Australia faces a severe skills shortage in software development, data science, and several other STEM-focused fields. A study conducted by local advocacy body, Startup Aus, found a “critical” skills gap in coding (including full stack developers, front end, back-end, and mobile), as well as user experience designers, data scientists, and project managers.
According to the report, nine of the 15 most-advertised positions in Australia were for developers, software engineers, and UX/UI roles.
The impact of this shortage on local companies is significant. Local developers demand greater salaries, and retention is more challenging as companies compete to attract in-demand skillsets.
The average salary of a software engineer in Australia is currently $91,853 excluding on-costs. Coupled with the dismantling of the 457 visa program by the Australian government in 2017, the ability of companies to plug the skills gap by bringing affordable talent into the country has been further inhibited.
As a result, Australian companies are looking overseas to outsource coding and development work. South-East Asia, in particular Vietnam, is a rapidly growing hub in which to find highly skilled and talented coders and other technical workers.
In the most recent Global Service Location Index (GSLI), by ATKearney, Vietnam ranked fifth, behind India, China, Malaysia and Indonesia, as an attractive place to outsource to. Furthermore, Vietnam has a young, vibrant culture, with 40 per cent of the population in the 15-24 age bracket. It is now seen as a major competitor to India’s outsourcing industry, offering a compatible culture with countries like Australia, and an education system producing a large pool talented coders and engineers.
There is still some confusion around the viability of Vietnam for outsourcing, but as Harvey Nash Chief Digital Technology Officer and President of Technology Solutions, Anna Frazzetto, noted in an article for Forbes, such perceptions are also rapidly changing. “In my experience, some western business leaders expect rigidness from Vietnamese outsourcing providers,” Frazzetto said. “[This view demonstrates] a lack of insight into the Vietnamese culture. What they find inside Vietnam, however, is a highly adaptive approach to work and tech.”
Finding the right partners in Vietnam
Despite all the potential payoffs, building teams in foreign markets can be fraught with risk. Not understanding the local hiring environment, economic conditions or business culture can lead to anything from finding the wrong people for the work, through to legal and regulatory issues. Vietnam is ranked the 69th easiest place to do business in the world, meaning that employing people properly in the country is complicated.
Too often companies from nations such as Australia attempt to recruit talent from afar, using a western understanding of HR and hiring practices. Sadly, these efforts can fall flat and end up creating inefficiencies, or even a net loss for the business.
“There is no point in leveraging talent from South East Asia if you give away 50 per cent of the arbitrage in lost productivity,” points out Chris Moriarty, CEO of Flat Planet, an Australian-owned firm that has expertise in running teams in Vietnam. “The best idea is to set up highly-sustainable, highly-productive teams that rival or even exceed the outputs any home-based team could achieve.”
Organisations like Flat Planet leverage on-the-ground expertise in building teams in South-East Asian markets, creating a safer, more certain pathway for western firms to access the deep pools of talent to be found there – whether it is for a team of just one single developer, or an entire IT business unit of 50 or more.
With 10-years’ experience creating teams in Philippines for Australian businesses, and in recognising the opportunities that Vietnam presents, Flat Planet has started working closely with IT talent in Vietnam to expand the base of talent available.
“The Vietnamese government invests a huge 5.8 per cent of total GDP in education (which outpaces Australia at 3.2 per cent) and the country has identified a huge opportunity for advancement for the Vietnamese people in developing a large base of IT talent,” Moriarty said. “They are actively encouraging western firms to come in and employ this talent, providing high quality jobs and opportunity.
“Understandably, they do want you to employ your staff legally and in line with Vietnamese standards and cultural values. And that is where a firm like Flat Planet can prove invaluable.”
Flat Planet recruits teams on a bespoke basis to suit each business’ requirements, and that team becomes part of the business, saving the business the issues involved in working with an outsourcing firm.
Other services provided by Flat Planet include ongoing support for the management of the outsourced team – properly managing a team in a South East Asian market again requires an understanding of the local culture and HR environment. Flat Planet’s guidance and support is based on a deep understanding of the local conditions and being the “middle man” to help overcome those potential cultural and work practices differences.
With a strong work ethic, low turnover rates, and a young, vibrant tech industry, a Vietnamese software team can become a key part of the success of an Australian-headquartered business.