It’s no surprise that
Vietnam is being talked about as an alternative, amid rising costs and
attrition rates in popular offshoring destinations like China and India. The
General Statistics Office of Vietnam reports growth of almost 6 percent in GDP
during 2014. Tech giants like Samsung, Microsoft, LG and Intel have invested in
large operations in Vietnam, and a growing number of technology startups have
secured investment. The entrepreneurial spirit on the streets of Ho Chi Minh
City is palpable.
Vietnam has a lot going
for it, and it’s a great outsourcing destination for some companies looking to
build teams up to a couple of hundred resources,
but it doesn’t have the scale for prime time right now for multi-national
corporations to set up large-scale development centers.
What’s
the attraction?
Vietnam first achieved a
“good” rating from Gartner back in 2010 when it was named one of the top 30
countries for offshore services. There has been steady improvement since then
with continued maturity of the existing industry, a wave of new graduates,
foreign investment and startups. A Gartner report from January this year named
Vietnam in the top tier of emerging market locations, alongside China and
India.
Speaking from our past
operations in India, we find modern IT skills in Vietnam equal to and in some
cases exceed what India offers. English skills in Vietnam are also excellent.
Schools teach English and it’s well-understood that proficiency in the language
allows progress in the IT industry. You can secure an articulate and
consultative workforce with good verbal and written English if you know where
to look.
The country is undergoing
a transformation. The rise of tech business and the increase in opportunities
is driving an entrepreneurial spirit that can be seen in the success of
developers like Dong Nguyen, the Vietnamese creator of the mobile sensation,
Flappy Birds. Designed, created, and distributed for free in a matter of days
from Ho Chi Minh City, within a year it had millions of players and was earning
$50,000 per day from in-game advertising. It has served as an inspiration for
others.
We also have to talk
about the culture of working in Vietnam where loyalty is highly prized. We’ve
been working in Vietnam for over 20 years, and the level of commitment, focus
and loyalty continues to be strong. The expectations on service level are
generally high in that part of the world and particularly so in Vietnam. Our attrition
rate sits at between 6 and 8 percent. For IT and outsourcing in India,
attrition rates regularly climb beyond 20 percent, and the trend is driving
wages higher.
Source : Josh Lieberman
Fostering loyalty like
this isn’t just down to external cultural factors. You need to create an
attractive internal company culture. We’ve done this by ensuring opportunities
for employee growth through training, maintaining an open door policy with
upper management, and encouraging a social atmosphere with clubs and weekend
parties. You have to go beyond paying lip service to these things and actually
show your employees that you care.
What’s
the catch?
But there is still a
definite skills gap. The Global Talent Index for 2015 suggested that Vietnam
has gone from being number 52 in the world in 2011 to number 53 this year. The
scale required for a really large operation simply isn’t here. We need another
five to ten years of graduates coming through before it will be realistic to,
for example, set up a 5,000-person center for IT outsourcing.
You also have to remember
that the technology industry didn’t take off until relatively recently in
Vietnam, so you won’t find support for maintenance and legacy platforms, like
mainframe or AS400.
There are complications
to negotiate when you set up a business in Vietnam. You can’t just parachute an
operation into the country. We have a local team that we have worked with for
years that had the experience to get up and running quickly. We were able to
build strong ties with local universities and the government. That enabled us
to optimize recruitment, understand tax implications and secure the appropriate
licensing.
If you can understand the
local hiring market and can afford to be selective and methodical, then the
talent is there, but Vietnam currently still lacks the volume needed to drive
the kind of growth we’ve seen in India.
A
bright future
It may still be early
days for Vietnam, but there’s a whole new generation of talent coming through
and a strong focus on computer science in the school system. That investment
will pay off as the technology sector matures and more companies see the appeal
of locating here. We expect great things within the next decade, and we intend
to be at the heart of it.
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