BPO is definitely not new in the world of business solutions. By definition, this is a way to subcontract a variety of business-related operations, both back and front office, to a third-party provider. The benefits for clients are enormous, most notably: cost savings, increased efficiency, the ability to focus more on core business functions, and the benefits of global expansion.
BPO is one of the fastest growing industries, especially in India, China, Malaysia and the Philippines. Compared to these giants, Vietnam’s BPO sector is relatively young and small in size and revenue. But the competitive advantage and growth potential in Vietnam, even tremendous, is strong.
Overview of BPO Destinations
- Strong Points
Larger Labor Pool
India’s huge talent pool makes India the largest outsourcing hub and leader in custom software development. Over 95% of developers are between the ages of 18 and 35, most of whom have a bachelor’s or master’s degree. And India has always dominated the software outsourcing industry, as more than 200,000 software graduates are willing to join the workforce each year.
With about 125 million English-speaking people, India is the second largest English-speaking country in the world and second only to the United States. Also, according to the EF English Proficiency Index, India ranks third in Asia in terms of English proficiency. Therefore, there seems to be no language barrier when communicating with Indian developers.
In addition to the above benefits, India still faces many challenges when it comes to distributing software development services.
Lack of privacy and security laws
There is a major problem that many outsourcing projects face copyright and licensing when hiring an Indian outsourcing company. The risk of getting a copy is very high, and the downside of this is that these projects can be sold multiple times and there is no guarantee that they will be kept safe.
Regional and cultural differences
Working with Indian software outsourcing companies can also be difficult due to cultural and regional differences. Social and cultural norms need to be adapted according to the specific region and customs of the target partner.
Unfortunately, even in 2020, India lacks the right infrastructure in some of the country’s largest cities. As a result, electricity and internet connections become unstable, logistics become inadequate, land acquisition occurs, and so on.
- Strong Points
Excellent understanding of Western culture
When Americans succeeded in liberating the Philippines from Japan during World War II, citizens adapted and embraced Western culture in their daily lives. English is taught as one of the main subjects of the education system, and most of advertising, business and television are also taught in English.
Thanks to the American accent, they can talk to Filipinos. The strong influence of the United States on the Philippines has led citizens to speak with better accents, especially when compared to countries like India.
Unpredictable weather conditions
The Philippines has an average of 12 tropical typhoons per year that can cause floods and other disasters. This means that these types of weather can affect ongoing software outsourcing projects because they can function in certain regions.
Lots of holidays
There are only 11 holidays in the United States, but there are 18 holidays in the Philippines. Also, since most Filipinos are Catholics, Holy Wee represents the longest vacation in the country. These extended breaks can be very costly, especially if you are working on a time-sensitive project.
Labor law supports employees
The labor law here is very supportive of employees. For example, an employer is not free to dismiss a poorly performing worker without providing appropriate documentation and causes. Worker retirement also requires the organization to provide prescribed severance pay and other membership fees.
Strengths of BPO services in Vietnam
- Young, dynamic and well-educated workforce
With a rich pool of highly skilled and motivated IT talent in the software development industry, Vietnam is in the top six countries with the highest number of engineering graduates, and in 2019 the World Economic Forum surveyed 128 countries. (Forbes) Supply will continue to exceed demand for many years. About 130,000 Vietnamese students study abroad in the United States.
Currently in Vietnam, the number of talented IT developers is constantly increasing. Tech companies can benefit from this trend by selecting skilled software developers from Vietnam’s vast tech talent pool and working with them through an extended team model.
- High quality technology education
At universities in Vietnam, not only technical education but also self-study and research quality are improving day by day. Education is one of the main reasons why Vietnamese technical workers are ranked as the best software developers in the world.
- Reasonable labor costs
The cost of hiring IT engineers in Vietnam is 30-60% lower than in Japan. Expenses are also 30-40% less than in China. Therefore, outsourcing is an effective business method used by many domestic and foreign companies. One of the outsourcing services that brings a lot of profits to companies, especially in terms of improving competitiveness, is the human resources outsourcing service.
Lack of experienced vendors in other
soft skills and practice in education
Despite all extensive efforts to improve Vietnam’s education system, Vietnam still lags behind overall soft skills and practices. Educational teaching methods used in most schools, especially in rural areas, can have a significant impact on student creativity and motivation. As a result, students do not have the necessary soft skills that will be important in their future careers, such as negotiation, presentation, and teamwork skills. These soft skills have become very important in the outsourcing industry for software development.
Too many outsourcing vendors
As software outsourcing grows in popularity and profitability in Vietnam, more vendors are entering the industry. Nevertheless, in that hurry, most new software sourcing companies make multiple useless mistakes. Most vendors are trying to make a lot of money at the expense of providing high quality outsourcing solutions. Also, knowledge sharing is kept to a minimum, as offshore startups for various software are far behind.