Advantages and difficulties of offshore development in Vietnam

When it comes to offshore development, many people generally think of the cost merit of being "cheap." However, in recent years, that aspect has changed. There are various factors, for example, due to economic growth in Vietnam and fluctuations in the supply-demand balance for IT human resources globally, including Japan, the cost merit is relatively shrinking compared to before. Rather, in recent years, the expansion of IT-related markets and the lack of resources have led to increasing attention to resource benefits.

Advantages and difficulties of offshore development in Vietnam


Advantages and difficulties of offshore development in Vietnam

1. Introduction

When it comes to offshore-development--hachinet-software">offshore development, many people generally think of the cost merit of being "cheap." However, in recent years, that aspect has changed. There are various factors, for example, due to economic growth in Vietnam and fluctuations in the supply-demand balance for IT human resources globally, including Japan, the cost merit is relatively shrinking compared to before. Rather, in recent years, the expansion of IT-related markets and the lack of resources have led to increasing attention to resource benefits.


On the other hand, it cannot be ignored that there are issues and risks in communication, etc. mainly due to cultural and geographical gaps in the utilization of offshore development.


Therefore, we believe that we can realize operations that fully utilize the merits only by recognizing not only the superior characteristics but also the disadvantages and risks and taking appropriate measures.


We hope that this article will help you to deepen your understanding of the characteristics and risks of offshore development in Vietnam and help you to consider the optimal solution.



2. Reasons why Vietnam is often selected as an offshore destination


2.1 Vietnam is a pro-Japanese country

The first point is that Vietnam is a pro-Japanese country which also is important for business abroad. This is because, in countries that tend to be anti-Japanese, the risk of trouble must be considered.


Vietnam also has a good impression of Japan, so you can promote your business while maintaining friendly communication. In addition, Vietnamese are said to be diligent and serious, and the fact that their national character is similar to that of Japanese is another reason why they are selected as business partners.


Another advantage is that there are many young people who can understand Japanese since many schools in Vietnam are focusing on Japanese language education and many students study abroad in Japan.


2.2 Cost

Although Vietnam is experiencing rapid economic growth, it is still an environment where we can enjoy significant cost and tax benefits compared to Japan. Regarding the specific unit price, there are differences depending on the offshore development company, and polarization is progressing, but it is said that the unit price is about 1/4 to 1/3.


Furthermore, as with the unit price, quality varies greatly depending on the offshore development company, but as introduced in the feature, the overall level of development capability is increasing year by year.


Therefore, it is possible to expect excellent cost performance for an easy-to-build development environment that utilizes highly skilled engineers while keeping the unit price to some extent. However, it is very likely that this cost feature will shrink in the long run, so it may be risky to consider offshore development in Vietnam by focusing solely on price.


2.3 Abundant and excellent engineer resources

Vietnam has set the production of advanced IT human resources as a national policy, and IT human resources from excellent science universities are stably supplied to the market.


The number continues to increase year by year, and it is said that 40,000 students complete a specialized IT curriculum every year, and the total number of IT engineers in Japan will reach about 350,000 in 2021.


Furthermore, in Vietnam, IT engineers are recognized as one of the so-called flower-shaped occupations, and there is a background that excellent human resources are all aiming for the IT industry due to their high salary and popularity.


For example, in Vietnam, a major IT company establishes a university by itself, and the IT company itself trains engineers from the young age of students. There are even offshore development companies that work with universities to provide education. Graduates who have cultivated skills through the education of such companies often start new offshore development companies, and there is a tendency for many companies to establish an education system based on their own experience.


Otherwise, Japan is well known for the declining working population, which leads to being more difficult to secure young IT human resources year by year. According to the Ministry of Economy, Trade, and Industry, it is estimated that there will be a shortage of about 400,000 to 450,000 IT human resources in 2030. Under these circumstances, it is a great advantage for Japanese organizations to be able to secure abundant excellent engineers.


