In APAC region, Vietnam is emerging as a preferred destination for offshoring IT related activities following India and China

1. Country Spotlight –IT Job Market In Vietnam Is Expected
To Increase By 6 To 10 Percent Annually Over The Next
Three Years
In APAC region, Vietnam is emerging as a preferred destination for
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offshoring IT related activities following India and China. This has
become evident as the country’s software export in 2012 rose to USD
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550 million, an increase of around 35 percent when compared to USD
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400 million in 2010. Several MNCs started setting up centres in Vietnam
during 2008-12, primarily to take advantage of its lower costs. Currently,
there are around 750 companies in the software vertical in Vietnam
employing 35,000 professionals. These include big players such as IBM,
HP, NTT, Huawei and Intel.
The main advantages Vietnam offers are a large workforce and a stable
government with strong support for ICT sectors from the government. Ho
Chi Minh City and Hanoi are the major technology hubs in the country. Hi
Chi Minh City has an installed talent base of 18,000 in IT services and
8,000 in software while the Hanoi has a talent pool of 9,000
professionals, primarily in the IT services sector. Further, these cities
generate a combined graduate pool of 9,000 engineers that are suited for
employment in the software development sector.
Talent Neuron research indicates that IT services jobs are set to increase
exponentially – it has already risen by 13.9 percent since 2010, and is
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2. expected to grow by 14.4 percent annually till 2016. Similarly, our
research shows jobs in the software development domain are also
expected to increase by 6.35 percent annually over the next three years.
Our job demand analysis shows that for every new job in software
development, there are about 13 software development professionals.
Universities offer an excellent ecosystem for companies to carry out joint
research
and
development
initiatives.
IBM
plans
partners
with
Vietnamese universities to conduct joint research in areas such as
analytics and cloud computing.
IT service companies in Vietnam primarily cater to the Japanese and US
markets, which account for a combined 75 percent of revenues.
Moreover, the move to deregulate sectors such as energy, health
services and telecom in Japan is expected to fuel the demand for
additional IT-related jobs (Data centers, managed services etc.) in
Vietnam. Talent Neuron research indicates that companies initially build
up a team of 300-350 employees within the first 3 years and then scale
up to 1,000 resources in the subsequent 5 years.
Vietnam also offers significant cost advantages when compared to China
and India. Salaries for software developers in Hanoi and Ho Chi Minh are
about 30-35 percent lower than those in Bangalore, India. Similarly,
developers in Beijing and Shanghai are offered double the salary
compared to their Vietnamese counterparts.

3. Source: Talent Neuron Salary Index. Note: The salary is considered for a
resource with 3-7 years of experience with typical development skills such
as C, C++, .Net, JAVA etc.
Government Incentive/Initiatives
As part of its efforts to enhance the country’s investment-friendly
reputation, the Vietnamese government offers various incentives for
software companies.

The corporate tax rate for software companies has been reduced to
just 10 percent of the total profits for the first 15 years of operations
(the standard tax rate is 28 percent)

The government offers a tax holiday for four years beginning from the
first year of profit, and then 50 percent reduction for nine years
subsequently

Exported software products and services are exempt from VAT and
import duty

The import of raw materials required for software production purposes
is exempt from import duty
In addition, the government is undertaking measures to de-regulate
sectors such as business services, telecommunications, distribution,
insurance, banking, securities, transportation, healthcare, education,
culture and environment. The Government also plans to increase private

4. investment in projects related to industrial areas, export processing
zones, hi-tech zones and economic zones.
Business Challenges

The employee turnover rate is around 17 percent in Vietnam and is
increasing at a rate of 2 percent year on year.

The IT talent available in Vietnam lack experience working in multicultural environments. Companies such as IBM have created
professional development programs for employees.