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Ultimate Guide to Start Software Development Outsourcing in Vietnam

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Outsourcing software development is now an important feature of almost every business. As more companies search for cost-effective production methods, hiring a third party to handle non-core functions is becoming a trending thing. Most countries across the world are improving standardization and increasing productivity by looking for the right software development partners in other parts.

Companies in the US and Europe face the challenge of the demand for workers with the right skill sets exceeds the supply. Such companies are now turning to outsource with the aim of meeting the needs of the software development industry. Time zone difference is another challenge. Vietnam is one of the areas that has gained recognition as one of the best software outsourcing destinations.

Here is the ultimate guide to help you start software development outsourcing in Vietnam.

Ultimate Guide to Start Software Development Outsourcing in Vietnam

What is Outsourcing Software Development?

Types of Outsourcing

Which Industries Apply Outsourcing Software Development?

Factors to Consider when Choosing the Best Software Outsourcing Company in Vietnam

Why Is Vietnam the Next Offshore Software Development Destination?

     Outsourcing Software Development with Saigon Technology

1. What is Outsourcing Software Development?

As more companies seek cost-effective production methods, software development outsourcing has become a crucial aspect for nearly every business. The trend of hiring a third party to handle non-core functions is gaining momentum. Most countries worldwide are enhancing standardization and increasing productivity by seeking the right software development partners in different regions.”

From 2010 to 2019, the global outsourcing industry has experienced lots of dramatic changes. Initially, IT outsourcing involved transferring staff, assessing the financial impact of selling assets, and novating contracts. However, these complications have been compounded by the evolution of offshore centers, on-demand IT offerings, and the arrival of the cloud-based offering.

The rapid advancement of information and communication technology and globalization has made it easier for companies to outsource some of the functions to low-cost locations across the globe. This can be done by contracting the functions to a third party (offshore software outsourcing) or setting up a subsidiary overseas to oversee the function, which is known as offshoring.

2. Types of Outsourcing

When it comes to software project management, there are different outsourcing models. The following are the two common outsourcing models in software development:

  • Project-based model
  • Dedicated teams model

3. Project-based model

This outsourcing model involves delegating the completion of the whole project to a third party. Usually, you explain the full requirements of the project to the members of the outsourcing company, including the project managers, business analysts. These members will now have the responsibility of forming the development team and supervising the project to its completion.


  • Takes off a large bulk of work from the company
  • Requires the outsourcing company to form the development team
  • Outsourcing company carry out project management
  • Outsourcing company implements quality control


  • It gives you limited control of the project and the developers
  • It can be more costly, especially with extra services
  • Requires full specification of the entire project at the start, which may be challenging
  • Misunderstandings could lead to huge mistakes that could delay project completion

Dedicated Team Model

The dedicated team model allows you to hire remote developers that work for you full time in the provider’s office but report to you directly. With this model, the dedicated team can form the entire development team or form part of the team that collaborates with in-house developers.


  • It gives you full control of the project
  • It provides more flexibility with project costs
  • Unlike project-based model, this model does not require you to give full specifications at the beginning
  • Allows you to detect and correct mistakes immediately they appear


  • It requires constant communication and collaboration with the remote dedicated developers
  • Language barrier and time zone differences may pose challenges

3. Which Industries Apply Outsourcing Software Development?

  • Machine Learning and Artificial Intelligence

Machine Learning and Artificial Intelligence have become an integral part of almost every aspect of our lives. With the significant advances in Machine Learning and Artificial Intelligence, the utilization of the technologies has proven to have the potential of increasing profits. Machine Learning helps transform businesses through intuitive learning experiences.

Moreover, businesses have also adopted Machine Learning and Artificial Intelligence from the industry level, ranging from healthcare, biotech, and financial service. According to Gartner’s survey, 59% of organizations are researching ways to create Artificial Intelligence strategies. Many companies might lack the required resources and opt for outsourcing.

  • Big Data

Data analytics offer significant benefits to companies and their consumers. With this technology, companies are able to sell better while the end-users are able to get what they need much faster. Big Data Source technology allows companies to create data solutions in a scale-able way to accommodate people’s craving for volume, variety, and velocity.

For companies to succeed in the rapidly changing field, they need skilled and experienced software developers that have the ability to create high-quality solutions in a short time. However, finding the right developers can be time-consuming and costly, and so most companies are now opting for offshore IT outsourcing.

  • Digital Transformation

Most businesses are now turning to outsourcing to acquire SaaS solutions development companies that help them undergo digital transformation in order to meet customer’s demands and needs. Since these businesses lack the necessary resources, the only option is now to turn to outsourcing to find companies that provide impactful solutions.

  • Business Intelligence

Business Intelligence is not a new term, but its importance has recently grown to an unimaginable level. Some businesses might have adequate resources that would enable them to run their in-house development team. However, other businesses have to rely on outsourcing to manage to monitor their business analytics.

4. Factors to Consider when Choosing the Best Software Outsourcing Company in Vietnam

When looking for the best offshore software outsourcing company, it is important to think long-term instead of looking at the short-term benefit. You also need to look at the ability of the outsourcing partner to scale at ease and also be able to provide a pool of talents with the right skill set.

