Vietnam's offshoring market poised for significant growth

The demand for services such as customer support, data entry, and software development has notably increased due to the country's skilled workforce, cost-effective services, and favourable business environment. Vietnam's strategic location near key markets such as China and Japan further enhances its attractiveness for businesses seeking outsourcing solutions.

A unique aspect of Vietnam's offshoring market is the presence of numerous small and medium-sized enterprises (SMEs). These businesses often focus on specific niches, including gaming, animation, and e-commerce, enabling them to provide tailored solutions to their clients. Additionally, the Vietnamese government actively promotes the growth of the nation's IT industry by offering incentives for companies to invest in research and development.

Top three drivers

Cost-Effective Labour Force

A key factor driving Vietnam's offshoring market growth is its cost-effective labour force. With lower labour costs than Western countries and regional peers, Vietnam offers businesses high-quality services at competitive rates. As the market matures, a notable trend is the shift towards higher-value services, including software development and research and development.

Skilled Workforce and Language Proficiency

Vietnam features a highly literate population, with a 96.1% literacy rate, positioning it 58th out of 113 countries and territories. The nation ranks 7th in Asia in the Global English Proficiency Index 2023. Additionally, A.T Kearney ranked Vietnam 7th in the Global Services Location Index (GSLI) as a strong outsourcing destination, reflecting the country's attractiveness for offshoring services.

Ongoing Infrastructure Development

Vietnam is experiencing significant infrastructure development in information technology and telecommunications, driven by government investments aimed at improving internet connectivity, data centres, and technological infrastructure. These efforts ensure reliable and high-speed communication networks for offshoring companies.

Outlook

According to Statista, Vietnam's offshoring market is expected to reach USD 0.84 billion in revenue by 2028, with a compound annual growth rate (CAGR) of 8.78% from 2024 to 2028. Several macroeconomic factors, such as a large and young workforce, a favourable business environment, and a growing middle class, will continue to support the expansion of the offshoring sector. Government initiatives aimed at promoting economic growth and attracting foreign investments will also play a vital role in the development of the industry.

Vietnam's strategic location and strong connections with key regional markets make it an attractive destination for companies looking to expand their operations. As the offshoring market continues to evolve, Vietnam is well-positioned to capitalise on the increasing demand for cost-effective and high-quality services, such as customer support, data entry, and software development.