Forecasting the landscape of software outsourcing development in Vietnam
Outsourcing software development has emerged as a pivotal trend in the global IT industry, positioning Vietnam as a rising star on the world’s technology map. This article provides a comprehensive overview of the state of outsourcing software development in Vietnam, while also forecasting future trends that could shape its trajectory.
1. Outsourcing software development is Vietnam’s new growth engine
Outsourcing software development, often referred to as software outsourcing, involves businesses hiring external partners to handle programming, design, and software creation instead of building an in-house team. This approach offers companies significant advantages, including reduced costs, time savings, and access to skilled talent from countries like Vietnam.
Vietnam has become an attractive hub for international firms due to its combination of cost-effective solutions and a highly capable workforce. Companies from the United States, Japan, and Europe are increasingly turning to Vietnam to optimize their resources. The appeal lies in the country’s competitive pricing and a growing pool of talented developers. By 2025, Vietnam’s IT sector boasts over 1 million programmers, laying a strong foundation for the expansion of offshore software development.
This market is not only growing in revenue but also in workforce scale. The rise of outsourcing software development in Vietnam signals a shift toward a tech-driven economy, making it a key player in the global outsourcing landscape.
2. Vietnam’s software outsourcing: potential and challenges
2.1. Vietnam’s potential
Vietnam is steadily emerging as a powerhouse in outsourcing software development attracting foreign investment, driven by several key strengths following:
Abundant, skilled workforce: With over 50,000 IT engineers graduating annually, Vietnam produces a steady stream of talented professionals proficient in multiple programming languages.
Competitive labor costs: Compared to India, China, or the Philippines, Vietnam offers lower rates about 20 - 30%, making cost-effective software outsourcing a reality for businesses worldwide.
Strong IT infrastructure and policies: Government investments in tech infrastructure and international partnerships enhance Vietnam’s appeal as an outsourcing hub. Tax incentives and high-tech zones like Saigon Silicon bolster the industry’s growth, offering advantages that many countries lack.
Improving English proficiency: Enhanced language skills facilitate smoother collaboration with Western markets, reducing miscommunication during project development.
Today, outsourcing software development accounts for a significant portion of Vietnam’s IT industry. Leading companies like BeetechSoft, FPT Software, TMA Solutions and Harvey Nash manage thousands of offshore projects annually, cementing Vietnam’s reputation as a reliable outsourcing destination. Japan, in particular, favors Vietnam due to cultural similarities and convenient time zones.
Revenue from software outsourcing has seen steady growth, reaching billions of USD each year. However, many Vietnamese firms still focus on low-cost services, missing out on higher-value opportunities. This poses a challenge for businesses aiming to elevate their brand and compete on a global scale.
2.2. Vietnam’s challenges
Despite its potential, Vietnam IT outsourcing faces significant obstacles to maintaining its competitive edge:
Regional competition: India dominates with its massive outsourcing industry, while the Philippines excels in English proficiency, pressuring Vietnam to differentiate itself.
Rising labor costs: Increasing programmer salaries are eroding the cost advantage, pushing companies to focus on quality over price.
Communication barriers: While Vietnamese teams excel in teamwork and deadlines, their reluctance to engage in direct communication can hinder collaboration with Western clients, necessitating improvements in responsiveness.
Addressing these challenges is essential for Vietnam to sustain its growth in outsourcing software development.
>>> Read more: Why should you choose a software development company in Vietnam?
3. Emerging trends in outsourcing software development in Vietnam
Outsourcing software development in Vietnam has evolved beyond simple coding tasks. Clients now expect comprehensive solutions, such as system design and strategic consulting, instead of just isolated services. For example, Vietnamese teams are increasingly handling end-to-end project management, not just delivering code. Meanwhile, the “nearshore” outsourcing trend is growing, with countries like Singapore and South Korea choosing Vietnam for its proximity and affordability. This creates new opportunities for offshore software development growth.
Emerging technologies like AI and blockchain are reshaping the industry. Modern offshore projects demand more than coding expertise; they require integrating cutting-edge solutions. To remain competitive, Vietnam must quickly upskill its workforce. Without adaptation, the country risks losing its edge to regional rivals like Indonesia or Thailand.
For example, FPT Software has partnered with major automotive brands to develop self-driving software, showcasing Vietnam’s potential to innovate rather than merely outsource. Smaller firms are also stepping into fintech and digital healthcare projects, signaling a shift toward high-value software development trends.
4. Predictions for outsourcing software in Vietnam by 2030
By 2030, outsourcing software development in Vietnam could surpass $10 billion in revenue, fueled by current growth rates and heavy investments in technology. Fields like AI, the Internet of Things (IoT), and 5G are expected to drive this expansion, positioning Vietnam as a leader in software development trends.
A noteworthy shift will be the rise of local companies moving beyond traditional outsourcing roles. Rather than just providing services, Vietnamese firms are likely to develop their own products and compete globally—a transformative step that’s often overlooked.
The remote work model will also revolutionize the industry. Vietnamese teams could collaborate with global clients without fixed offices, cutting costs and boosting flexibility. The United States and Japan will likely remain the largest markets for Vietnam’s software outsourcing services.
Conclusion
Vietnam's IT outsourcing industry has a skilled workforce, competitive costs, and technological advancements, which position it to make a significant impact on the global stage. However, it must overcome challenges related to quality, competition, and skill gaps to ensure sustained success. Thus, investments in emerging technologies, service quality, and international partnerships are key factors that will determine whether Vietnam can solidify its position in the global outsourcing software development arena. As the industry evolves, Vietnam grasps this chance to redefine itself as not just an outsourcing destination, but a hub of creativity and innovation.
