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Chairman's Insights

Is Vietnam making progress in the global software outsourcing market?

The IT sourcing market has long been tipped as a natural for Vietnam but has been a long time in the development phase. However, in AT Kearney’s 2017 Global Services Location Index, published last week, Vietnam has entered the top ten destinations at number 6 out of 55 countries and a rise of 5 places from 2016. The survey /Index covers both IT outsourcing and Business Process Outsourcing.

It is interesting to note that Asian countries occupy 7 of the ten top places led by India, China and Malaysia holding the top 3 places.

The reason given for Vietnam’s jump of 5 places in the rankings is due to the growing popularity of Business Process Outsourcing which has been growing globally at a rate of 20-25% over the last decade. In addition, an abundance of young people fluent in English young and low cost labour have made Vietnam an increasingly popular destination for Business Process Outsourcing.

The survey measures three metrics, financial attractiveness, people’s skills and availability and business environment. Out of the top ten countries Vietnam had the highest ranking for financial attractiveness but only ranked 8th for people’s skills and availability, marginally ahead of  Thailand and Chile, and number 8 for business environment marginally ahead of Indonesia and Philippines.

However automation is gathering pace and is considered a threat to millions of jobs in developed and developing countries. According to AT Kearney, the fear that automation will destroy jobs is by no means new to developed nations that have seen successive waves of technological improvements displace low-skilled workers. This threat is less familiar, however, to the developing countries that have benefited from the offshoring and outsourcing trends over the past several decades. These lower-cost nations have experienced tremendous increases in high-quality employment and transformational economic growth in recent years, but this development model is now increasingly under pressure.

AT Kearney also cautioned in respect of Vietnam that As Japan is the Vietnamese BPO industry’s primary client, continued growth in this area will depend, in part, on the strength of the Japanese economy.

Founder & Senior Board Adviser
Ken Atkinson View more