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Outsourcing to Vietnam? Are You Kidding?

Outsourcing services are equally as expansive as outsourcing products, and the competitive capabilities of Vietnamese companies are very impressive - even when measured on a global scale.
- Ed Carroll, former VP of Engineering for Egghead.com

July 19, 2005

Emerging 30 Years Later

April 30th, 2005 marked the 30th anniversary of the end to the Vietnam War...Have things changed? Today, Vietnam has one of the most enviable economic growth rates in the world. In the last 30 years Vietnam, a country the size of Italy with a population the size of Germany has one of the most enviable economic growth rates in the world. Interestingly, over 60% of the population is under the age of 30, which means that most of the people living in Vietnam today are too young to remember the fighting.

Mixing Old and New

Hanoi today is a bustling city of 3.5 million, where the mixture of old and new is in constant evolution. One of the first sights to strike the first time traveler here is the amount of rubble piled in seeming random patterns around stacks of new brick - the amount of new growth construction can only be described as astounding. New streets, new office complexes and new homes are going up everywhere one looks in this key industrial and government center. Vietnamese tend to invest in land because of an old wariness of banks, driving up land prices and fueling a building boom.

A Global Competitor

With the characteristic energy of youth, this young nation is pushing hard to build a future where Vietnam is a global competitor-and America is a top trading partner. One area in particular is in providing outsourcing services to American businesses looking for faster, better, cheaper ways to make their products from apparel manufacturing to clerical support centers, from software development services to contract computer product manufacturing to integrated circuit production. Outsourcing to an overseas company may not be appropriate for every situation, but when it does, clearly the Vietnamese want to prove that they have the capability to be a worthy business partner.

Opportunity Arrives

Partnering with industry, the Vietnamese government is making a big push to expand their economy out of deep impoverishment at the end of the American/Vietnam war; encouraging significant investments in education, transportation, housing, and technology. Over the last several years, significant reforms, including a wide-ranging trade agreement with the US and the promise of World Trade Organization membership in 2006, have caught the attention of those looking for capable off-shore partners and foreign investments, now exceeding $30 billion. The partnership between government and industry provides important impetus to this thrust. Industrial growth has been constant at 15% annually for many years, and similar examples of extraordinary growth can be found in telecommunications and road systems. Wireless Internet cafes are popping up everywhere and everyone has a mobile phone, not unexpected in a society of thirty-somethings.

Competition on the Rise

The Vietnamese are determined to challenge their much larger, older, and better financed competitors (India and China). Economic growth has averaged 7-8% annually for the past 8 years, earning good profits for an increasing number of private and public Vietnamese firms. Considering the state that the country was in following the war, Vietnam's emergent growth can only be considered spectacular.

Modern Infrastructure

As with many emerging economies, Vietnam will leap-frog the telecommunications and computing infrastructure of 30 years ago-jumping directly into advanced fiber optic cabling and wireless capabilities. And, many of the globally largest corporations have taken notice of the investment. More and more high-technology production is moving to Vietnam. Several multi-national companies such as IBM, Hewlett-Packard, Intel, and Infosys have well established contracts manufacturing computers, printers, and components. These companies are in Vietnam because of the quality of the products produced here.

Outsourcing For a New Beginning

Outsourcing services are equally as expansive as outsourcing products, and the competitive capabilities of Vietnamese companies are very impressive - even when measured on a global scale. For example, FPT Software Corporation, one of the largest technology companies in Vietnam with over 1,000 software engineers provides software engineering services for mission critical software products and applications to clients world-wide. FPT has deep technical capabilities and is one of only 120 companies in the world to achieve the highest levels of software quality certification.

A Capitalistic Attitude

One might ask how this is possible under a communist government. Well, although the government is led by the Communist Party, the government has provided tax incentives, much like non-communist governments do, to encourage development of technology based companies and workers. Perhaps the best thing fueling their growth is the capitalistic attitude of the people. Examples of free enterprise abound, and are sanctioned and actively encouraged by this government. Of course, to make money, takes money, and the Vietnamese government has shrewdly bolstered the financial infrastructure.

Language Fluency

Another key attribute fueling Vietnam’s growth, is its multiple language fluency. As is common in much of Asia, many Vietnamese speak multiple languages fluently, and English is often a second (or third) language of choice; making it mildly easy for a non-Vietnamese speaking American to make himself understood. And these are just a few of the clear signs that Vietnamese society is becoming more educated, more technically capable, and more globally competitive. If outsourcing technology products and services makes good business sense, than take a close look at Vietnam. here.

Vietnam Partnerships

When Agilis Solutions went about the process of selecting a development partner, we conducted a detailed analysis of many companies, their processes and business models, in multiple locations around the world. We chose FPT Software Corporation, based in Hanoi, Vietnam, to be our partner primarily because of their long-term commitment to continuous process improvement and their reputable track record working with leading technology companies (HP, IBM, Toshiba, etc.). "This partnership is in its fourth year now, and we could not be more pleased than we are with the quality of the delivery we receive from FPT," says Eileen Boerger, General Manager and Vice President, Agilis Solutions.

About the author

Ed Carroll has been building software products for over 20 years, with particular expertise in automating economic analyses, decision support, and supply chain management process. He is presently a sales executive with Agilis Solutions, and has provided strategic technology leadership for a variety of companies. He is the former vice president of engineering for Egghead.com, and has held senior technology leadership positions at Nike and Boeing.

Contact Ed Carroll

   
 

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