Without a doubt, the COVID-19 pandemic has globally shaken the business, which damaged billions of dollars as startups desperately tried to get through the storm while maintaining their services and products for their clients.
As a result, many startups have to sacrifice by shutting down parts of operations and laying off staff members. These actions might sound logical at first, however, once they are executed, those companies will become more vulnerable due to losing their existing customers for failing to deliver the promised results.
So the bottom line is finding the appropriate strategy to let tech startups save costs while still maintaining peak performance. In other words, cutting down on more expensive redundant headcounts and having a more economically viable offshore team to help support your operations.
According to a recent study, the average annual savings of offshore software project costs vs onshoring is about US$56,000 per project. This is a significant reduction, and very valuable for startups.
Vietnam: Quick economy recovery with booming IT talent
Vietnam is among the 30 countries that have the lowest death rate caused by COVID-19, due to the government’s early and effective implementation of anti-disease measures.
As a result, Vietnam is among the first nations in ASEAN to reopen, allowing businesses to resume. This means the country is already starting to recover ahead of others, especially for offshoring which already gets people back to work. In the landscape where everyone has to cut down their operation due to distancing practices while still trying to meet the customer’s demand, having the capability to keep going without being disrupted is valuable.
Additionally, the country’s GDP growth record is brimming with an average six percent rate, which is the fastest compared to other famous offshoring destinations in ASEAN such as Indonesia, Thailand, Malaysia, and more. As a result, the Vietnamese market for software outsourcing also holds much more potential in the near future.
On the other hand, Vietnam is also well known for its breeding ground of technical talent where young engineers, software developers, and entrepreneurs arise.
🔎 Eddie Thai, general partner at 500 Startups Vietnam, expected Vietnam to be ranked in the top three countries with the highest number of engineers by 2024. As a result, Vietnam provides lots of leeways for offshore tech startups to find and hire the right talent.
From the standpoint of recruitment, having a wide talent pool will save time (and therefore costs) for scaling operations. Recruitment efforts allow businesses to access more candidates and have a higher chance of getting suitable talents for the roles they are hiring for, in a shorter period of time, hence, decreasing the overall time/cost significantly. With better recruitment efficiency, tech startups can better focus on other core business activities.
Vietnamese workforce is affordable and reliable
Shortage of skilled talent is one of the common reasons for sky-high onshore labor costs. In fact, firms often offshore to Southeast Asian countries to take advantage of their human resources. Still, compared to other competing players, Vietnam is standing in the spotlight due to its lower salaries but a dependable workforce.
The Vietnamese government understands how important foreign investments are to its economic growth more than anyone.
Thus, the country has put a lot of work into keeping its currency competitive to allow a fast-growing economy led by exchange rate-sensitive exports. As a result, Vietnamese labor costs are approximately 10 percent to 50 percent lower than its neighbors such as Indonesia and Singapore, and approximately five percent cheaper than the Philippines when it comes to fresh developers.
As shown in the table above, the low labor costs in Vietnam indicate that it is the better custom software development destination for tech companies and startups to save costs. Even when compared with its neighboring countries, Vietnam still presents a noticeable difference in the cost range.
Moreover, Singapore has always been one of Vietnam’s largest foreign investors, with US$49 billion worth of projects in 2018. There has always been a positive relationship between the two countries, where investors are encouraged to venture into various sectors such as startups, software development, Industry 4.0, manufacturing, and offshoring.
Therefore, building an offshore IT team and accessing the labor market in Vietnam is much easier for Singapore companies and startups.
By observing a 30 percent yearly increase in IT growth in Vietnam at a relatively lower turnover rate and higher stability compared to Thailand or Malaysia, offshoring software development to Vietnam seems like a given.
Ekoios Technology is currently among the most accomplished IT outsourcing, mobile app and web development companies in the industry, they are former co-founders and experts of leading IT corporates in Viet Nam. With our deep experience in many tech fields (especially in Blockchain and AI) and a team of highly skilled software developers on board, we possess the expertise needed to turn your idea into reality and provide you with 24/7 support during the process, ensuring the highest quality at a very affordable cost.
Please contact us for more information.