Vietnam, Becoming new Outsourcing hub for foreign investors

with No Comments

Vietnam is becoming a new outsourcing hub for foreign investors, attracting more giant software development corporations.Foreign investors and the Vietnamese government are trying to push up the economy, bringing in higher-tech and higher-margin businesses, and winning commerce away from better-establishing countries, a local newspaper reported on May 29.

According to the Wall Street Journal, six years ago, when British recruitment agency Harvey Nash PLC began scouting for an offshore hub for its news software-development business, Vietnam was not an obvious choice. The country still was in the business of trying to make shoes, bicycles and clothes cheaper than any body else, while countries such as India, the Philippines and South Africa already were latching onto the outsourcing phenomenon.

But, Vietnam became the top contender with mix of low wages, improving English-language skills and technical proficiency, when Harvey Nash’s inspection team returned from Hanoi to assess the options, the paper added. Today, Harvey Nash employs 1,500 people across Vietnam through its own business and its partnership with FPT Software Corp., a unit of Vietnam technology company FPT Corp., Wall Street Journal said.

The paper cited Microsoft Corp. founder Bill Gates during his visit to Vietnam last year as saying there was no reason Vietnam couldn’t follow India into software development and other forms of outsourcing.

Besides, last year’s decision by Intel Corp. to build a 1 billion USD semiconductor factory near Ho Chi Minh City was a turning point of sorts for such efforts.

According to the paper, California consultancy NeoIT ranked Vietnam ‘s Ho Chi Minh City as the top non-Indian city in its 2006 review of the most competitive cities for outsourcing, based on the available labour pool and infrastructure. The only other non-Indian cities in the top 10 are Manila and Shanghai.

However, the paper said, Vietnam still is some way away from becoming one of the reigning outsourcing giants in Asia.

Moreover, the global outsourcing industry relies as much on the quality of telecommunications as on the talent pool, and in this respect Vietnam still is lacking.

But building up telecommunications is a quicker fix than building up a competent work force, and an increasing number of companies, the paper said.

National Press