Why Vietnam is an attractive IT offshoring destination

Harvey Nash’s chief digital officer discusses the benefits and drawbacks of outsourcing IT work in Vietnam.

Vietnam’s technical talent, retention rates and modern tech infrastructure has attracted the likes of IBM, Microsoft and Intel to set up operations there. While it will never be able to offer the scale of IT services hubs in India and China, Vietnam is increasingly an attractive alternative for IT organizations that are frustrated with high turnover and rising costs in the usual offshore locations.

[ Related: Is Vietnam a viable offshore outsourcing alternative? ]

CIO.com talked to Chief Digital Officer and Senior Vice President Anna Frazzetto at Harvey Nash, a 10-year veteran of outsourcing to Vietnam. She explains the growing appeal of the country to Western buyers of IT services, its loyal labor force, the specific challenges of sourcing IT work in Vietnam, and her advice for overcoming them.

vietnam outsourcing overby

[ Related: 6 hot offshore IT outsourcing markets offer new options ]

CIO.com: Vietnam has been a lesser player on the global IT services scene for some time. What driven increased interest in the region in recent years?

[ Related: Vietnam outsourcing guide ]

Chief Digital Officer and Senior Vice President Anna Frazzetto: The turning point came when they joined the World Trade Organization (WTO). Vietnam’s involvement in this organization has been a key driver in its growing role.

There has always been a level of nervousness about working with a socialist country and exactly how western companies would work in that environment. But, in reality, we have encountered no issues. The Vietnamese have a very strong desire to work with other parts of the world because they value the positive flow of money and funding coming into their country.

CIO.com: You’ve been involved in outsourcing to Vietnam for more than a decade. What’s changed during that time?

Frazzetto: Harvey Nash has been in Vietnam for 16 years, and much has changed. When I first joined the company 11 years ago and first mentioned Vietnam, the response was, ‘Really? outsourcing in Vietnam? How can that work?’ But now, outsourcing in Vietnam is fairly common. That’s a significant change. I think the evolution of the country itself, its involvement in the WTO, and its willingness to work with the western world all play a role.

Another factor is the flexibility provided by the government in allowing companies like Harvey Nash to come into the country and work directly with their universities to craft programs and tailor the kind of staff we need. Now, countries like Thailand and Cambodia are now also seeking outsourcing opportunities and are coming up with creative ways to attract companies to their countries.

CIO.com: Last year, Gartner ranked Vietnam a top five location alongside India, China, the Philippines and Malaysia. How does Vietnam compare to those four hot spots?

Frazzetto: China and especially India have obviously been the mecca of outsourcing for the last two decades. These two countries have been-there-done-that and have gone through all the offshoring challenges. Today, the biggest challenge they have is retention of staff because it is culturally and socially acceptable to migrate to other countries to enhance your career.

But that is not necessarily the case for Vietnam. In Vietnam, you provide not only for your immediate family, but also your extended family. It is typical in the Vietnamese culture for folks to want to stay in their country, be involved in IT on a local basis, and provide for their families. This is a significant difference and an important advantage for the Vietnamese outsourcing environment.

Then there is the level of technical talent. Malaysia has technical competency, but does not seem to possess the same scalability as Vietnam. I often hear of organizations struggling to build out teams fast enough in Malaysia because of the quantity of staff needed to do an assignment. I believe that technical competency in Vietnam is superior to the Philippines. However, in the Philippines the English is better. This is why the Philippines are so proficient in call centers.

Vietnam does an outstanding job in education and has a high regard for math and science. Both Hanoi University and the University of Ho Chi Minh offer excellent talent. They even have something similar to the Olympics for mathematicians, and we are proud to have a few medalists who work for us.

CIO.com: What types of companies are sourcing IT or technology work in Vietnam?

Frazzetto: We recently heard that Apple is talking about opening a R&D facility in Vietnam. Microsoft and IBM are there as well. All the big players are setting up their own facilities. If the companies that are the gold standard in technical competency are setting up house in Vietnam, that says a lot about the technical talent Vietnam is offering.

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Stephanie Overby

CIO (US)
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