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Vietnam is Becoming The Best Offshore Country for Technology

When some ASEAN nations might be popular attractions for IT (Information Technology) outsourcing, we want to share with you some reasons why Vietnam is becoming the best offshore country for technology companies to begin the digital transformation excursion. It proposes software engineer staffing and outsourcing ways to make you move towards the challenge in a global business background.

1. What is Offshore?

Offshore refers to a location that is not in one's native nation. In the banking and financial sectors, the word is widely used to denote places where rules differ from those in the home nation. Offshore locations are often island nations where companies, investments, and deposits are established. Companies and people (usually those with a high net worth) may relocate abroad in search of better terms, such as tax avoidance, loosened restrictions, or asset protection. Although offshore institutions can be utilized for unlawful reasons, they are not illegal.

What is Offshore?
Figure 1. What is Offshore?

2. Understanding Offshore

Offshore refers to a wide range of foreign-based businesses, accounts, and financial services. To qualify as offshore, the activity must take place in a country other than the company's or investor's home country. As a result, while a company's home base may be in one nation, the commercial activity takes place in another. Simply said, going offshore allows non-residents to get services.

Offshore can refer to any location abroad—any nation, territory, or jurisdiction. However, the phrase has come to be associated with specific locales that have grown attractive for offshore economic activity, most notably island nations such as the Cayman Islands, Bermuda, the Channel Islands, and the Bahamas. Other landlocked nations that have popular offshore financial centers (OFCs) include Switzerland, Ireland, and Belize.

The amount of regulatory norms and openness varies greatly amongst OFCs. However, they often provide:

  • Tax rules are favorable, which is why they are usually referred to as tax havens.

  • Risk reduction and increased growth potential

  • Businesses will save a lot of money.

  • Asset protection, particularly during times of insecurity

  • Regulations that are too lax

  • Confidentiality

For the reasons stated above, enterprises and high-net-worth individuals (HNWIs) frequently relocate overseas. They may also opt to bank and invest in an offshore nation if they go there regularly. OFC supporters say that they promote financial flow and facilitate international commercial transactions.

However, detractors argue offshore helps to conceal tax responsibilities or ill-gotten earnings from authorities, even though most nations require foreign ownership to be declared. Offshore banking has also become a conduit for increasingly illegal operations such as fraud, money laundering, and tax evasion. As a result, there is growing pressure on OFCs to become more open with global tax authorities.

3. Key reasons why Vietnam is considered the ideal offshore country for technology

3.1. Ratios of cost-effective development

It is not strange that a lot of worldwide giants are outsourcing Software Development requests to national-based suppliers, while you do a better cost comparison and cost-benefit report. In other words, Software Outsource expenses are 85% more effective than in America, which has recalled a lot of big American-based organizations to outsource their Software Development duties to our nation.

Vietnam is among the top countries in Asia, especially for getting around 50% more expense-saving than India. Moreover, Vietnam keeps saying that development is a better attraction for the software outsourcing market than Western European-based organizations. It determines that development expenses in our country are 55% quite better than their Eastern European-based suppliers.

Reducing costs is crucial for IT technology companies.
Figure 2. Reducing costs is crucial for IT technology companies.

3.2. A good English-friendly business scenario

Vietnamese benefit from the Latin alphabet enabling our students to acquire English skills faster than many South-East Asian peers. This advantage sets Vietnamese apart from other languages and supports our national pupils in both spoken and written English proficiency.

Vietnam's strong ties with Western countries enhanced business and political connections, making English widely spoken and a subject in schools. As a result, English has become prevalent as both a mother tongue and a curriculum requirement. On the other hand, it’s seen as an essential factor for getting competitive employment opportunities and attracting more IT talents.

3.3. The development of a start-up ecosystem

Vietnam's blend of the tech-savvy workforce and government initiatives positions it as a leading ASEAN economy and a startup magnet. This combination is transforming the nation into a thriving tech powerhouse and a sought-after hub within the region. Besides, with some huge giants constructing their Software Development centers in our nation together with a quickly developing economy, the start-up ecosystem is recalling a lot of seeds and previous-phase investors from all over the world.

On top of it, the huge potential for Vietnamese start-ups can lie in developing tech ways that deal with emerging-market issues that the regional software talent is greatly positioned to complete.

