How to Set Up an Offshore Development Center in Vietnam

In recent times, companies seeking to access worldwide talent at a lesser cost than conventional in-house development groups have grown to rely more and more on offshore development centers, or ODCs. According to Statista’s estimate on software industry income in Vietnam by 2024, Vietnam will generate a total of $594.40 million in 2024.

As a result, international companies are increasingly considering Vietnam as an advantageous partner for the establishment of offshore development centers. In order to set up an efficient offshore development center in Vietnam, this blog entry will offer a short checklist.

1. What Is an Offshore Development Center (ODC)?

A software growth company located abroad that can assist in lowering internal expenses and effort is known as an offshore development center (ODC). In nations like Vietnam, the Philippines, and India, where living expenses are cheaper, one might find development offices abroad. Moreover, these nations possess the necessary stability in politics and financial capacity to create and incorporate ODC software procedures.

2. What role does ODC have?

The primary advantages of a conventional ODC are its capacity for growth and adaptability. It is imperative that this offshore development center architecture is appropriate for ongoing servicing and assistance.

2.1. The typical ODC responsibilities include:

2.1.1. Project Manager

Recognize and evaluate the requirements and obstacles faced by your business, making sure that every project is completed to the required standards. In your role as the head developer or supply supervisor, oversee a group of five to thirty offshore developers.

2.1.2. Senior Developer

The capacity to oversee a group of two to six offshore developers and comprehend and handle your commercial needs. In charge of developing key modules and creating the application framework. In a relevant technical sector, the individual typically has 5- 8 years of expertise.

2.1.3. Intermediate & Junior Developers

Provide top-notch software that complies with the requirements. We have English-language communication with you via email and message boards. The experience gap between junior and mid-level programmers is one to three years.

3.  How do you establish an offshore development center in Vietnam?

3.1. How to set up ODC in Vietnam

Establishing an offshore development center (ODC) in Vietnam involves a series of strategic steps, each crucial to ensuring the success and operational efficiency of the center. Vietnam has become an attractive destination for offshore development due to its skilled labor force, competitive cost, and supportive government policies. Here’s a guide to setting up an ODC in this vibrant country.

The first step involves conducting thorough market research to understand the legal, economic, and cultural environment of Vietnam. This includes understanding the labor laws, tax obligations, and any government incentives for foreign investments. It’s also important to analyze the talent pool available in terms of software development and other IT skills you require. Identifying a suitable location within Vietnam is crucial, with cities like Ho Chi Minh and Hanoi being popular choices due to their developed IT infrastructure and access to a large pool of skilled professionals.

Next, you need to establish a legal entity in Vietnam. This could be in the form of a representative office, a joint venture, or a wholly foreign-owned enterprise (WFOE), depending on your business goals and the level of control you wish to maintain. Engaging with a local legal firm can streamline this process, helping navigate the complexities of Vietnamese law and ensuring that all documentation is correctly filed. Additionally, setting up banking arrangements, obtaining necessary business licenses, and ensuring compliance with local laws are critical steps during this phase.

Finally, recruitment and operational setup form the backbone of your ODC in Vietnam. Building a strong local management team is key to bridging cultural and operational gaps. Leveraging local recruitment agencies or professional networks can help in hiring skilled developers and other staff members. Investing in training and development ensures your team stays updated with the latest technologies and practices. For the physical setup, consider partnering with a local real estate agent to find an office space that meets your technical and logistic needs, ensuring a productive work environment. Establishing clear communication channels and project management practices will ensure smooth operations with your headquarters and other global offices.

3.2. The best suitable location for choosing in Vietnam

Vietnam has rapidly emerged as a significant hub for IT and software development, attracting global attention for its talent pool, cost efficiency, and innovative ecosystem. Among the vibrant cities fostering the growth of the IT industry, Ha Noi and Ho Chi Minh City stand out as a premier location.. Being the country’s most populous city, Ha Noi and Ho Chi Minh City boast a vast pool of IT professionals, efficient transportation and logistics systems, affordable living costs, and a wealth of resources and infrastructure.

3.3. Choose the Top Partner for Vietnam Outsourcing Services

Once you’ve decided on the optimal ODC model for your organization’s requirements, the subsequent action involves identifying a suitable Vietnamese service provider capable of executing your project. Currently, numerous leading IT outsourcing firms in Vietnam excel in establishing offshore development centers tailored for international companies. Every company offers its unique benefits, and the decision on the most suitable option for your particular demands rests with you.

