what. 

Pricing models

As a hiring company, you should thoroughly understand the pricing and contract terms of potential vendors before deciding. There are different pricing models in outsourcing that suit various projects and needs, with project-based and team-based options being the most common. 

Good outsourcing providers offer different pricing and contract terms to match their clients’ needs. Another important aspect to consider is how transparent the vendor is about their pricing. Beforehand, clients should know the total costs, how costs are divided, and what happens if the workload increases or project requirements change. Choosing a vendor who isn’t clear about these aspects could lead to unexpected or hidden costs. 

Companies should also aim for a good balance between price and quality. While outsourcing often aims to cut costs, going for the cheapest option might result in a low-quality end product and could end up costing more in the long run. 

Approach	Project-based	Team-based
Explanation	A clear understanding of the scope and cost	Hire an external development team on a permanent basis
Flexibility	Low	High
Client management	Minimum	Maximum
Budget	Fixed	Result-based
Best fit for	Small and medium projects	Large projects

Choosing the right software outsourcing company in Vietnam

Understand your project clearly

Before you start searching for a dependable software outsourcing company in Vietnam, it’s essential to have a clear understanding of your project: its goals, scope, and technical needs. 

If you’re not clear about what you want, it’ll be hard to narrow down potential agencies and effectively communicate your requirements. 

Here’s what to consider before you begin your search: 

• Define project goals: Figure out what results you want to achieve. What problems do you want to solve, and how will the project help your business?
• Make a goal-focused plan: Think about why you need this software, not just how or what it is. Focus on your business goals and how the new product will benefit your customers.
• Set budget and timeline: Financial and time limits will shape the project’s scope. Clearly communicating these to potential software companies will manage expectations, help you come up with a realistic budget and deadlines, and foster honest collaboration.
• List required technologies and skills: You don’t need to know every detail, but it’s useful to have a general idea of the technical needs. This will help you find companies with the right skills and experience to bring your idea to life. Unclear requirements can lead to misunderstandings, missed deadlines, and wasted money.
• Prioritise: Decide if you need a website, a mobile app, or both. Focus on the most crucial features; otherwise, you might end up overwhelmed.

Do research and make a shortlist

Narrow down your options to a short list of two to four firms that you want to learn more about. Consider how well they match the initial criteria you’ve set. If you’re serious about choosing the right partner, you’ll need enough time to evaluate each one thoroughly. 

Also Read: Saladin seeks to transform Southeast Asia’s insurance landscape

Don’t rank providers solely by their hourly rate. While it’s important, focusing only on cost can make it hard to understand the total expenses of your partnership. Remember, opting for the cheapest option often ends up costing more in the long run. Instead of just looking at the price, it’s better to consider the value for money the provider can offer over time. Many factors play into this calculation, which we’ll discuss in detail in the next section.

Check partner’s market reputation

We all want to collaborate with the best in the industry. As a business, you’re always on the lookout for the top custom software development company to partner with.  

Before signing any contracts, it’s crucial to know how scalable their solutions are and how flexible they are in handling tough business challenges. These are important questions to ask yourself. 

Take a moment to check the market reputation of the service provider. Look into their client base and project history. You can find client testimonials and reviews on their website or social media channels. For more insights, consider reaching out to one of their clients on social media to get their opinion. 

Websites like Clutch or GoodFirms provide detailed profiles, ratings, and reviews of outsourcing companies based on client feedback and industry expertise. 

After weighing the pros and cons, analyse which drawbacks you can overlook in order to leverage the strengths of the company that align with your business needs. 

Review partner’s portfolio and case study

Most software outsourcing companies in Vietnam display their portfolio and case studies on their website or social media. However, you can still ask them for a more detailed portfolio if needed. 

Ask for access to the outsourcing developers’ portfolios and case studies. These showcase their past projects and achievements. Reviewing these helps you evaluate their expertise, abilities, and track record in delivering similar projects or solutions.

Final thoughts

Software is essential for modern businesses, but not all companies can afford to build their own team. That’s where outsourcing comes in handy. Vietnam is a popular choice for outsourcing due to its resources, skilled workforce, and reasonable costs. However, to get the most out of outsourcing in Vietnam, you need a reliable partner, careful planning, and good management. 

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