There are many potential offshoring places in the world, but why is Vietnam still one of the first choices?
In the 4.0 era, offshoring seems to attract investors more than ever. It is a way that entrepreneurs use other nations’ resources to advance their businesses, whether those resources belong to their organizing part or not. The main purpose of offshoring is to save production costs and increase the entrepreneurs’ competitiveness in the business market.
In reality, outsourcing gives unproductive results in business. The internal hiring cost is relatively high as well. So, some entrepreneurs start drifting their way to offshoring. Choosing the best offshoring countries is a top-priority consideration for any enterprise if they want to broaden their international Tech-network.
Covid-19 pandemic has changed the market, created difficulty for some entrepreneurs in choosing places to develop their business. Due to Covid-19, most of the South-East Asian offshoring markets are unlimitedly closed.
Despite these crises, Vietnam is highly recommended as a good place for offshoring, due to its excel in developing an active business ecosystem and its excellent Covid-19 control. There are some other countries that recover well in post-COVID-19 attracts some enterprise leaders to widen their business.
Although India and China have dominated the offshoring market for a long time, it’s no longer being good places for seeking low-cost labor or sustainable quality in work. South-East Asian countries become new competitors by focusing on empowering competitiveness in recent years.
Many Singapore small-scale start-ups have cooperated with other ASEAN countries to increase their product developing capacity without wasting budget.
There are some common offshoring markets such as Vietnam, Indonesia, Philippines, Cambodia, Myanmar, Thailand, and Malaysia, which is famous for low-cost labor and English-speaking IT workers.
As reported by Tech JDI - a Singapore Technology company, Vietnam is an appropriate choice for Technology resources, ranking above Thailand and Malaysia. It not only proves the Vietnamese potential competitiveness with other surrounding countries but also shows that Vietnam is a sustainable country for business resources and the marketplace.
Particularly, there are several main advantages that make many enterprises believe that Vietnam is the most ideal offshoring place.
LOW-COST LABOUR WITH HIGH QUALITY
Singapore is facing a deficiency of Tech-resources. Meanwhile, Vietnam has thousands of graduates IT Bachelors who join the labor force every year. It also means the Vietnamese labor cost is cheaper than others.
Vietnam is considered well in STEM education (Science, Technology, Engineering, and Mathematics). This is a good opportunity to create a developed Technology human resource in solving various offshore problems. Vietnam's resources are flexible, highly adaptable with the shift of the market.
SUSTAINABLE ECONOMIC GROWTH
Unsustainable social and political problems create difficulty for the economic growth of Asian countries, especially Thailand and Malaysia. Vietnam luckily becomes one of the most stable economic growth in the local economy with the help of the government in business.
The government also focuses on guiding the youth start-up, which contributes to the development of the offshore market. In fact, start-up companies and small-scale enterprises contribute by 50% of the number of national jobs. Vietnam also takes out some supporting policies in tax-reducing and legality, which creates an ideal place for business production.
GEOGRAPHICAL ADVANTAGE & EFFECTIVE POLICY
Some enterprises have trouble investing in South-East Asia, due to the natural crisis. Although Vietnam suffers from many natural epidemics, it is still reported to be one of the least damaged countries.
Moreover, Vietnam has proved to have a strong & effective policy to handle Covid. While other countries see their positive cases increase day after day and fail to control the situation, Vietnam has proved its ability to handle the chaos.
NO VAT FOR SOFTWARE SERVICE
The standard VAT rate in Vietnam is 10%, while the reduced rate is 5%. However, as the Government’s plan is to encourage Technology development & turn Vietnam into an industrialized country, the Software sector received various support & benefits. That’s why, transfer of technology, software, and other software services are entitled to 0% rate.
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