Why Outsource to Vietnam?

This blog has been updated with more relevant research and information. 

Vietnam’s strong economy and rising technology boom are showing promise for the outsourcing industry in comparison to its western neighbor India. Industry insiders speculate Vietnam could even become the Silicon Valley of the Eastern hemisphere.

Many companies looking to outsource their business look to countries like India. While the industry may be larger and more established in those, Vietnam has several advantages to consider.

Strong Rising Economy

Vietnam’s economy is one the fastest growing markets in the world. The World Bank predicts the economy to grow at least 7 percent per year for the next 20 years.

Young and Top Talent

A recent article in Reuters magazine discussed how Vietnam is becoming the tech hub for top talent, citing it as the place to go when considering an offshore provider. “Vietnam has the highest-performing computer science students I’ve ever encountered,” said Neil Fraser, a software engineer at Google, who visited local schools. Vietnam also has an excellent university system that graduate top talent companies can pull from.


We like to say we’re a “big fish in a small pond.” But what does this mean, exactly? Since there are not hundreds of offshore firms in Vietnam like there are in India, the race for top talent is not as competitive as an Indian offshore business. As a result, attracting and retaining top talent is easier for companies based there. In India, competition between companies is strong, and employees frequently jump from company to company looking for the next highest salary or title.

Dedicated Team Culture

Because the market in Vietnam is just starting to show successful growth you will find smaller offices and tight-knit team environments in Vietnam. In India you may find an office with thousands of employees, making it harder for your on-shore team to establish a dedicated relationship with someone.

Retention Rates

Employers in Vietnam have a great reputation of paying well above the industry average and a strong reputation of building long standing employees that stay for around for years. As a result, you get people on your project that are there for the long haul. Less turnover equals more productivity and greater cost savings. We often hear from companies replacing vendors in India that the constant turnover meant they were always training and retraining, causing downtime on their project work and frustration from on-shore team members.

With a strong educated population, rising economy, and booming industry research continues to show that Vietnam is the place to offshore your business.

Transitioning to a New Offshore Provider

Last week we discussed the warning signs that are often seen when it’s time to walk away from a bad offshore vendor. Vetting and finding a new vendor is challenging, but making a smooth transition and setting your new relationship up for success is where the hard work begins.

First, you’ve got to end the relationship with your old provider. Be careful to not burn bridges. Just because you’re ending your contract doesn’t mean the relationship has to go sour. You may never know when you’ll need each other in the future, and you need their commitment to help transition their work back to your team. Acknowledge why you are moving on, but keep the conversation positive and constructive.

When you’re ready to transition, here’s how to minimize disruptions:

Allow Adequate Time

To guarantee a smooth transition, make sure you adequately estimate and plan for the time it takes to transition off an existing provider, to your team, to a new provider. Depending on your business, this can be anywhere from three to six months, and in some cases longer.

Manage Your Assets

In your termination agreement, make sure to outline how your project’s data and assets will be managed. What do they own that needs to be given back to you? What systems need to be transferred, backed up, or have privileges revoked?

Prepare Your Team

Be transparent with your team about why you are transitioning to a new provider. It’s important to get the team’s buy-in and understanding of how the new vendor will work with them. At this point, it’s helpful to appoint transition leaders to make sure all of your bases are covered.

Set Relationship Goals

Poor performance can be a thing of the past if you’re clear about your KPIs and timeline upfront. Be certain that your new relationship is set up for success by clearly communicating your definition of success and needs.

Breaking Up Is Hard To Do

Breakups are hard. Breakups in business are even more challenging because the stakes are greater. Often, we have a gut feeling that a relationship has soured, but can’t quite put our finger on why. With the first quarter of 2016 in the past, it’s time to ask yourself – is it time to replace my offshore provider?

Warning signs that it may be time to walk away from your current vendor:

Not Fulfilling Expectations

Have you set goals for your performance that haven’t been met yet? Are things way off track, with no hope for improvement? If you’ve outlined key performance indicators that aren’t being met, what reasons are you given? If there’s a lot of finger pointing and excuses, it may be time to move on.

Revolving Door

Does it seem like you are constantly having team members removed and added to your project? Frustrated with having to onboard and retrain new people all of the time? This usually means your vendor has a bad company attrition rate, and they’re struggling to retain top talent and manage their workload. You deserve better! Work with someone that makes you and their employees a top priority.

Bad Communication & Teamwork

At KMS, we like to work in constant sync with our clients. This means regular updates and check-ins, and being a true part of your team, like someone sitting in your own office. Are you going days without hearing from your vendor? Do you have to contact one project manager that passes your message down to the people actually working on your project?

Dated Technology & Processes

If you feel like you could be more agile, or that there’s an easier way to do things, you’re probably right. Our industry is constantly changing and that means finding a vendor that keeps their team trained on the latest technologies and methods at all times.

If you’ve decided it’s time to make the switch, check out our next post where we’ll share tips on making a clean break, and how to transition to a new offshore provider.