Why Outsourcing to Vietnam is a Sound Business Decision (Part 1)
This article lays out the business case for meeting your company’s software development needs by outsourcing to Vietnam. It first outlines factors to consider in deciding which offshore locations to outsource to. Then it considers those factors one at a time for Vietnam, concluding that the country is a promising offshore location for outsourced software development and for business’ other IT needs.
Factors to Consider Regarding the Offshore Provider’s Location
In this section, we present a simple and straightforward framework for understanding the advantages and disadvantages of various offshore locations for your outsourced projects and business fun
ctions. This list of factors focuses on the most important and relevant factors, without becoming overly complex by listing unimportant minutiae.
The main factors that should be considered are as follows:
- Price: Obviously one of the main resources to outsource work is to save money, so naturally you will be interested in the price quoted by the offshore provider. But it is critical to know exactly what that price includes. Costs for labor and overhead are both important components of the total price. Before doing direct comparisons of offshore providers’ labor costs, you should consider how much overhead you will incur in managing the outsourced work.
- Labor Force: Who exactly will be working on your project? You should be familiar with these workers’ professional experience, education, and technical expertise. Also, make sure that there are enough workers available to work on your projects, so that your work won’t be slowed by labor bottlenecks. Find out what kind of turnover rate the offshore provider has, because if the turnover rate is high, a lot of time will be wasted on re-training and transferring information to new offshore employees.
- Socio-Economic Stability: You can greatly reduce the risk of outsourcing by choosing to work with an offshore provider that is located in a country that has high economic, ethnic/religious, and political stability. If the offshore provider is located in a country with significant instability and conflict, your project may proceed more slowly or come to a complete halt. Also, the unstable situation may present dangers if and when your employees have to travel to the offshore site (Americans are often a target of insurgents overseas). And ultimately, if the country unexpectedly ends up with new leadership, you may find that the business-friendly policies that originally attracted you to the country suddenly change and become hostile to foreign investment.
- Economic Stability: Be familiar with the country’s GDP and other economic indicators, and how those indicators have changed over the past several years. Also, consider whether foreign investment is increasing or decreasing and try to understand the underlying factors. What international trade treaties and pacts is the country a part of?
- Ethnic/Religious Stability: Know what ethnic and religious groups are present in the country and whether they are tolerant or intolerant of one another. Does the country have a history of ethnic unrest and/or religious conflict?
Political Stability: Understand the local political situation where the offshore provider is located. What kind of government does the country have, and how long has the current regime held power? Does the country have a history of upheaval and uprisings? Know whether rebellions, revolutions, and coups are common. Also consider the stability of neighboring countries and whether they have friendly relations with the country where the offshore provider is located. Read expert analyses of any regional conflicts.
- Business Environment: When you outsource IT-related work, you’ll probably be exchanging proprietary information and dealing with intellectual property. You need to know what policies the country has in place to protect your company’s trade secretes and intellectual property rights. Likewise, does the country have appropriate laws regarding economic development, taxes, and the labor force? How well are those laws enforced? All of these issues are very important in fostering a favorable business environment.
- Language: You must be able to communicate with the offshore service provider – not only with the top managers, but also with the workers who are involved with your project on a daily basis. How well do they speak and write in English?
- Strategic Fit: Many companies ignore questions of strategic fit – much to their chagrin. If the offshore provider doesn’t understand and adapt to your company’s strategic goals and standard business processes, the final deliverable will not be what you are looking for. Have an open discussion with the offshore providers’ managers and try to understand why they’re in business and how your project will be a good fit with their strategic goals
Source: Consult from Internet
