According to Bloomberg, Vietnam is an attractive destination for startups in 2023.
The international press reported that Vietnam’s economy has been struggling domestically and internationally in 2023.
However, there are still encouraging signs regarding the economy’s potential for growth. In the meantime, Vietnam is also focusing on long-term economic growth to encourage startups to start businesses, invest, and do business in Vietnam.
Vietnam has been recovering and getting back on track with its development
As the boom period of reopening following COVID-19 comes to an end in 2023, the economy is returning to a long-term growth trajectory. Vietnam wants to spend 7% of its GDP on infrastructure this year to support economic growth and ensure that FDI will continue to flow into the country for years to come.
In the future, Vietnam’s economy is being strengthened by foreign direct investment. Vietnam is an ideal location for tourists and foreign investors to set up companies due to its favorable business climate, stable political environment, sustainable macroeconomic development, abundant labor force, and low cost.
According to experts, the situation is very bad all over the world, but Vietnam has been recovering and getting back on track with its development. There will still be obstacles, such as the possibility of a recession and global protectionism, which reduces export demand. However, there will still be many advantages, and foreign investment, including investment in human resources and infrastructure, will drive growth in a variety of ways. In addition, the recovery of consumer and business confidence is expanding rapidly. Domestic demand has returned to normal.
According to Bloomberg, Vietnam is a desirable location for startups due to its abundance of skilled engineers, low labor costs, and rapidly expanding economy. By 2030, Vietnam wants to make Ho Chi Minh City a “magnet” for technology investments and a digital economy.
Vietnam is now a major hub for manufacturing and a crucial link in the global supply chain. As a result, increasing automation is crucial for economies and businesses. One of the primary drivers is the rapid improvement in labor productivity and the digitization of the value chain. Vietnam’s economy has great potential for rapid growth and digital transformation across all sectors.
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Concerning the factors that ensure Vietnam’s growth, there is a consensus. These elements incorporate speeding up primary and institutional changes, profoundly taking part in new-age economic alliances, improving unfamiliar speculation fascination, speeding up computerized financial change, and profound mixing into the worldwide store network.
5 Reasons You Should Choose Vietnam for starups
While Eastern Europe, China, and India appear to be the leading destinations for offshore software development services and IT solutions, Vietnam has gradually positioned itself as an emerging power in this area.
Indeed, revenue from Vietnam’s information and communications technology (ICT) industry reached $148 billion in 2022, indicating a 10% rise year over year. The industry’s contribution to GDP was reported to be $34.3 billion, an increase of 8.7%. Additionally, its economic capital, Ho Chi Minh City, is frequently cited as one of the top outsourcing hubs in the Tholons indexes.
Between 2014 and 2019, Vietnam’s Information and Communications Technology (ICT) sector had an average yearly growth of 9.8%, with annual revenue of $110 billion in 2019, representing almost 1/6th of the whole nation’s GDP. Additionally, its economic capital Ho Chi Minh City is frequently cited as one of the top outsourcing cities in the world.
Let’s review the main advantages of Vietnam as a destination for starups:
A Large Pool of Educated Young Talents
Vietnam’s education system prioritizes STEM subjects, and IT degrees are in high demand. This has led to a steady flow of talented IT professionals who are fluent in English and familiar with international business practices.
With a young population with a strong appetite for education, Vietnam indeed offers an undeniably strong talent pool. With nearly 100 million inhabitants, 53% of whom are under the age of 35 (and a median age of 32.8 years), Vietnam is a significant demographic power that can easily fuel its booming IT industry. It also has one of the lowest unemployment rates in the world.
According to TopDev’s report, each year, Vietnam trains some 400,000 IT engineers in one of the 153 institutions listed in the country.
The Ministry of Information and Communications (MIC) reported that the total number of digital tech firms in Vietnam in 2022 was 70,000, an increase of 9.6% over the previous year. 60% of these companies are switching from low-value to high-value manufacturing processes.
Vietnam ranks 29th, right above France, in terms of skill value worldwide in the Developer Skills Chart of Skill Value Report in 2018.
