Asian Tech Ecosystems

3 experts share challenges and opportunities in offshoring tech development in Vietnam

The number of tech jobs in Vietnam has risen over the last three years. The country employs 250,000 engineers and the estimated demand estimated is expected to be 400,000 by 2018. A survey showed a 2-year experienced engineer is estimated to earn a maximum of US$1,160 per month and looks set to rise further.

Fuelling this demand boom is the insatiable global hunger for tech talent. But why specifically Vietnam as a source for tech talent, and in particular off-shoring services?

I asked three industry experts for their insights.

Overview of the Vietnamese tech talent market

According to a Cushman and Wakefield 2016 report, Vietnam ranks top as a BPO – Pioneering location for 2015 and 2016.

Dat Vo, COO of Fetch Technology, a hiring and placement service of Vietnamese software engineers, highlights the opportunity to tap on a young, energetic and competent population cost-effectively makes Vietnam an attractive proposition as an offshoring destination.

Charles Lee, Co-Founder, CoderSchool, a programming school based in Saigon that uses Silicon Valley curriculum, notices a change in the type of work done by Vietnamese engineers.

He shares:

The single biggest change I’ve seen is the rise of true product development, rather than traditional outsourcing. We’ve seen many companies open offshore offices, with Vietnamese employees being fully integrated into the company, as opposed to being nameless, faceless outside contractors.

This requires more sophistication from both sides, and reflects the greater demands of modern software development. Five years ago, people were making simple, crude, one-off apps. Now, modern software projects are more nuanced – often requiring lots of thought on not only the straight implementation, but UX, performance, and long term maintainability.

Vietnam seems to have risen in popularity because the coders here have shown the ability to rise to the challenge. There’s an earnest desire in many of the coders here to participate in a company’s vision and end goal; it’s not just a paycheck, it’s a chance to make a real impact in the world upon an end user. There’s also an earnest desire in many of the coders that I’ve met to excel in their profession.

Harley Trung is director of Engineering at TINYpulse, a HR SaaS platform that help analyse employees feeling and performance. He notes that successful exits in recent years for companies with a majority of software development or R&D done in Vietnam are a contributor to putting Vietnam on the global map for BPO.

He cites examples like Misfit Wearables, which was acquired by Fossil for $260 million, and Arimo being acquired by Panasonic.

Also read: Keep an eye out for the Vietnam startup ecosystem and its potential for growth

Factors supporting demand for Vietnamese tech talent

Trung shares that Vietnamese children get exposed to programming from as young as Grade 4. Mathematics and computer science are strong disciplines in the local education system.

He observes Vietnamese are also entrepreneurial, where some have done quite well taking care of outsourcing needs for tech companies, in areas such as CMS and Web/Mobile development.

Vo concurs on the computer skill levels among Vietnamese. He shares that the education landscape offers a wide range of computer science and programming related courses to choose from.

He further explains the reputation as a BPO service has further strengthened Vietnam’s position as an attractive place for talent. He says:

With corporations from Japan and US offshoring to Vietnam, a migration of skillsets naturally follows. Another contributing factor is the return of Viet Kieus and students return from their overseas stints, we can see them bringing back their expertise and knowledge to Vietnam.

Lee cites the competitive salaries and abundant supply of talent. He experienced many of the companies that he worked with simply could not hire engineers in their home countries.

In the U.S., it’s often very difficult to hire an engineer. They’re simply being out-recruited by tech giants like Amazon and Google. The difficulty increases exponentially when it comes to hiring a team — the process can take months, even longer if the company wants to be selective and find the right person.

Meanwhile, it’s not uncommon to spin up a team of engineers within a month in Vietnam. There’s a ready supply, and with that supply, one can afford to be selective to find the right fit for them.

Challenges companies face when offshoring tech talent to Vietnam

1. Conflicting time zones with other tech hubs

Trung says, “At timezone GMT +7, Vietnam working hours don’t overlap very well with companies that sit in Europe (GMT 0) or the West Coast (Pacific time, GMT -7).”

Lee concurs. To him, a 12-hour time difference to the U.S. West Coast, which is where lots of software development is done today, can make it difficult to collaborate in meetings and get quick feedback on matters.

2. Communication Breakdowns, lack of controls and poor staff retention

Vo explains that Vietnamese is the main language in business, education and at home throughout Vietnam. Thus, spoken English is challenging for many.

He observed many companies hire Vietnamese engineers very loosely, as though they were hiring freelancers. This often leads to problems such as unclear employment terms and arrangements. It then becomes inevitable that companies will suffer from a lack of control over their offshore team.

To further exacerbate the issue, offshored staff often do not feel like part of the organization. With no proper structured professional environment, staff may feel isolated and very soon detached from the organization. This makes staff retention one of the top problems that companies faced when off-shoring.

Also read: Witness Vietnam’s next generation of startups vying for the podium

3. Lack of understanding of Vietnamese work culture

Lee highlights the culture of hierarchy, the deference to seniority that is more prevalent in Confucian-Asian societies that clashes with how some modern software companies run.

He explains, “Sometimes engineers here will think of themselves as more junior and be hesitant to speak up against a senior. On the flip side, those who think of themselves as more senior will be hesitant to admit fault or show weakness (often referred to as ‘saving face’), especially in a public setting.

There’s also one more humorous thing that has tripped up more than a few Western employers – people like to nap at work sometimes, especially after lunch. It’s fairly uncommon practice in the West.”

Advice to startups about off-shoring tech talent in Vietnam

1. Have a good hiring start and great company culture

Vo emphasizes that hiring is a critical function and doing it right from the start will prevent loss of control and poor staff retention. He advises startups to avoid hiring freelancers as they are not dedicated, as their attention is divided among clients. Rather, he emphasizes on identifying candidates with the right set of values. Beyond having technical competencies, Fetch’s rigorous process includes networking events, meet-ups and workshops which allows interaction with potential candidates and understand them better.

Building a solid work culture is next. Every developer is a member of the FETCH family regardless of the organisation they work under. We are focused on creating a positive work culture of excellence and team work through dedicated managers to oversee the well-being of each member, recreational facilities, social and team building events, as well as nightly happy-hours organised for the after work beer catch-up.

2. Integrate all units together, including the one in Vietnam

As for Trung, his personal experience has shown he could hire many great engineers in just 3 years in Vietnam. In comparison, his Seattle office has been challenged to hire engineers as the hiring landscape is competitive with an average engineer staying in a company for less than 2 years.

His advice to companies wanting to off-shore talent in Vietnam should always incorporate it together with other overseas units.

At TINYpulse, we have never thought of our Vietnam office as a technical offshoring solution. The companies has two offices, one in Seattle with a focus on Sales and Marketing, while the Saigon office carries a focus on Software Engineering. Both offices collaborate on the product, while the majority of engineers and QAs are in Vietnam.

To further connect the teams, he flies to Seattle for work a couple times per quarter, while his CEO and other directors make trips to Vietnam on a quarterly basis as well.

Lee concludes:

There are many successful companies who have thriving companies here – we have CoderSchool alumni at companies like Lazada, Grab, TinyPulse, and several other innovative software companies both large and small – so it’s definitely very possible to build a truly amazing engineering team here.

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This article first appeared on e27.

This is part of the “Asian Tech ecosystems” series, where I share insights on various startup ecosystems in Asia.

Ethics disclaimer: CoderSchool is an investee portfolio of TRIVE