October 3, 2022

Volume XII, Number 276

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October 03, 2022

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Outsourcing Experts: Vietnam Is the Next Big Destination

While India and China remain the most popular outsourcing destinations, experts have been eying smaller Asia/Pacific countries as potential areas for growth as costs in the two outsourcing powerhouse nations continue to rise.

Vietnam has emerged as a potential landing spot for IT outsourcing operations, although industry experts note that significant challenges remain before companies should consider Vietnam as a reliable host, as they do India and China. A recent article on TechCrunch explored the allure of Vietnam. The article notes that Vietnam and its citizens are well-positioned to provide services to international corporations. Companies that have used Vietnam as an outsourcing location have found workers fluent in English and with “modern IT skills . . . equal to and in some cases exceed what India offers.” Furthermore, low attrition rates keep wages down, whereas in India in particular climbing attrition numbers have pushed the cost of offshoring upwards.

Significant challenges remain, however, before Vietnam can emerge as a true competitor to India and China. Notably, the Heidrick & Struggles Global Talent Index Report placed it 53rd among the top 60 nations—20 spots below China and 18 below India. This is a strong indication that the talent pool is limited in Vietnam, and big companies may find it impossible to fill seats at large-scale IT outsourcing operations. Additionally, the TechCrunch article notes, “the technology industry didn’t take off until relatively recently in Vietnam, so [companies] won’t find support for maintenance and legacy platforms.” However, outsourcing industry leaders expect that time will cure these ills, and within the next decade, Vietnam should emerge as a competitor to China and India for certain offshore services.

Copyright © 2022 by Morgan, Lewis & Bockius LLP. All Rights Reserved.National Law Review, Volume V, Number 147
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About this Author

Vito Petretti, Morgan Lewis, Technology Lawyer
Partner

Vito Petretti’s practice focus is technology and outsourcing matters. Clients regularly turn to him to draft and negotiate domestic and international outsourcing service agreements for a variety of business processes, such as information technology, finance and accounting, human resources, and procurement. Within the realm of information technology, Vito drafts and negotiates agreements for software licensing, hardware purchases and leases, data licensing and subscriptions, website hosting and development, and other technology-related agreements, including system...

215-963-5001
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