IT outsourcing in Vietnam is an excellent choice for companies seeking scalable teams with advanced technology skills while staying within budget. Generally, Vietnam’s hourly rates are 15% to 30% lower than those of Indian developers, and they are approximately 70% to 90% lower than U.S. developer rates. Vietnamese tech professionals are proficient in complex technologies like AI and blockchain.

However, a potential downside is Vietnam’s relatively lower English proficiency compared to India, which may sometimes lead to communication challenges. Nonetheless, assigning bilingual managers easily alleviates this setback.

Strategic Recap: Why Outsource IT Services to Vietnam?

Vietnam has rapidly gained traction as a viable alternative to traditional outsourcing giants like India and the Philippines. Here’s why:

  i. Benefits

  1. Competitive pricing: Vietnam offers cost savings of up to 50% compared to Western markets.
  2. Skilled tech workforce: Over 400 universities offer IT related programs, producing thousands of engineers annually.
  3. Favorable government policies: Government incentives and investments in tech parks and innovation hubs.
  4. Strategic time zone positioning: Overlaps with both US West Coast and European working hours.

ii. Challenges

  1. Language barriers: Though improving, English proficiency can vary.
  2. IP and data protection: Legal frameworks are evolving but require careful navigation.
  3. Vendor quality variation: A wide quality spectrum exists, making due diligence essential.

Vietnam’s Tech Ecosystem

Vietnam’s IT industry began gaining traction in the early 2000s, supported by government-led digital transformation efforts. Since then, initiatives like the 2020 National Digital Transformation Program and the “Make in Vietnam” strategy have accelerated progress. These focus on AI development, digital public services, and green technology. As a result, the country is steadily building a tech-driven economy.

Moreover, with a Political Stability Index of 45.02 and a Human Capital Index of 0.7, Vietnam offers a reliable environment for long-term investment. Its strong emphasis on technical education continues to produce a steady pipeline of STEM graduates, further strengthening its position in the global IT outsourcing market.

Vietnam’s economy at a glance

GDP_IT outsourcing in VietnamGross Domestic Product
Annual GDPUSD 430 Billion (2023)
GDP Per CapitaUSD 4,282 (2023)
Income CategoryLower-middle Income (2025)
People
Population 101.5 Million (2025)
Literacy Rate96% (2022)
EF English Proficiency IndexLow Proficiency (2024)
IT Sector_IT outsourcing in VietnamIT Sector
IT Services Market SizeUSD 2.2 Billion (2025)
IT Outsourcing Market SizeUSD 793 Million (2025)
Registered Software Companies74,000+ (2025)
Business environment_IT outsourcing in VietnamBusiness Environment
Ease of Doing BusinessScore: 70/100 | Rank: 70 (2020)
Political Stability IndicatorPercentile Rank: 45 (2023)
Corruption Perceptions IndexScore: 41/100 | Rank: 83/180 (2023)


Additionally, its digital infrastructure is advancing with expanding broadband fiber optic coverage, electronic payment systems, and nationwide gigabit access goals. The digital economy surged to US$14 billion in 2019, with a projected 29% annual growth rate to US$52 billion by 2025, per Google. Furthermore, Vietnam’s startup ecosystem health, ranked 55th globally, underscores its growing influence.

Lastly, major tech hubs in Ho Chi Minh City, Hanoi, and Da Nang host multinational R&D centers, tech enterprises, and vibrant startup communities. These are the innovation hubs behind cloud computing, data analytics, and AI-powered app development in Vietnam.

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IT Boom and Market Trends

Vietnam’s IT software outsourcing market has experienced significant growth:

  1. Software development, fintech, and cloud solutions are leading segments, driven by domestic demand and partnerships with North America, Japan, and South Korea.
  2. IT exports generated over $4 billion in revenue in 2022, per Viet Nam News, supported by a 60% annual increase in IT professionals.
  3. Annual growth in IT outsourcing ranges between 10% and 15%, with a market size of $17 billion.
  4. Global partnerships bolster software quality assurance and credibility in fields like artificial intelligence and DevOps services.

Outsourcing Models in Vietnam

IT outsourcing in Vietnam offers flexible outsourcing models tailored to diverse technical requirements, enabling alignment with business objectives and project management needs:

Offshore/Nearshore/Onshore: Offshore development to Vietnam maximizes cost efficiency, while nearshore outsourcing suits European Union clients due to time zone compatibility. Onshore options are less common but available.

Dedicated development teams: Ideal for custom software and Minimum Viable Product (MVP) projects, these teams function as extensions of in-house staff for agile software development.

