Rise of Vietnam as an IT Outsourcing Hub

Living in Vietnam after experiences with Samsung SDS, Microsoft, AWS, and Head of SK C&C Cloud in Korea, particularly as the Country Manager for Smilegate Vietnam, has been a stroke of luck for me. The unknown friendliness and comfort I felt during my first visit to Ho Chi Minh City in 2010, coupled with the rapid changes, increased my interest in the country. Korea and Vietnam share commonalities in their historical struggles, overcoming challenges such as the survival struggle against the Chinese unification dynasty, Buddhist and Confucian cultures, colonial periods, and the North-South division.

During my tenure as the Head of SK C&C Cloud, I heard the intention of establishing a software development center in Vietnam for a gaming client, driven by the desire to contribute to connecting Korea and Vietnam and assisting both nations. With a shortage of software developers in Korea and a relatively abundant pool of developers in Vietnam, I believed it could be mutually beneficial.

According to the 2022 status of the Korean software industry workforce released by the Ministry of Trade, Industry and Energy, there were around 148,000 software professionals, but the shortage was around 6,000, resulting in a 4% shortage rate. Although the statistical figure is 4%, it is a known reality that it is difficult for not only major companies such as Naver, Kakao, Line, Nexon, and Smilegate, but also small and large companies to find competent software developers. As an alternative, many companies choose IT outsourcing.

However, the mistake lies in attempting to achieve cost savings rather than paying a certain level of cost to attract competent developers. Seeking good quality at a low cost is a common desire, but opting for low-cost solutions often leads to employing entry-level developers locally, resulting in difficulties in obtaining desired outcomes. Additionally, challenges arise when using regions like India or the Philippines due to ineffective English communication with Korean developers. While China's Yanbian and Dalian regions were once utilized, rising costs and developer outflows from China have increased the difficulty. The shortage of developers remains an unchanged reality, and the lamentation about the difficulty of hiring developers persists.

It's not possible to find excellent developers at a low cost. If Korean companies could pay 6-70% of the labor costs of Korean developers and utilize advanced developers from abroad, it could be a good option. If the cost of hiring mid-level developers as 100% in Korea, utilizing advanced developers from Vietnam at 6-70% of the cost could be a favorable option.

In discussing the choice of Vietnam, I'll share several reasons.

Firstly, one of the noticeable reasons for Vietnam's rise is the possession of a sufficiently large pool of high-quality software talent. According to A.T. Kearney's GSLI, Vietnam ranked 6th in financial attractiveness, people skills, availability, business environment, and digital proficiency. Vietnam has around 430,000 software developers, with approximately 50,000 graduates from universities and software education institutions each year. Notably, 55% of them are in the 20-29 age group, and 30% have over 5 years of experience. The education system focuses on STEM, producing excellent students with a programming foundation actively participating in software development.

Secondly, Vietnam is a trend-sensitive IT powerhouse. With a high smartphone penetration rate and large-scale businesses developing and operating their services, developers with diverse experiences thrive in the market. Zalo, Vietnam's national messenger, launched in December 2012 and currently has 80 million users. Developers with experience servicing a large user base exist in the market.

Thirdly, Vietnam has developers with rich experience in web and mobile development. They use the latest frameworks and libraries, have a high understanding of Progressive Web Apps (PWAs), and can leverage modern technology. Due to the active adoption of mobile devices over PCs, there is a surplus of excellent mobile developers, and the scarcity of IT legacy based on old technologies allows for the utilization of developers capable of applying modern technology.

Fourthly, there are many experts in Vietnam who can communicate in Korean. Graduates of Korean language departments from major universities and Korean expatriates often have excellent Korean language skills, and many are proficient in English. In addition, there is a specialized profession called IT Comtor, which combines interpretation skills with an understanding of IT projects, enabling effective communication and project management.

With these diverse reasons, Vietnam is establishing itself as a new hub for IT outsourcing. However, depending on how you deal with communication difficulties arising from language and cultural differences, the results will appear completely different.

Just as the taste of a dish can vary depending on the chef despite using the same recipe, it is crucial to remember that this field requires careful planning and collaboration. I hope that sharing the experiences and insights gained here can contribute, even if only slightly, to the growth of South Korea. It's worth noting that I opted for directly hiring through a software development center rather than IT outsourcing.
 

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