Furthermore, we belong to a group of exceptional nations that have nurtured software talent in the backdrop of emerging markets. This unique advantage enables our talent to empathize with the challenges faced by users in remote areas, setting us apart from talent predominantly based in European nations. From that start-up and business ecosystem quickly growing, our nation keeps going to uncover and strengthen the following wave of software talent. In other words, it can be an ideal destination for tech at this moment.

Background of the start-up ecosystem
Figure 3. Background of the start-up ecosystem

3.4. A large workforce with affordable but high-quality tech talent

3.4.1. Access to a wider tech talent pool

One of the most significant advantages of an offshore country for technology is the opportunity to tap into a market with a large pool of tech expertise available for hire. Their search radius is frequently located in the ASIAN area to fully capitalize on the local talent pool, such as Vietnam. With 50,000 fresh IT talent entering the market each year, the country is regarded as one of the finest outsourcing options.

Furthermore, the abundance of tech talent from outside makes it simpler to find specialty developers with the necessary skill set to undertake difficult projects. AI, IoT, blockchain, and other innovative projects may be quickly developed with the assistance of professionals who are generally difficult to locate in Singapore.

When combined with the reality that it generally takes 2 months or longer to effectively get software development employment, the flexibility to be unconstrained by the local market allows enterprises to significantly accelerate their recruitment process.

3.4.2. Affordable but skilled tech talent

The cost-effectiveness of offshore IT teams over local employees is the key reason why many firms choose them. Hiring a full-time local software engineer with 5 years of expertise in a developed nation like Singapore may be quite expensive, with an average cost of $3,220.

A Vietnamese developer with the same expertise and skill set, on the other hand, costs only $2,300 a month, or 40% less. Building their own offshore IT team allows businesses to simply quadruple their personnel with the same budget.

Another advantage of recruiting tech professionals from abroad is the ability to get high-caliber engineers with years of expertise, industry knowledge, and language competence. Even if a business just intends to build up its IT operation with one or two additional headcounts, it is still worthwhile to invest in overseas talent to obtain the top-tier team member rather than settle for the average Joe.

3.5. Stable economic environment

The best offshore country for technology needs a stable economic environment. When it comes to the economy, many Asian nations are afflicted by economic insecurity for a variety of reasons, such as a coup in Thailand or political turbulence in Malaysia. Vietnam, fortunately, is one of the few exceptions. In reality, as a consequence of the government's unconditional support for entrepreneurship, it is one of the most stable countries with a good economic development rate.

Furthermore, the absence of ethnic and religious strife contributes to Vietnam being a far more appealing investment location. With "Kinh" ethnicity accounting for 90% of the people and atheism accounting for more than 80%, Vietnam has discovered a near-perfect neutral ground to strengthen its economic basis and attract international investment.

Vietnam has a stable and growing economic environment
Figure 4. Vietnam has a stable and growing economic environment

On the other side, the government concentrates on developing healthy ties to steer youthful people into the startup ecosystem, allowing the market to grow even more. In reality, startups and SMEs account for up to 50% of total employment in the country. Vietnam also provides supportive regulations, tax breaks, and favorable legislation, creating a perfect climate for offshore.

A good example is a collaboration between Enterprise Singapore and the Vietnamese government-backed organization Saigon Innovation Hub, which has started a two-way interchange of companies and IT expertise.

This collaborative program connects Singapore with prospective investors and customers to assist startups and enterprises in expanding their operations into the thriving Vietnamese market.

3.6. Geographic advantages

Last but not least, many people are concerned about the prevalence of natural catastrophes in Southeast Asia. However, in Vietnam, this is not a major worry because the country suffers less than other tropical countries in the vicinity. So, geography is an advantage for Vietnam to become an offshore country for technology. Although heavy rain and storms do occur on occasion, Vietnam is less vulnerable to extreme circumstances such as typhoons, which occur often in the Philippines.

Furthermore, the weather in the southern sections of the nation is pleasant all year, with average summer temperatures ranging from 25 to 30 degrees Celsius. This is why offshore corporations prefer Vietnam over other ASEAN nations such as Cambodia, where typical summer temperatures reach 35 degrees Celsius with heavy humidity.

Final thoughts

Here are all the main reasons why Vietnam will become a perfect tech hub for outsourcing shortly. Finally, you can leave your thoughts below this post if needed.

Source: Internet

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