Especially for large-scale projects, the number of contractors is limited in Japan, while Vietnam is relatively easy to accept due to its abundant resources. Although there are issues such as management difficulties, in the case of a large-scale project, the cost merit, which is one of the main merits, is also very large, so it seems that the value of consideration is very high.


2.4 Easy to handle development under various conditions

By outsourcing to a country with an abundant labor force, it is possible to secure a large number of human resources. Therefore, it is possible to support development under various conditions such as development with short delivery time and large-scale development.


It is also possible to build a speedy development system in anticipation of the rapidly changing global market. It is a great strength to be able to quickly prepare the required system.



3. Issues/problems of offshore development



3.1 Communication may be difficult

Communication problems are unavoidable because the contractor is from a foreign country. It may take time to translate specifications and information sharing. Therefore, if the contractor does not have a person in charge who can speak Japanese, a staff member who understands English or the local native language is required.


Nowadays, the Internet is widespread and the means of communication itself are abundant, but the problem of time difference must be taken into consideration during meetings. Especially in an emergency, it may be difficult to contact you promptly or request a response.


3.2 Differences in perception are likely to occur due to differences in culture

There are various cultural differences between the outsourced country and Japan. There are many differences in values, business etiquette, and work outlook. This difference can cause trouble.


For example, in general, overseas operations that are not in the contract are not performed. If the requirements are not well defined, there is a risk that the product will be of poor quality to the ordering party.



4. Measures to prevent offshore development from failure

アプリをオフショア開発するときのポイント|開発会社選びを失敗しないためには? - Deha magazine



4.1 Understanding the differences in communication culture

The basis for thinking about global business is the recognition that Japan is a country where high-conquest communication can be achieved. Since Japan is a country with a single ethnic group, it is common to make ambiguous expressions in areas of communication such as conversation that would naturally be understood by the same ethnic group. The fact that such ambiguous expressions are valid is called high conquest.


On the other hand, from a global perspective, many foreign countries are diverse and multi-ethnic nations. High Conquest communication, which is common in Japan, does not work in these countries. Since cultural common areas are weak in other ethnic nations, all items must be clearly expressed and explained without ambiguity. This kind of society is called low conquest.


In offshore development that deals with overseas countries, it is necessary to eliminate ambiguities that can only be applied to high conquests and to thoroughly communicate with low conquests. Also, let's thoroughly create materials, etc. with Low Conquest. Do not use demonstratives such as "this" and "that" as much as possible, and explain in clear terms.


4.2 Start a test team offshore

One solution is to set up a test team offshore. By involving the test team from the upstream process, it is possible to detect any discrepancies with the project at an early stage.


Also, since the tester and the developer are in the same native language, it is easier to communicate closely and understand the development status, and as a result, it is easier for the Japanese side to manage.


4.3 Source code review

Source code review is very important to understand the development status. It is not recommended to throw the development to the offshore side. If you throw the whole thing, there may be cases where misrecognition occurs frequently at the user test stage and many problems occur, or there are cases where the release is possible but it is not expandable and additional development becomes difficult.


4.4 Communicate closely

At the same time as communicating with the low-conquest mentioned above, let's actively work to communicate closely. Specifically, it is important to grasp the development status, such as close communication with communication tools, communication using diagrams, and in some cases video conference while sharing the screen. It is also important to have a bridge SE on-site, which will serve as a bridge between Japan and offshore destinations.



5. Conclusion

We hope that this article will be of some help to you when considering offshore development in Vietnam. In addition to quality assurance on the offshore, we, Hachinet are also engaged in offshore development with an emphasis on quality. If you have any concerns about offshore development or system development, please feel free to contact Hachinet. We will do our best to support your offshore project.



If you are considering offshore development, please feel free to contact us.

Here is our contact information.


Account Manager: Quan (Japanese/English available)


Phone number: (+84) 2462 900 388


Email: contact@hachinet.com


Please feel free to contact us for consultation/application by phone.


Click here for more information ▶