  • Vision

You should consider software outsourcing companies that have the same future vision. Moreover, you should avoid limiting yourself to partners that only focus on immediate benefits. The outsourcing partner should also understand you when it comes to developing strategic plans by collaborating with your team in every step to ensure the project is successfully completed.

  •  Transparency

Transparency ensures great performance and is critically important to enabling businesses to achieve sustainable growth. Choosing a company that ensures transparency in every step of the project enables them to utilize their capabilities effectively. A transparent outsourcing partner will ensure that you have direct management access to the project and the team of developers.

  •  Communication

Communication may pose a challenge when you decide to opt for outsourcing in low-cost locations. Fortunately, most Vietnamese professionals have studied English, which gives you an advantage when it comes to giving specifications on the projects.

However, time zone difference is another challenge that can also affect communication, but you can agree on the most convenient time to hold regular meetings. The best IT outsourcing company should have up-to-date telecommunication that allows you to stay connected with the development team. Moreover, you can optimize internal communication portals and live video calls to ensure you and your partner enjoy instant and convenient communication for an effective and efficient partnership.

  •  Agile Mindset

Choose a software outsourcing company with an agile mindset that requires a high level of collaboration, complexity, receptivity to change, and quality. The process of developing a new product requires frequent adjustments, which makes Agile working a suitable option. Hiring a software outsourcing partner that has adopted Agile methodology successfully can help in ensuring that you get your project on the shelf much faster.

5. Why Is Vietnam the Next Offshore Software Development Destination?

Vietnam is now the second-largest outsourcing partner for Japan after China. This is after overtaking India, which was initially the second-largest outsourcing partner. Apart from Japan, Vietnam has recently become one of the leading outsourcing partners for companies from the US and the European markets. The following are some of the reasons why Vietnam is the next software development outsourcing hub:

  • Economy

Vietnam has one of the fastest-growing economies and the most dynamic economies in the world. The country is home to some of the best software development companies and the market has a lot of potential. Vietnam has also opened up to international companies and regional companies, which makes it easier for foreign organizations to hire the services of the developers in the country.

  • Government Investment in IT

The government of Vietnam has invested heavily into upgrading IT infrastructure in its quest of ensuring that the IT industry leads the country’s economy. Access to the latest technology is one of the key drivers of the expected growth in the country’s economy.

Over the past years, internet penetration rose by double-digit. The country has a young population and decreased internet connection costs, which makes it a conducive environment for software development. With the government recognizing the role of the tech sector in the country’s economy, Vietnam is set to remain one of the most reliable outsourcing hubs in the world.

  • A Pool of Thriving and Young Talents

Vietnam boasts a young population, with 60% of the total population being under 35 years. The young population is also well-educated and suited for the technology sector since their education system has developed a curriculum that focuses on science and mathematics. According to statistics, there are over 290 universities in Vietnam alone offering courses in IT and telecommunication.

The pool of talents does include not only Vietnam-trained youngsters but also a group of expatriates returning from the west where they were studying and working as programmers. These expatriates return with valuable skill sets and technologies that open new opportunities for software companies in the country.

Moreover, the growing young population of experts and entrepreneurs are able to adapt to the ever-changing environment. The pool of thriving young talents is committed to enhancing critical thinking by improving productivity and working methodology. With the young population of thriving talents, the country is set to become an increasingly popular software outsourcing destination for many foreign companies.

  • Cost-Wise

Just like other countries in the region, Vietnam is one of the locations with the most cost-effective developers. Companies from the US and European markets can get highly skilled and experienced IT-related workers at the lowest minimum hourly wage.

This makes Vietnam software outsourcing companies the most affordable option as compared to providers from other regions, including Latin America and the US. The minimum hourly wage in the US is four times higher than the rate in Vietnam.

  • Companies with Various Expertise

Vietnam is home to a number of software outsourcing companies that operate in different areas of expertise and partner with clients in different industries. This offers great convenience as projects can be done and completed in one area. The companies are also tapping the large pool of young and tech-savvy workforce that helps businesses thrive.

  • English Language Skills

English is not even considered as the second language in Vietnam, but the language is compulsory in schools in the country, and students need to prove that they have sufficient English skills in order to graduate. 

Vietnam uses the Latin alphabet, which makes it easier for Vietnamese to learn English as compared to people in other Asian countries. Most Vietnamese software outsourcing companies are able to provide developers that can communicate in English, especially in written communication.

6. Outsourcing Software Development with Saigon Technology

Saigon Technology is one of the leading outsourcing software development companies in Vietnam. The company is located in Da Nang and Ho Chi Minh cities. It specializes in offering high-quality software development outsourcing services to clients in various industries across the world. With our team of professionals with exceptional talents, skills, and proven approach, we have made a name as one of the most trusted software outsourcing companies.

We have well-established global capabilities, delivery processes, and quality standards that enable businesses to achieve sustainable growth. Our team of over 230 software engineers with vast experience and knowledge in modern mobile and web app development technologies, Machine Learning, and Artificial Intelligence is committed to delivering on any software project. Most of our developers have fluent English communication skills that allow for a smooth collaboration with our customers. Please contact us for more information.

Thanks & Kind Regards,

Thanh (Bruce) Pham


Saigon Technology Solutions

Email: [email protected]

A Member of Forbes Technology Council 

Mobile: (+84) 913 666 227 

Skype: tienthanh.pham (Thanh Bruce Pham).