Should Australian Companies Consider Outsourcing Software Development to Vietnam?

Should Australian Companies Consider Outsourcing Software Development to Vietnam?

Short answer? Yes! It’s hard to ignore the growth of Australia’s ICT (Information & Communication Technologies) market. With major investments in both infrastructure and labor, companies like Cisco, IBM and even Warner Brothers have made Australia a global destination for ICT, and the rate of growth in this market shows no signs of slowing. In fact, the Australian Department of Employment predicts the creation of nearly 15,000 new software development and related positions by 2019, a rate of growth that far exceeds the industry average. This is great news for Australia and for the industry, but it does present a challenge.

The fact is that between native labor and job-seeking immigrants, Australia will simply not be able to introduce enough new workers into the labor market needed to meet the needs of its ICT industry. On one hand, this is a good problem to have, but it is still a problem. In order to meet the needs of a growing IT industry, Australia will need to look for global solutions and find technology partners that are highly skilled, experienced and cost effective.

Vietnam is no newcomer to the Australian market. Several Vietnamese companies such as Fujinet have been selling software products in Australia for years, and many large Australian companies in the IT arena—companies like Cisco and Avaya, for example—have partnered with Vietnamese providers for efficient and cost-effective development expertise. In 2016, Australia’s leading virtual data room company Ansarada built a software development center in Vietnam, further illustrating the developing working relationship between the two countries. Let’s take a closer look…

Compared to Australia—a country struggling with an insufficient IT labor force—Vietnam has a growing and competitive engineering workforce; well-educated IT professionals with a proven record of performance on the global stage. In Vietnam, there is a strong emphasis on preparing students for careers in Information Technology, and these students typically start programming in the 2nd grade and learn English as part of their core curriculum. In fact, according to a Forbes survey conducted back in 2015, Vietnam was already a global top 10 producer of IT and engineering graduates. In addition, IT-specific education in Vietnam increasingly includes elements of language and culture to prepare them for immediate employment abroad. Some of these graduates enter the domestic workforce, but many choose to work and study abroad, and Australia is a top 5 destination.

And it’s not just a question of education and qualifications. Vietnamese culture values loyalty and a strong work ethic, and as such Vietnamese employees and contractors have very low leave rates (as low as 5%) and are highly productive and efficient. This creates many advantages in efficiency, cost-effectiveness, and productivity.

Currently, Vietnam is one of the top outsourcing software markets in the world, and the rate of Vietnam’s growth in the industry has been remarkable. By 2016, Vietnam was a top 5 location for outsourcing (Gartner’s Leading Global Locations for Offshore Services), was ranked 1st in pioneering location and cost environment (Cushman & Wakefield BPO and Shaped Service Location Index) and 6th in the 2017 Global Services Location Index (A.T. Kearney). This outstanding profile and exceptional performance mean Vietnam’s technology centers are poised to compete with California’s Silicon Valley and Washington’s Seattle Tech Hub in the future.

Geographically, Vietnam also has several advantages over much of the competition. For example, travel time between Vietnam and Australia, at 8-9 hours, compares favorably with travel time between Australia and India at 12-14 hours. There are frequent and convenient flights between Australia’s Sydney, Melbourne and Perth and Vietnam’s Hanoi and Ho Chi Minh City, making those sometimes necessary face-to-face meetings much easier. Also, the time zone gap between the two countries is 1 to 4 hours, creating sufficient overlap to facilitate real-time communication and virtual meetings.

Vietnam has been building a positive image and solid reputation with its many Australian customers. As the excellent feedback from big tech companies has grown, so has the number and quality of working relationships between Australia and Vietnam. The number of Vietnamese students and employees studying and working in Vietnam further facilitates these working relationships, and more and more Australian companies are leveraging the many advantages of outsourcing some development to Vietnamese providers. With increasing cooperation between the two country’s governments, both the private and public sectors are creating what promises to be an outstanding environment for a sustained, long-term relationship.

Adamo Digital has ventured heavily into Australia’s software development market with great results. Our Australian customers include companies like OnContractor, Apps People and Edway, among others. Recently, a group of OnContractor managers flew to Hanoi from Perth to meet and work with Adamo on a website overhaul project. We had an effective meeting to organize the management of the project and “put names to faces”, which will make long-term cooperation that much easier. It’s an excellent example of the kind of working relationship that can be had between Australian and Vietnamese partners.

With broad knowledge and areas of specific expertise, a strong work ethic, and many cultural commonalities, Vietnam is building a reputation as an ideal outsourcing software destination for the Australian technology industry. Vietnam has already seen great success in in similar markets, including Japan and the United States, and the excitement is palpable among Vietnam’s IT professionals. Information Technology is still a relatively young field of endeavor, and Vietnam is earning its place in the spotlight as a global player. As the rapid pace of growth leads the world towards a future of unimaginable achievement, you can bet that Vietnam will be at the vanguard of the expeditionary force taking us there.