Vietnamese coders have the 11th highest rating in the world, according to the Developer Skills Charts of Topcoders Report in 2022.
International firms are not mistaken: many high-tech companies such as Qualcomm, Intel, Sony, and Samsung have invested heavily in the country over recent years. Hiring and R&D investments are thus going well in Vietnam, with little turnover in the IT-related industries. IT outsourcing companies in Vietnam are also growing, offering healthy competition for you to choose from!
Attractive Costs
In a country where GDP per capita is just around 4,000 USD, despite very strong economic growth, the cost of infrastructure and labor remains quite low compared to the rest of the world.
Vietnam offers highly competitive pricing for IT outsourcing services. The average hourly rate for a software developer is around $25 (or in the $20-40 price range), which is significantly lower than the rates in other outsourcing destinations such as India or China. Vietnam’s offshore services pricing is therefore a tempting offer for companies trying to cut expenses without risking quality.
According to Marketsinsider, Vietnam ranks 5th in the “Best countries to outsource to in the World in 2019”, and 2nd in the “Top 8 IT Outsourcing Countries” in 2022, according to Lotus-qa.com, calling it the “The next Silicon Valley in Southeast Asia”.
CIO magazine claims that outsourcing to Vietnam can save you up to 90% of software development compared to the United States of America. Other studies suggest that software development costs are also 50% inferior in Vietnam compared to India. Outsourcing software in Vietnam is one of the best value-for-money you can find in the world! Vietnamese software development companies can offer their services at extremely competitive rates.
A Stable Environment
Vietnam’s political landscape is known to be extremely stable, with an appropriate legal framework and a very resilient economy, contrary to a lot of its neighboring countries, such as India, Thailand, Myanmar, and the Philippines, which may be prone to uprisings, regional conflicts, or social disarray.
Since the 1990s, Vietnam has experienced strong and sustained growth, even during the COVID crisis. It remains one of the only countries in the world to have been able to maintain the biggest share of its economic activity during the years 2020 and 2021, with around +3% GDP growth per year. With growth hitting 8.0% in 2022, Vietnam’s economy saw a significant rebound from its average rates of 7.1% from 2016 to 2019, predicting a positive prospect for upcoming years.
Even when the world is in turmoil, stability seems to reign in Vietnam, offering unparalleled conditions for the security of your projects and their deadlines.
A Prime Location for Business
Vietnam is at the heart of South East Asia, which is currently the most dynamic economic region in the world and can be considered a bridge between China and the rest of ASEAN.
Perfectly integrated into the world economy, Vietnam is at the crossroads of business destinations such as Singapore, Thailand (Bangkok), Malaysia (Kuala Lumpur), and Hong Kong, all located less than 2 hours away from Vietnam by plane.
Its network of transportation is growing larger by the day, and plans to open new international airports will make Vietnam even more globally relevant, with very frequent and accessible flight routes to and from all over the world.
Language
If it is true that because of its history, India has always been considered a prime destination for English-Speakers to do business with, let us not forget that Vietnam also has a valuable advantage in the form of its Latin alphabet. Contrary to most Asian countries, Vietnam is indeed one of the only (along with the Philippines and Malaysia) to use a “Westernized” version of its written language.
As a result, it makes it relatively easy for Vietnamese to learn English, which is incidentally the most popular foreign language in the country.
According to a survey conducted by Statista in June 2021 in Vietnam, English was learned by 86% of the respondents. Around 50% of the Vietnamese population can communicate in English, with a higher rate in the main cities like Ho Chi Minh City and Hanoi. The vast majority of Vietnam’s college graduates have high proficiency in English.
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The Vietnamese government is also particularly committed to expanding English language education to meet the requirements of skills-intensive jobs in high-tech employment sectors. As of today, Vietnam ranks #7 on the English Proficiency Index out of 24 Asian countries.
So if you choose to work on software builder in Vietnam, you will find that the so-called language barrier is almost non-existent, especially if you work with us and our international teams, where we offer expertise in English, French, Spanish, Japanese, and Vietnamese.
Contact us today to learn more about outsourcing your startup!
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