How is software outsourcing industry doing in the Asia-Pacific region?

May 20, 2019

So today, let’s talk about how the software outsourcing industry is doing in India, Vietnam, and Thailand. These are the three high-ranked Asia countries that make it to the top 10 of A.T. Kearney’s 2017 Global Services Location Index.

Global Services Location Index was conducted based on 3 main factors that are: financial attractiveness, people’s skills and availability, and business environment of the software outsourcing sector.

1. Indian – The Godfather of the software outsourcing game

According to various organizations such as Deloitte, Nasscom, etc., India remains the top choice for software outsourcing. 59 out of 100 companies asked by Deloitte have put it that they are outsourcing or had experience of working with an Indian software development vendor. Furthermore, there are also 22% of the participants said that they are considering to develop their product in this country.

software outsourcing
There are more than 200 IT-related multinational corporations as well as a ridiculously big talent pool of 1.1 million employees in the land of spices.

And in the 2017 Global Services Location Index, India continues to be on the top and even leads the second country – China – by 0.76 points.

So what are the pros and cons when outsourcing software to India?

First of all, let’s talk about the advantages.

As stated in the report, there are more than 200 IT-related multinational corporations as well as a ridiculously big talent pool of 1.1 million employees in the land of spices. And if you are wondering about the number of freshers here, there are 200.000 engineering graduates join the industry every year. And this crowded competition leads to fierce competition in the market.

Furthermore, the IT infrastructure in India has been developed for a long time. Together with it, having experience in management is also a major strength of Indian software outsourcing companies. The reason behind these two factors is that India has involved in the outsourcing industry since the very beginning. And you know what? That’s why overseas businesses can cut down the cost of investment, operation, and management when outsourcing to India.

However, there are some bad sides too.

We, at the moment, cannot be so sure about the term “talent” in this scenario because there have been complaints about the quality of code coming from this country. It turns out that after receiving the product from their Indian partners, many businesses have to hire another software agency to fix and put things together.

The first reason may surprise you. Many specialists commented that it seemed like in India, getting tasks done is way more important than figuring out how and why they’re done. Furthermore, Indian software companies are embracing the concept that firing people who cannot accomplish the work fast enough. In short, most of the vendors here care only for the quantity, not the quality.

The second one came from an Indian tech guy via a Reddit thread about software outsourcing in India. He argued that the quality of IT human resources in this country is decreased due to the low quality of life here. A lot of Indian students thought that working in the IT and software development industry must be the golden ticket to get out of their poor backgrounds. Consequently, many of them decide to study this without thinking of any other factors like their ability, interest or passion.

After all, India still dominates the software outsourcing game, and it will take other countries a really long time to be a sweetheart like this one.

2. Vietnam – The coming of age

Vietnam was widely known as a country of war and agriculture for long. However, at the moment, this very country is continuously growing to be one of the most prominent countries in the software development industry, especially the outsourcing business.

software outsourcing
At the moment, this very country is continuously growing to be one of the most prominent countries in the software development industry, especially the outsourcing business.

And two of the most important achievements of Vietnam Business Process Outsourcing recently are:

  • To become Japan’s second-largest partner in software and outsourcing service since 2014. Research conducted by the Information Technology Promotion Agency Japan states that Japanese companies are using 20,000 Vietnamese employees in ITO (Information Technology Outsourcing) and BPO (Business Process Outsourcing). Not only does this happen due to the lack of IT human resources in this country but it is also because the quality of software engineers in Vietnam is increasing.
  • To be in the top 6 most attractive software outsourcing service provider in AT Kearney’s 2017 Global Services Location Index. Moving from the 11th place in 2016, Vietnam finally became the 6th fastest growing software outsourcing country in 2017 GSLI, passed Thailand and the Philippines on the list. It is worth noticing that this has been the first time Vietnam make it in the top 10 since 2013. This index also stated that in 2015, Vietnam’s outsourcing industry reached $2 billion and is developing at a rate of 20 – 25% annually for the past 10 years.

These achievements do not just happen.

Vietnam becomes one of the front runners in this software outsourcing race thanks to two factors: skilled labor and cost-effectiveness.

The skilled labor force comes greater productivity. This is just a fact. Firstly, thanks to the returns of Vietnamese expats from aboard, knowledge, experience and also capital are brought back to the homeland. Secondly, due to the need for high-skilled labor, the government and a lot of companies spend more money than ever to invest in human resources. Last but not least, Vietnamese are widely known as hard-working and loyal workers.

Speaking of the cost-effectiveness, Japan and many other countries have seen Vietnam as a cheap yet powerful IT hub. This happens due to the fact that the cost of operating businesses, especially in the IT field, is low compared to other countries in the same region.

For more information about Vietnam outsourcing industry, read here.

3. Thailand – The hidden dragon

Thailand is another good choice for many businesses to seek for an effective method to reduce costs and enhance the internal operation.

This South-east Asia country is considered to be one of the top locations for various IT-related industries for its well-organized infrastructure and stable economy.  

However, due to the fact that Thailand is putting in great effort into developing the tourism industry and manufacturing sector, in 2017, this country was pushed back to the 8th place in the index by A.T. Kearney. And speaking of its political instability, many businesses have stepped back from this wonderful country.

But that’s not the only reason.

software outsourcing

The workforce in this country is young, productive and crowded. Nevertheless, according to a report from Springer, Thai firms have developed without a long-term deepening of their technical capabilities. The report also addressed that their technological learning has been very slow and passive compared to other countries in the area. It is worth to notice that most of the large corporations and SMEs are struggling to increase their design and engineering capability.

But don’t you worry about that. Thailand still offers us affordable costs when it comes to software outsourcing. It is reported that the salary for an intermediate developer in Thailand is only one-fifth of what their US counterparts earn. And the salary for an experienced project manager here is only one-third of that in the US. Furthermore, the talent pool in this country is kinda unique, expats come from every corner of the Earth to be here to enjoy the finest weather and work with the locals for a living. So chances are that you can find a mix of Thai and foreign talent for outsourced projects.

We at Designeveloper hope that this article has given you a better insight into how the software outsourcing industry is doing in India, Vietnam, and Thailand.

If you are looking for a Vietnam software development company, let’s have a talk. Designveloper is the leading software development company in Ho Chi Minh City, Vietnam, founded in early 2013 with a team of professional and enthusiastic Web developers, Mobile developers, UI/UX designers, and VOIP experts. Following a systematic approach, we intend to deliver the best and most cost-effective software services to our clients.

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