Software development outsourcing has been growing from an effective solution to a trendy approach for any business that looks to scale its development process or cut costs without compromising on quality. The global software outsourcing market is projected to grow from USD 85.6 billion in 2018 to USD 102.9 billion by 2023, at a Compound Annual Growth Rate (CAGR) of 3.5% during the forecast period (2018–2023). The primary drivers for the growth of this market are the need for cost-effective software development solutions and the need for quality assurance and compliance with international standards. Due to the competitive benefits when outsourcing IT needs to third-party, a lot of organizations of different sizes and from various industries have been reaching out to popular IT outsourcing destinations to find reliable IT partners to work with.
The most common outsourcing destinations include India, Vietnam, China, the Philippines, and Ukraine. Among them, Vietnam and India are two of the most popular choices. While India has become the favorite destination for IT-specific services for a long time, Vietnam has just gained its position on the world map as the new IT hotspot in Asia in recent years. This article will give you an overview of some main differences between these two countries in terms of software outsourcing so that you can make an informed decision when choosing your next software development partner.
Rich pool of IT talent
The shortage of top developers is one of the primary reasons why IT businesses and even tech giants in developed countries take a distance to outsource their software development projects to offshore locations like Vietnam or India.
When it comes to India, there is no dearth of IT talent as the country possesses more than 4 million people working in the IT sector, and 120,000 IT professionals are added to its workforce each year. Also, the country is home to some of the world’s most prestigious engineering institutions like the Indian Institutes of Technology (IITs), which turn out high-quality engineers every year.
In Vietnam, there has been a consistent increase in the number of IT graduates over the past few years. The country now has more than 40 universities and colleges offering IT courses, with an annual output of around 15,000 IT graduates. Moreover, a large number of Vietnamese students are choosing to study abroad in countries like the US, UK, Australia, Canada, and South Korea, and they bring back valuable skills and experience that help contribute to the development of Vietnam’s IT industry. Now, the country is the home of estimated 430,000 software developers and around 1,030,000 individuals currently working in the ICT industry. Leveraging the abundant supply of manpower, many top IT outsourcing companies in Vietnam have been successfully partnering with global tech giants.
Competitive Labor Costs
The wage cost is one of the most important factors that businesses take into consideration when they make the decision to outsource software development projects to another country. Compared to India, the costs of Vietnam software outsourcing, as well as the rates of developers, are relatively lower, making the country a more appealing destination that tech companies cannot overlook when they seek IT outsourcing solutions. In India, the average salary of mid-level software developers is around $7,000 per year, while in Vietnam, the same position would cost an organization $3,500 per year on average. When it comes to senior developers, they cost $12,000 annually on average in India, while the same position would only set businesses back by around $6,000 per year in Vietnam.
The Language Advantages
Another major selling point that makes Vietnam a more attractive country for software development outsourcing is language proficiency. In Vietnam, English is widely taught in schools as a compulsory subject and spoken throughout the country. While a large number of Indian developers are also proficient in English, there are still many who struggle to communicate effectively in the language, which can be a hindrance to effective collaboration between the onshore and offshore teams. In Vietnam, however, almost all of the urban population is fluent in English, which helps reduce miscommunications and cultural barriers, and makes it easier for foreign businesses to work with Vietnamese IT service providers.
In recent years, both India and Vietnam have made significant improvements to their infrastructure, making it easier for businesses to set up their operations in these countries. When it comes to Vietnam, the country has a well-developed telecommunications infrastructure, with fixed-line and mobile penetration rates of around 60% and 150%, respectively. Moreover, the country also has a strong internet infrastructure, with broadband speeds that are among the fastest in Southeast Asia.
In India, the situation is not too different as the country also boasts a well-developed telecommunications infrastructure, with fixed-line and mobile penetration rates of around 17% and 80%, respectively. The country also has a strong internet infrastructure, although broadband speeds are not as fast as in Vietnam.
Favorable Government Policies
The Vietnamese government has been proactive in recent years in attracting foreign businesses to set up their operations in the country. A lot of policies have been introduced that are aimed at making it easier for businesses to do business in Vietnam. For instance, the government has slashed the corporate income tax from 30% to 20% for software companies and has also introduced a number of policies that are aimed at promoting the development of the country’s IT industry.
Same for India, the government of this country has been taking steps to promote its IT industry and attract investments from foreign businesses. Therefore, the country authority has introduced many policies that are aimed at providing incentives to businesses that set up their operations in India.
Now, these are a few factors that we should put on the scale to weigh when it comes to deciding between India and Vietnam for software development outsourcing. While both countries have their own strengths and weaknesses, it is clear that Vietnam has the edge over India in a number of aspects that make it a more promising destination for businesses looking to outsource their IT needs in the future.