Staff augmentation: Integrates software engineers or team leads to address talent shortages or urgent cloud infrastructure needs.

Project based outsourcing: Suited for mobile app development or database systems with fixed scopes and timelines.

Hybrid models: Combine dedicated teams, project engineering, and managed services for adaptable software solutions.

Leading IT Outsourcing Companies in Vietnam

Key IT outsourcing firms in Vietnam include:

FPT Software: Based in Hanoi with 29,000+ employees, FPT serves clients like Airbus and Toshiba, excelling in AI development, cloud computing, and enterprise mobility.

TMA Solutions: In Ho Chi Minh City, with 3,300+ engineers, TMA focuses on telecom, fintech, and healthcare, serving North America and Australia.

KMS Technology: A US based firm with a Vietnam delivery center, specializing in software engineering, DevOps services, and quality assurance for healthcare and fintech.

Saigon Technology: With 400+ developers in Ho Chi Minh City, it offers custom software development, mobile app development, and staff augmentation for Western Europe and North America.

NashTech: A Harvey Nash Group division, NashTech provides IT consulting, legacy system modernization, and business process services from Vietnam.

Why Global Companies Choose Vietnam for IT Outsourcing

Vietnam’s IT outsourcing ecosystem attracts global companies with its unique blend of cost efficiency, technical expertise, and operational advantages, making it one of the best countries to outsource software development:

  i. Cost efficiency without compromising quality: Up to 50% cost savings compared to Western Europe and North America, driven by a low cost of living and competitive software development rates, ensures high ROI while maintaining quality standards.

  ii. Skilled and innovative talent pool: Over 400 universities produce thousands of software engineers and IT professionals annually, with expertise in high-demand fields like AI driven personalization, data engineering, cloud infrastructure, and DevOps services, supported by a strong tech education system.

  iii. Time zone alignment: Indochina Time (ICT, UTC+7) facilitates real time collaboration with Eastern Europe, Western Europe, and parts of North America, enabling agile workflows and nearshore collaboration via tools like Google Meet for customer support and project management.

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 iv. Cultural compatibility and service orientation: A Hofstede Cultural Compatibility Index (e.g., Power Distance: 70, Long-Term Orientation: 47) reflects adaptability and alignment with Western business practices, enhanced by growing English proficiency and communication skills.

  v. Scalability and flexibility: Flexible engagement models support seamless team scaling for custom software, mobile app development, and Minimum Viable Product (MVP) projects, catering to startups and enterprises alike.

  vi. Favorable government policies: The National Digital Transformation Program and “Make in Vietnam” initiatives promote R&D centers, tech innovation, and public-private tech programs, fostering a tech-driven economy.

Example Case:

Savvycom partnered with a healthcare institution to develop a centralized scheduling platform, enhancing user experience and reducing manual errors. This showcases Vietnam’s ability to deliver high-impact software solutions in regulated industries like healthcare.

Key Challenges to Address

Navigating Vietnam’s emerging market requires awareness of potential hurdles:

English proficiency: Vietnam’s low EF English Proficiency Index may necessitate bilingual project managers to ensure effective communication skills and seamless project management.

Intellectual Property and data privacy: While data protection laws are improving, they lack full GDPR alignment, requiring partnerships with vendors adhering to robust legal frameworks and the Copyright Act.

Vendor quality variation: The range of quality assurance standards underscores the need for thorough due diligence when selecting outsourcing firms.

Risk Mitigation Strategy

IT outsourcing in Vietnam’s emerging market presents operational, legal, and cultural risks that require proactive strategies to ensure project success:

Vendor Selection Checklist

Select vendors with:

  • Industry-specific expertise (e.g., healthcare, fintech);
  • Proven global delivery and international track records;
  • Agile processes and robust IP security protocols;
  • Scalability to handle growing project demands over time;
  • Adequate team size to ensure resource depth;
  • Positive client feedback and case studies demonstrating impact;
  • Multi-time-zone support for seamless distributed team coordination;
  • Transparent pricing models with clear cost breakdowns.

Final Thoughts

With a Political Stability Index of 45.02, an IT services market of $17 billion, and a digital infrastructure targeting gigabit access, Vietnam is a leader in the IT software outsourcing market. Its cost efficiency, technical education, and government support through programs like the National Digital Transformation Program make it ideal for software development, AI development, and cloud solutions.

IT outsourcing in Vietnam is great for startups seeking a Minimum Viable Product and even for enterprises pursuing digital transformation.  By addressing risks with legal experts and agile workflows, businesses can confidently tap into Vietnam’s thriving tech scene.

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TAGS IT Services Software Development