Software Development Outsourcing In Vietnam: Trends In 2019

As the world economy continues to globalize and outsource software development to Vietnam, new trends are rapidly developing in the industry. 2019 is bringing new types of projects, new international dynamics and new company cultures.

In order to get key insights on what’s happening and what’s coming, we reached out to two industry leaders: Giang Martin Tran, founder and CEO of Restaff-House of Norway; and Kent Nguyen, entrepreneur and technology consultant at 31Seven. Read our discussion below about the future of software development outsourcing in Vietnam, and how Giang and Kent’s own enterprises are navigating shifting technology and labor landscapes.

What trends have stood out in your industry this year?

Giang: Right now, there is a trend towards software relating to security, information, and data. This ranges from securing big data and information flow to analyzing it to increase business.

There is also a trend in securing personal information as well, and since the GDPR (General Data Protection Regulation) was implemented in 2018 in the European Union, we have seen a lot of work in that area. Software tools and solutions compliant with GDPR have been trending in the industry in Europe. As we partner and serve a number of Norwegian companies, this has especially stood out for us.

Additionally, as Vietnam’s economy grows, so do skills and salaries. Investors want the return on investment to be quality, and they are willing to pay for it. Now, clients are not hiring Vietnamese teams for lower prices as in the past; clients want to invest in people and quality.

Kent: I continue to see more and more regional and international companies setting up their software team in Vietnam. This trend has been going strong for the last several years, with more and more responsibility being shifted to these Vietnam-based teams.

About 6-7 years ago, there were little Product outsourcing activities in the market when I first started my product development house. Today, I experience first-hand a constant influx of founders and investors picking Vietnam as the destination for one-stop software product-building. In at least 10 different cases I’m involved in, the management teams of these foreign companies hope to see their Vietnamese development team as a self-managed department in their organization. It is also common now to see this in many other digital-related services as well.

What was the most meaningful moment for your company so far this year?

Giang: On a general note, I believe and look for meaningful moments every day -from personal small-talk in the hall; to discussing challenges within a project in a meeting. Interacting with the staff on a day-to-day basis is also a way of collecting valuable knowledge from the staff, what is motivating and driving them.

However, earlier this year when we experienced the unexpected effects of turnover for the first time, seeing how we were able to quickly adapt and stay focused to deliver great results despite the challenges was a beautiful and meaningful moment. I realized we have been doing the right thing all along, creating and building a strong and good work environment. Turnover will happen at every business scale, and in many cases, a small portion is also healthy for any business. It is all about how an organization reacts and adapts.

Open-mindedness and tolerance is vital for effective teamwork, innovation and productivity in a work environment. It promotes creativity, because everyone feels free to express opinion and share insights, even when disagreeing. At Restaff we aim to create and live in such environment. Ultimately, I believe this leads to high level of satisfaction and fulfilling solutions for everyone knowing that a process of disagreement and discussion has been tolerated.

Kent: My current company focuses on providing end-to-end technical solutions for SME (small and medium-sized enterprises) at all levels. It was the moment when we realized that there is a huge demand for one of our core services (Business Intelligence) locally and regionally. There is a potential for a one-size-fits-all formula to go after this niche and underserved segment. It was the “validation checkpoint” in the startup journey, and like the last few times, it helped to define what comes next.

What do you foresee as the key trends in software development outsourcing in Vietnam being in 2020 and beyond?

Giang: The trend of building software teams in Vietnam will grow stronger, meaning that the demand and chase for skilled and talented resources will continue.

The biggest challenge for software development outsourcing in Vietnam right now is to attract and keep resources and talent. You have to catch the talent or internally develop it. And to internally grow talent, you need to have a good working environment and interesting projects.

Kent: Software development trends in Vietnam follow behind what’s happening in developed markets. Based on this, we can predict that working with large data will be one of the hot topics soon to come. In my opinion, we will continue to see great demand in the field of “Artificial Intelligence work”. We will start to see more projects in building Business Intelligence systems, developing Machine Learning models and fundamentally helping SMEs making sense of their existing data.

With more international companies entering Vietnam, how competitive is it becoming to hire and retain talent? What is your firm doing to be competitive?

Giang: There have been trends in more work benefits in the past decade in Vietnam, from diverse complimentary advantages as free coffee to fully covered company trips, happy hour and other treats. But real value is not in this. It’s not about what you get; it’s about how you can create a valuable work environment, the culture you want.

Now, those other perks are assumed to be available everywhere. They’re just small things to help support you. What we try to do is create a work environment with flexibility, responsibility, pride and motivation. We think about how staff feel, whether they’re happy, if they’re being properly challenged enough, and if they’re being treated fairly. Since we only take long-term projects with clients, there is stability and time to think about all of these things. And there is a culture where there’s no consequence for you to speak up if something is wrong.

Kent: At the moment, it is tough to hire talent with many strong brands competing for the same pool, especially at the senior level. Because of this, many teams are doing literally whatever they can to retain their employees through culture-building activities. From free lunches, better facilities in office to more mature team building activities and HR frameworks. I haven’t seen any good team that hasn’t had this as default offering on their job description. In fact, the ones that are not doing it at the moment are finding it very hard to hire based on salary alone.

My business requires highly experienced consultants from different fields, and naturally, salary and benefits are not sufficient to keep highly valued employees. What I’m trying as a work-around solution is promoting more remote work and project-based engagements. There is a growing number of senior and management personnel who want to be able to have more time for personal responsibilities outside of office constraints. My team has been on a fully remote basis since the beginning, and this arrangement seems to work well so far for solving short-term objectives.

How have perceptions of your overseas clients changed overtime since you started, about outsourcing work to emerging markets, specifically Vietnam?

Giang: Since we started in 2008, we have been flexible alongside our clients. Our clients are treated and considered as our partners. We’ve incorporated and encouraged a model of team-building, beyond delegating tasks, from the very beginning. Restaff is not only a production hub; we are partners in facing challenges. I believe in ownership, and the more you know about the context and significance of your work with your partners, the more invested you are and the more you can gain from them; you’ll have pride in what you do. Our clients are invited to help create a unified international team by visiting Vietnam twice a year, and they also invite our representatives to visit their business.

Clients simply love this approach, and appreciate building long-term relationships. Outsourcing is not a new thing, but historically, the biggest challenge is a lack of consistency. The other side is robotic. We don’t want to be another robot factory. We want to enable our people to think, and utilize the brightness of our team. We want to be personal – our clients get to know the developers collaborating with them.

People often comment on decisions they’ve made with the phrase, “It’s not personal; it’s just business.” For us, it’s both. All of these technology products are just tools to support us humans. At Restaff, we strategize and build our business with a personal touch. The culture of our work environment is to talk, deal and listen. If you’re not people-oriented, I don’t know how you can be sustainable.

Kent: In my 10 years of working with overseas clients, we’ve mostly serviced teams from more developed countries such as Singapore, US, and in Europe. Recently and very fortunately, I have had opportunities to work with clients from less developed countries such as Myanmar and Samoa. These are places where technology is either nonexistent or at very early stages, even compared to what’s happening in Vietnam.

This shifted my perspective in many ways, including how I understood a project scope to be defined. A project is no longer a fixed service contract, building web portals or mobile apps for a certain period of time as requested by the client. My definition of project now extends beyond delivering the software code. It must also include setting up the business process, and training and working with the team on the ground for a longer period to ensure that the system can run smoothly and actually solve real business problems. I see this as an evolution from pure software development. Venture builders nowadays want to look for teams who can handle their entire online systems remotely for low cost. In layman’s terms, management is now not only looking for “people who can code”; they want and need “people who build and run their system”.

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