Vietnam is an Emerging Software Outsourcing Destination

| Updated on February 14, 2024

In the software development field these days, IT outsourcing is more and more becoming popular as a cost-effective, efficient, and expert solution to meet evolving demands. Furthermore, IT outsourcing companies like Saigon Technology provide advanced tech infrastructure and skilled personnel as well as cost-saving solutions. 

A lot of software outsourcing service providers are found in Vietnam, India, as well as other countries in Southeast Asia. The offshoring and outsourcing trend will continue to grow as business organizations can acquire high-quality services at lesser costs. Vietnam is rapidly emerging as a dynamic country for low-cost high-quality software solutions. 

Furthermore, it benefits from an extensive pool of talented professionals with lower labor costs than other service providers. Vietnam has been witnessing an incredible disruption of outsourcing software development on a global scale. The Information Technology service sector in the country hits $7.32 million in 2020, a million higher than the previous year. 

Asia’s Software Outsourcing Powerhouse

Among the top software development outsourcing countries, Vietnam today is Asia Pacific’s new IT outsourcing hotspot across the globe. It was also ranked number 13 in the Global Outsourcing Destination in 2015. It was in fifth place in the A.T. Kearney Global Services Location Index back in 2019 and fifth place in the Top 50 Digital Nation in the same year. 

Emerging from nowhere, Vietnam currently is the favorite IT hub for numerous multinational tech corporations. These include IBM, Intel, Nokia, Samsung Display, and Microsoft. These giant organizations are taking various forms of software outsourcing solutions from Vietnamese service providers, such as custom software development, offshore software development services, mobile app development, web app development, QA, staff augmentation, business process outsourcing, and other digital transformation services to help drive fast business growth and meet strategic business goals. 

The IT industry is receiving foreign direct investment from different countries. More than 1,600 foreign corporations have already invested in the country’s IT industry, with a $13 billion registered total capital. The leading investor is still the United States, followed by Asian countries such as Japan, South Korea, Singapore, and China. 

Based on a report by NTT, 45 percent of global firms outsourced more work in Vietnam during the pandemic. This makes the country a rising outsourcing hub and drives more opportunities for foreign investment from different countries all over the world. While the pandemic nearly closed down many businesses, it didn’t seem to have a severe impact on the IT industry worldwide, including in Vietnam. 

The pandemic has opened more opportunities for the unstoppable growth of the industry as people worldwide shifted to the work-from-home method. Furthermore, the restrictions only further fueled the demand for technology to meet the changing demand, such as more resources to contain the virus, and more mobile apps needed to cater to the needs of people to shop from home, study from home, and work from home. 

Immense Change

According to startups, with an educated and young population, strong government support, and high internet, and smartphone penetration, Vietnam makes for an attractive destination for tech investors and entrepreneurs. Furthermore, the dramatic digital transformation in the country lures a lot of foreign IT investments. 

There is indeed tremendous change in the digital landscape of Vietnam.  The country not only has a high internet penetration rate of 70 percent rate, but it also has over 61 million smartphone users, putting it among the top 10 countries with the biggest smartphone users in the world. Furthermore, it has more than 97 million people and a relatively young population, people who are open to new things. 

With the right training, the tech-savvy generation could transform the country into a leading IT provider to the global market. 

Government Support

To encourage entrepreneurship, the government of Vietnam has established several funds at provincial, state, and city levels to support tech startups. Additionally, it also collaborated with banks and countries to develop innovative programs and funding, technical training, loans, and business monitoring. This is why the startup ecosystem in the country showcases development that impresses various sectors. 

The lucrative tax incentives are a big lure to foreign companies and investors. Moreover, the government puts a priority on IT investments as well as incentives for investment. Tech firms could take advantage of corporate tax income or CIT incentives. These include 15 years of CIT at 10 percent, 4 years of exemption, and a 50 percent tax reduction for the next 9 years. These are all attractive propositions that are hard to resist by international corporations thinking of setting up operations in the country. 

Unlike a few Asian countries wherein foreign firms could only have a 50 percent maximum ownership, Vietnam offers international organizations 100 percent foreign ownership, which makes setting up shop in the country a very attractive proposition indeed. 

Outsourcing Outlook in Vietnam

At present, India is experiencing some outsourcing road bumps. Vietnam, however, continues to grow. As with other outsourcing hotspots in the Asia Pacific region like Thailand and Cambodia, the country has to maintain its diligence in cultivating tech talent. The sustained STEM education government investment as well as the expanding footprint of multinational firms fuel the workforce and the marketplace. 


Driven by the growing smartphone adoption, internet penetration, and young demographics, Vietnam offers big potential for startups, particularly those that focus on eCommerce, fintech, and enterprise solutions. These sectors have drawn a significant amount of funding in recent years. The country offers massive opportunities for businesses looking to expand into Southeast Asia. Already, there are many organizations and businesses that are taking advantage of the country’s labor force to build their brand. 

Adam Green

With more than 3 years of experience as a software and tech writer on Adam has been writing articles, blogs, and featured stories centered around the software and tech niche since he graduated from Virginia Tech University. He writes savvy articles, tutorials, and reviews that explain difficult concepts to readers of all levels. His expertise includes software development, cybersecurity, artificial intelligence, and emerging technologies. Through simple and engaging writing, Adam constantly delivers useful insights that enable readers to feel at ease in the ever-changing technological scene.

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