IT Outsourcing in Vietnam, the Answer to Australian Business Challenges

A report from the Australian Bureau of Statistics, concluded at the end of the second semester of 2022, provides insights into the challenges faced by the country’s companies within the information technology and communication sectors.

Issue #1 faced by Australian IT companies

25% of surveyed Australian companies reported that in 2022, their activities were disrupted due to a lack of qualified personnel in the labor market. In contrast, 22% of companies considered themselves to have struggled due to a lack of qualified personnel internally.

Finally, 21% believe that during the year 2022, their business did not meet expectations because they were forced to achieve lower profit margins to remain competitive.

Solution: ‘Cost Reduction’ Proposed by a Vietnam-based IT Service Company

Outsourcing IT activities, particularly to Vietnam, offers multiple advantages for Australian businesses facing challenges related to a shortage of qualified workforce and economic pressures.

IT outsourcing allows companies to achieve substantial savings, especially on labor costs. According to marketsplash.com, in 2023, the IT outsourcing market was estimated to be over 1.3 trillion dollars, highlighting the scale of this economy. Furthermore, outsourcing can save up to 90% of labor costs, depending on the target relocation country.

“Optimize resources, maximize performance.

In the art of business management, economy and efficiency

are not just goals but a philosophy.”

Regarding economic pressures, Bocasay, an agency offering offshore software development, has implemented a model that enables companies to increase their profit margins.

How is this made possible? Bocasay offers its clients a margin optimization strategy. This strategy is made possible by a significant reduction in costs, especially in recruitment and human resources expenses, through the use of offshore service centers.

These offshore service centers are located in several parts of the world:

• In Madagascar 🇲🇬
• In Vietnam 🇻🇳
• In Mauritius 🇲🇺

This approach generates savings of up to 40% on IT outsourcing expenses while accelerating product launches through Agile project management.

The goal is to enable the company to focus its investments on its core activities, relying on a reliable technical partner, and thereby reducing opportunity costs* and ensuring technical continuity in projects.

*Opportunity cost represents the value of what you lose by choosing one option over another. In a business context, this often refers to the potential loss of earnings or benefits when choosing one investment option over another.”

Solution: “Access to specific technological skills” offered by an IT services company based in Vietnam

Vietnam, in particular, offers a pool of highly skilled talents in the technological field, allowing companies to access specialized skills and knowledge. The development of software, web and mobile applications is greatly facilitated and made possible through an abundance of available technologies.

Examples of available IT services in Vietnam:

• PHP, Symfony
• JavaScript, React
• .NET
• Python
• Mobile

Building a tech team in Vietnam is a popular strategy among Australian companies, particularly for web application development. This approach is favored due to the significantly lower development costs in Vietnam compared to those in Australia.

Issue #2 faced by Australian IT companies

According to the report from the Australian Bureau of Statistics, Australian companies are grappling with a talent shortage in IT and are implementing measures to counter the lack of resources in new technologies.

Among these measures is the increase in working hours applied by 39% of responding companies. This measure goes against the Australians’ need to balance private and professional life.

Moreover, another noteworthy measure indicative of the benefits generated by outsourcing is that 25% of companies have affirmed that they outsource or externalize activities to service providers.

Finally, we will observe an article on LinkedIn, dated October 2023, from an Australian CEO of a cybersecurity specialist company, describing another remarkable fact: half of Australian organizations now outsource IT functions globally due to a shortage of local talent. The most frequently outsourced skills are AI (56%) and cybersecurity (40%).

Solution: ‘Offshore Outsourcing’ with a Vietnam-based IT company instead of local outsourcing in Australia

As an Australian company, to truly embrace the growth you are aiming for and address the talent shortage, outsourcing is a genuinely relevant first step, but outsourcing to a foreign country, rather than locally, brings multiple benefits.

For example, Vietnam is a destination where you can entrust your software, web and mobile development projects, with many attractive capabilities to elevate your business.

1. Cost

Vietnam offers significantly lower labor costs when compared with Australia. This helps companies to substantially reduce their operational costs.

2. Quality and Availability of Talent

Vietnam is recognized for its pool of IT talents, particularly in software development, AI and cybersecurity. Vietnamese universities produce a large number of qualified graduates each year.

3. Time Zone Difference

The time zone difference between Australia and Vietnam can be strategically utilized to ensure continuous work. When the workday ends in Australia, it begins in Vietnam, enabling 24/7 productivity.

4. Innovation and Specialization

Vietnamese service providers are often specialized in specific technological niches, bringing greater innovation and in-depth expertise to specific projects.

5. Language and Culture

While Vietnamese is the primary language, English is widely taught and used in professional settings, especially in the IT sector, facilitating easy communication.

The National Australia Bank (NAB) Outsourcing to Hanoi

According to digitalcfoasia.com, the National Australia Bank (NAB), the largest business bank in Australia, launched the NAB Innovation Centre Vietnam (NICV) in 2019.

The goal was to enhance technology and customer experience. Over the years, the NICV has rapidly expanded with three offices in Ho Chi Minh City and Hanoi, employing hundreds of qualified professionals in various technological roles.

This offshore expansion 🌎 demonstrates how a major Australian financial institution has benefited from outsourcing to Vietnam to strengthen its technological capabilities while optimizing costs.

Australian companies often opt to build tech teams in Vietnam for web application development. This is a widespread practice due to the cost-effectiveness of web development in Vietnam compared to the expenses in Australia.

References:

• Australian Bureau of Statistics (June 22, 2023): Characteristics of Australian Business
• Digitalcfo Asia (June 20, 2023): Vietnam Emerges as a Global Leader in IT Outsourcing, Attracting Australian Financial Institutions”