Vietnam - The Potential and Booming Hub of IT Outsourcing Market 2022

CMC Consulting

20/10/2021

374

In order to keep up to date with global technology innovation, Vietnam's IT industry has taken advantage of opportunities to gain a competitive advantage, stable top positions in their respective markets and have landed Vietnam in MarketInsider’s list of the 5 best countries to outsource to in the world in 2019.


IT outsourcing (ITO) is the utilization of service providers to supply IT-reliant business processes, application services, and infrastructure solutions. In a broader sense, outsourcing refers to contracting out portions of work that would normally be done internally to outside vendors or service providers. IT outsourcing providers can either take complete responsibility for all IT maintenance and support, which is known as a fully managed service, or they can provide additional assistance for an internal IT staff, which is known as co-sourced IT support and is typically used by larger enterprises. 

Why should companies outsource their IT related operations?

  1. Outsourcing is a prior method for cutting costs.
    Because businesses don't have to train or keep long term staff in the IT operations , there’s less capital required. IT companies also have the ability to offer access to equipment and services at very lower costs than businesses may incur to get it alone.
  2. Companies want to focus on their core business activities
    IT outsourcing allows the core team to focus on core duties. It is important for small to medium companies that don't have a wide array of IT resources. Instead of overloading workers with tasks which they are not well familiar with, it is better to leave those tasks to experts allowing an in-house team to concentrate on major business activities, especially during the rapid growth.
  3. It’s the chance to innovate business model
    Covid-19 pandemic has presented us with several unprecedented changes and challenges. Every individual and industry must adjust themselves to the disruption it has produced, and the impacts are expected to continue for years. This has made companies more open to new ideas and methods of working. This is also a fantastic opportunity to assess business strategies and implement things that previously seemed inefficient. Companies who seize these chances will undoubtedly gain competitive advantages and secure top positions in their respective markets.

 

IT outsourcing has become one of the most important services provided by international firms today.

According to Statista, the global market for IT Outsourcing in 2020 was estimated at $342.9 billion, the total value of IT services companies might exceed $413.72 billion by the end of 2021 and projected to reach $410.2 billion by 2027.

Total contract value of the ITO market worldwide from 2000-2019 (Source: Statista)

As a result, outsourcing providers' position in the high-tech industry has changed from simple manual work to top-level choices on a variety of crucial topics especially in full-cycle business management solutions.
IT outsourcing firms are no longer referred to as “agencies for developers hiring" as a result of this trust. Many vendors have evolved from IT Talent Connectors to completely strategic partners for entrepreneurs, striving for long-term partnerships, shared risks, and company alignment.

IT-consulting and implementation services market revenue in the World from 2016-2021 (Source: Statista)

 

IT Outsourcing Market is highly competitive owing to multiple vendors in the market providing IT services to the domestic and the international markets. ITO’s main players are: China, India, EU, Japan..

  • India and China have been the significant outsourcing destinations in the world because of their ample human resources which are well equipped with knowledge about IT, low labor cost, and widespread high-quality telecommunications infrastructure. These countries have been working in this direction for more than 25 years and have maintained their dominance among the top IT outsourcing destinations.
  • According to the survey below, Eastern European countries such as Ukraine, Poland, and others would become increasingly appealing as IT outsourcing destinations in the future. India and China, the two most important outsourcing countries, will continue to lead global outsourcing revenue, but Ukraine, Poland, Romania, and Belarus will be fierce competitors.

Number of ITO companies in Eastern Europe, by size (Source: N-ix.co)

 

Following in the footsteps of China, India, and Europe, Vietnam has an ambitious goal to transform the whole country to a key player in the global digital economy. Sponsored by the Ministry of Science and Technology, Vietnam intends to establish internationally competitive technology enterprises and turn one of the country's major cities—Hanoi, Ho Chi Minh City, or Da Nang—into an IT booming hub.

In order to keep up with global development, Vietnam's IT industry has faced dramatic transformations. The advantages of this country include a huge pool of IT talent and a low price of outsourcing when compared to other major outsourcing destinations such as Ukraine or India. 

Vietnam's competitiveness in the IT outsourcing business is being proven by the inflow of IT outsourcing projects from major worldwide clients such as Samsung, IBM, and Microsoft with advantages such as:

  • Lower labor cost: In general, outsourcing services in Vietnam are 20-30% less expensive than in Eastern Europe and Latin America. Only African tech hubs can match Vietnam's labor costs, but due to its less developed infrastructure, quality may decline.
  • Young and skilled workers:Vietnam is one of the top countries in the world with the most engineering graduates. According to TopDev, it has over 400,000 IT engineers and more than 50,000 new graduates each year from its 153 technical colleges. This large number of engineers can supply the workforce for the cheapest labour projects, and without reducing the quality.
  • Well-developed IT infrastructure: In order to promote Vietnam as a prominent destination in the high-tech sector, the Vietnamese government has provided financial support, land rental discounts, and other perks to local IT enterprises.
  • Diverse technical skill sets
  • Stability in politics
  • Easy communication
  • Honesty and transparency

 

Conclusion 

To summarize, IT outsourcing has evolved into one of the most important services offered by IT corporations today. In order to keep up to date with global technology innovation, Vietnam's IT industry has taken advantage of these opportunities to gain a competitive advantage and stable top positions in their respective markets.All of these advantages above have landed Vietnam in MarketInsider’s list of the 5 best countries to outsource to in the world in 2019.

Accompanying Vietnam during the digital era, CMC Consulting (Successor company of CMC Ciber), which was established in 2008, is honored to be the Gold Partner of SAP Vietnam, a leading reputable provider of consulting services and implementing business management solutions. With more than 150 leading ERP consultants and experience in successfully implementing ERP systems for many businesses in the domestic and international markets, successfully go-live numerous projects for enterprises from Europe, Asia to Vietnam.

CMC Consulting commits to delivering SAP's high-quality software solutions and services to clients, assisting businesses in optimizing production processes and lowering costs. and get the best return on investment via the use of current technologies and the inheritance of managerial expertise gained from successful businesses throughout the world, helping clients seize the best business opportunities; becoming the most credible partner always accompany and support enterprises throughout the operations.

Our goal of providing high-quality IT human resources to the international market is a significant and pioneering strategic move that promises to create value and provide the firm a significant competitive edge in the near future. We commit to customer success by quality services and optimal price competition. 

 

CMC Consulting makes Vietnam's Digital Transformation services available to the rest of the world.

CMC Consulting - Empowering Businesses During the Digital Transformation!

Contact us:

Hotline: 024 7106 5555- Ext: 8700

Email: contact.cmcconsulting@cmc.com.vn 

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