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IT Outsourcing

Why has Vietnam become the most sustainable IT alternative in times of crisis?

Frédéric Lasnier
Frédéric Lasnier
Chief Executive Officer, Pentalog

After my recent visit to Vietnam, where I spent a few days in the company of Martin Umaran, one of the founders of Globant (our Argentine acquirer), I can still say that I am amazed. In Hanoi and Ho Chi Minh City, we had the pleasure of meeting with several local tech entrepreneurs.

The country I first discovered in 2009 has undergone significant changes. Its total GDP now exceeds $400 billion, with over 14% coming from information and communication technologies. With 7% of that coming from telecom and infrastructure, it means approximately $28 billion comes from software and services. This figure has multiplied by 28 since Pentalog first arrived in Vietnam. Impressive, isn’t it?

Vietnam GDP Growth Rates

A demographic boom more than an economic one!

Even with such remarkable growth, it’s in the field of engineering demographics that the achievements of the Vietnamese society are most spectacular. The country’s population of programmers has grown by a factor of 30 in less than 20 years. It will surpass France in 2023, the UK around 2025-2026, and given its incredible momentum, it could even surpass Germany and Japan before 2030.

This digital ascent is explained both by a 1% annual growth of a highly literate population and by the incredible trust this population has in technology. Vietnamese people are learning to code massively. Currently, there are around 550,000 programmers, compared to 530,000 in France.

Pentalog Vietnam

Challenging headwinds in Asia favor collaboration with Europe since 2022

While the country’s technological resources work extensively for Japan and South Korea, Vietnamese outsourcing companies are finding it increasingly difficult to maintain their profit margins. The value of major Asian currencies has been gradually decreasing over the past five years. This is problematic because salaries in these countries are often linked to the dollar. As the Dong, Vietnam’s currency, remains stable against the Euro and the dollar, it complicates the situation. In this context, European and American companies, being more robust, are becoming more attractive to the IT workforce in the country.

Vietnam Price Catalogue

Vietnamese agility, ideal in times of crisis

Beyond these monetary explanations, more and more of the country’s human resources are turning to the delivery practices of the American West Coast, preferring agile organizations to the traditional Japanese V-cycle. Production quality now reaches the highest levels when working in an agile manner. This is evidenced by the fact that we have seen 25% growth there in 2023. In the midst of a crisis and for the next three years, it’s very likely this will be the best outsourcing solution for teams of 30 to 1000 programmers.

This combination of factors provides a significant advantage to European companies, who now see Vietnam as an alternative to, for example, India. Not only offering a hardworking and naturally kind workforce but, of course, some of the most favorable costs in the world.

IT Outsourcing in Vietnam

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