Offshore outsourcing to Vietnam is becoming a more popular option for organizations looking to take advantage of time zone differences. Read away to know more about how this discrepancy can be used to improve a custom software development cycle.
Offshore outsourcing, or offshoring, refers to the practice where a business engages a third-party supplier from a different nation to handle operations.
Offshore outsourcing has traditionally been pursued to reduce spending. There are notable differences in the wages paid for equivalent skills between Europe, the U.S. or Australia and developing countries such as Vietnam, Malaysia, India, and the Philippines.
To illustrate, a software engineer in the U.S. who charges $45 per hour costs only $7 per hour in Vietnam. Likewise, the equivalent of a UX designer who costs $58 an hour in Australia costs only $4 an hour in India.
McKinsey Global Institute states that such wage differential can help businesses save at least 45 to 55 percent savings in the cost base. Moreover, by reengineering the process design, this savings could potentially be raised to 65 to 70 percent of the original costs.
At the same time, not all enterprises offshore purely to cut costs – IT outsourcing across time zones greatly helps with business growth in several other ways. Let’s examine a couple of them.
Benefits of Working Across Time Zones
Round-the-Clock Operations
In addition to cost savings, “follow-the-sun”, also known as round-the-clock, is another allure of offshoring. First pioneered by IBM, this approach can turn the challenge of different time zones in offshore outsourcing into business strengths.
The concept entails software development teams spread across different global locations collaborating on a shared project.
Essentially, each team passes on their work at the end of their workday to a team that is just starting their day on the opposite side of the world. This enables continuous 24/7 work progress, with task handovers happening between these global teams as each location’s shift comes to an end.
With proper coordination, the project duration could potentially be halved. Think of it like a factory running two shifts, producing two times the volume.
Access to a Wider Talent Pool
Offshoring provides access to a diverse array of skills and expertise that could be limited or fiscally prohibitive in local markets.
Moreover, recruiting from a global pool of technologists with varied skill sets, experiences, and cultural perspectives fosters diversity and creativity and translates to an overall stronger and more skilled team.
Smoother Entry into New Markets
Offshore outsourcing has emerged as a key strategy for companies seeking to expand their global footprint.
By partnering with offshore service providers in the target market, organizations can benefit from insights into local market dynamics, regulatory requirements, cultural nuances, and consumer preferences.
This localized knowledge could be invaluable for developing market entry strategies that are tailored to the specific needs of the new market.
Business continuity and disaster recovery
Diversifying IT operations across different geographic locations contributes significantly to business continuity as it grants companies access to alternative data centers, backup power systems, and other essential infrastructure in times of crises like natural disasters, cyber-attacks, political instability, and other unexpected events.
Offshoring in Vietnam: Leverage Time Zone Advantage to Speed Up the Development Cycle
Vietnam, nestled in the heart of Asia, not only boasts breathtaking landscapes and rich cultural heritage but also holds a strategic advantage when it comes to time zones.
The time zone in Vietnam, UTC+7, positions the country in a prime spot for businesses looking to optimize their operations on a global scale.
One key benefit of the Vietnamese time zone is its alignment with major Asian markets such as China, South Korea, and Singapore. This synchronicity simplifies business interactions, facilitates real-time communication, and streamlines decision-making processes among regional partners.
Compared to European time zones, Vietnam is 5 to 7 hours ahead, leading to an overlap that encourages real-time collaboration.
World time zones
Source: 24TimeZones.com
The strategic Vietnamese time zone also enables businesses in North America to implement a follow-the-sun model when offshoring in Vietnam, allowing for continuous work progress through coordinated shifts with global teams.
The U.S. day and night contrasts with those in Vietnam (for instance, AM in Vietnam will be PM in America and vice versa). With Vietnamese colleagues on the team, there is potential for round-the-clock productivity. At the end of the day, a team in the U.S. can hand off their work to team members in Vietnam, who can then continue the work while their American coworkers are resting.
Yet, it’s crucial to grasp that follow-the-sun development can reduce project duration (an organization might save months on the development cycle!) only if coordination is proper.
Startups in Silicon Valley were pleased with the rapid prototyping of new software products, where coding is carried out in India before being returned to the U.S. for feedback and refinement.
Meanwhile, as of April 2024, Vietnamese developers are even more affordable than their Indian counterparts, while international programming awards and inclusion in the top 10 countries with the best programmers in the world leave no doubts about their technical prowess.