When selecting a Vietnam ODC (Offshore Development Center) services provider, it is crucial to consider the following key elements to make an informed decision:

Read more: Don’t overlook Vietnam’s Leading IT Outsourcing Firms in 2024

3.3.1. Technical Knowledge and Experience

The primary and most crucial traits of a successful offshore development center revolve around the service providers’ responsibilities. These include recruiting IT professionals and forming the offshore development team, necessitating a deep comprehension of the project’s technical needs and practical experience in overseeing ODCs. Furthermore, these companies should have the ability to guarantee the quality of work and adhere to project timelines. 

Meanwhile, Vietnam boasts a significant number of highly skilled IT specialists, particularly in cities like Ho Chi Minh City, Hanoi, and Da Nang. Therefore, choosing an outsourcing partner with profound technical knowledge and experience is key to efficiently identifying, evaluating, and organizing a competent team for your ODC.

3.3.2. Previous Experience

When evaluating outsourcing providers, analyze their portfolios to assess technical expertise and past performance. Reviewing their client list can provide valuable information about their capabilities. Be sure to ask about their experience in specific industries. Evaluate client satisfaction with work from the vendor’s Offshore Development Centers (ODCs). 

These steps are essential when examining portfolios or conversing with potential partners. A comprehensive assessment of their previous achievements can simplify the process of accurately evaluating potential vendors. Before deciding, consider reaching out to some of their clients for direct feedback on the outsourcing provider.

3.3.3. Pricing

This element plays a vital role in outsourcing operations and acts as the primary reason why many global companies opt to assign their IT needs to Vietnam. The country is renowned for its cost-effective yet top-notch outsourcing solutions. According to CIO Magazine, IT outsourcing in Vietnam can be as much as 90% cheaper than in the United States. 

Nevertheless, establishing offshore development centers involves a substantial, enduring financial commitment, with the possibility of unforeseen costs emerging during the project. Hence, it’s crucial to compare quotes from various providers to pinpoint the most appropriate offshore development center (ODC) services. The ideal ODC partner should match your budget and project requirements without introducing unexpected expenses.

Read more: Comparing Hourly Rates for Software Developers Worldwide

3.3.4. Working and Technical Support

The first one, your external partner should offer technical assistance from the beginning to the end of the project, covering all stages from planning to execution and completion.

Besides, before finalizing a decision, evaluate the vendor’s work approach and methodologies to ensure they align with your preferences. While you can request customization for offshore development centers to meet your needs, altering the work culture might pose greater challenges. Outsourcing vendors usually establish the Offshore Development Center (ODC) and hire staff, integrating their distinct approach into the assembled team.

4. What Makes Vietnam ODC Services Worth using?

In recent times, Vietnam has emerged as a premier choice for ODC services. Its appeal for IT outsourcing is largely attributed to its competitive labor costs, a substantial and skilled IT workforce proficient in various languages, and welcoming government policies for international enterprises. 

• Ho Chi Minh City has consistently been recognized as a leading city for outsourcing, securing its place at the top for eight consecutive years according to Tholons’ rankings from 2009 to 2016
• Vietnam has garnered acclaim for its innovative outsourcing solutions and cost-effective environment, leading the rankings in Cushman & Wakefield’s business process outsourcing and shared service location index for 2016-2017
• Top 10 nations where the most engineering degrees are produced  as reported by Forbes in 2015.

5. What win-win scenario may our clients attain with the aid of Sphinx’s offshore team?

Customers choose Sphinx as their offshore development center in Vietnam for various reasons, including Sphinx’s standing as a leading offshore software development hub in the country.

• Hourly Rates that Encourage Competition
• Clear Oversight of Delivery Management and Service Performance
• Consistency and Openness in Operations
• Intensive Teamwork
• Adaptable Team Composition
• Cutting-Edge Development Approaches

Besides, you can focus completely on crucial responsibilities such as business management, sales, marketing, and operational procedures, as we handle product development, providing the following advantages:

• Affordable rates and seamless team growth.
• Proficient in technical skills as well as in English.
• Offering a one-month trial with a full refund option if expectations are not met.
• Openness is key to successful ongoing partnerships.
• English Proficiency: Our team possesses the ability to read and comprehend English when it is spoken.
• Affordability: It’s possible to hire outstanding developers at competitive hourly prices.
• Talented Young Developers: In Vietnam, we have young developers who have pursued their studies and honed their technical abilities to a high level.