Thus, engaging a seasoned software development firm in Vietnam is a smart move that allows you to capitalize on the advantages of round-the-clock development cycles while reducing budgets for wages, all without sacrificing software quality.
Some Other Reasons Which Make Offshore Outsourcing in Vietnam a Profitable Deal for Businesses
Fast-Growing Economy
Vietnam emerged as a beacon of economic strength in the global arena, drawing considerable international investment, particularly in cutting-edge sectors like Industry 4.0, AI, hydrogen, and semiconductor chips.
Despite global investment challenges, the nation drew in over US$36.6 billion in foreign investment in 2023, making a record disbursement of US$23.18 billion.
The Asian Development Bank Vietnam’s GDP will grow by 6% in 2024.
Vietnam: Growth rate of real gross domestic product (GDP) from 2019 to 2029
Source: Statista
Rapid Adoption of Emerging Technologies
Vietnam’s numerous sectors are progressively transitioning towards intelligence and automation, enhancing production efficiency and service quality through the adoption of advanced technologies and digital tools.
In March 2021, Vietnam issued its National Strategy on Research, Development, and Application of Artificial Intelligence until the Year 2030. This strategic roadmap delineates several pivotal objectives and directives aimed at advancing AI technology within the country.
In a 2023 report by Oxford Insights, the Vietnamese Government secured the 39th spot out of 193 countries for its artificial intelligence readiness.
Furthermore, Vietnam has surged ahead as one of the frontrunners in cryptocurrency adoption in recent years. Vietnam secured an impressive 3rd place in The 2023 Global Crypto Adoption Index Top 20.
Cost Savings
As we mentioned earlier, so far, Vietnam is the cheapest country when it comes to hiring IT talent.
According to Indeed, as of April 2024, the average salaries for a software engineer in leading offshore outsourcing countries are:
Vietnam — $589 per month
India — $612 per month
Philippines — $661 per month
Malaysia — $1,025 per month
China — $6,084 per month
English-Speaking Population
Generally, the presence of an English-speaking population is a crucial factor in selecting offshore service locations as the shared language facilitates meeting quality and performance criteria.
To date, Vietnam stands among the top 10 regions in Asia for its highest rankings in English proficiency.
Also, the nation is positioned at 58 out of 113 countries in the EF English Proficiency Index of 2023.
The National Foreign Languages 2020 Project is just one of the many Vietnam government initiatives designed to boost English proficiency in Vietnamese business and society.
Strong Investment in Technical Talent
With a government’s heavy emphasis on STEM education and an impressive number of IT engineers graduating annually from over 400 local world-renowned universities like Duy Tan, Ton Duc Thang, and Vietnam National University in Ho Chi Minh City, Vietnam’s tech industry is thriving and growing.
Support for Startups
Vietnam’s flourishing startup ecosystem, cultivated over a decade through supportive policies and initiatives, showcases a diverse array of successful tech companies like MoMo, VNG, Buy2sell, Tiki, Topica, Sky Mavis, Axie Infinity, Vinmec and many more.
Partner with Elinext — Leading Software Outsourcing Company Based in Ho Chi Minh City, Vietnam
Elinext is a full-cycle software outsourcing company with 700+ seasoned developers and 1,000+ custom software development projects under its belt.
With international offices spanning across the USA, Germany, France, Ireland, Singapore, and Hong Kong, along with multiple delivery centers around the world, including Vietnam, Poland, Georgia, Kazakhstan, and Uzbekistan, we ensure that you receive top-notch services from a location of your own choice.
By partnering with Elinext, you will also get an English-proficient Team Lead from Europe. Europe is a strategic location that bridges the gap between different time zones, offering a convenient overlap for real-time collaboration.
Based on our experience, we have found that the pairing of a Vietnamese development group with a Europe-based Team Lead sharing the same time zone with a client fosters effective communication between distributed teams with no overlapping hours (8+ hours difference).
A Europe-based Team Lead available both during the client’s and Vietnamese development team’s business hours ensures:
– a complete and timely gathering of the project requirements of all the stakeholders and
– guarantees the prompt resolution of project issues.
A workflow organized in this way:
1) Eliminates downtimes caused by potential delays in communication between teams
2) Saves you money on rewriting redundant code (written due to poor communication or miscommunication).
Whether you’re starting from scratch or looking to upgrade your existing technology to current-generation solutions, Elinext is here to help. Please get in touch for a free and confidential chat.
