Outsourcing in emerging Asia countries is more and more the solution chosen by many companies to achieve their objectives. But where is the best emerging destinations to outsource software development?
In the IT industry, the most important part of outsourcing is planning which country has qualified individuals to work and maintain its values on products and services. Moreover, another factor is the monitoring of data privacy, maintenance, technical issues,… of emerging markets and countries for outsourcing.
There are many software outsourcing companies in Asia, and that number continuously grows each year. So that, finding the country that meets the needs of your company with benefits outweighing the costs should be selected.
We all know some of the major countries for outsourcing such as India and China. However, we also recommend the top IT outsourcing destinations in emerging and developing Asian countries.
When it comes to outsourcing, the similarities between Asian countries are low labor costs and a large pool of IT talents. Besides, there are factors that differentiate some countries from others that make them stand out.
In this article, we will look through 3 countries in the Asian Pacific that are considered emerging markets for outsourcing.
Filipino culture is a blend of Western and traditional Filipino culture, which makes it easy to adapt to different cultures. Filipinos are still partly affected by the Western lifestyles and cultures from the past colonization. What’s more, Filipinos are known for their hospitality and easy to socialize and work with. These factors help the Philippines to become an emerging market for outsourcing.
Besides, the Philippines is one of the largest English-speaking countries in the world with 70% of the population fluent in English. This helps tackle one of the most concerned when outsourcing: language barriers. It is the language of commerce and law, as well as the primary medium of instruction in education. Among Asian countries with low living expenses, many foreigners choose it as their retirement destination. The Philippines was ranked 13th among best non-native English speakers in the world and 3rd among Asian countries.
However, there are some concerns about the political and economic instability that prevent the Philippines from growing disruptively. Due to unpredictable shifts in national politics, foreign companies and investors still hesitate to get into the outsourcing market. Besides, the climate of uncertainty results from the frequent revisions and reversals of laws and a history of mass protests.
Philippines is the leading nation in Southeast Asia in outsourcing partly thanks to its close relationship with Western countries, especially the U.S. The Philippines — U.S special relationship dates back to 1951. Philippines can benefit a lot from its relationship with the United States, where 43% of companies utilize offshore outsourcing for IT services. Businesses from the U.S are the biggest clients for most of outsourcing companies in the Philippines. We can name some big companies that choose the Philippines for outsourcing such as Slack, Citi, Basecamp, etc.
There are approximately only 10% of the population has proficiency in English, which is not a competitive percentage compared to other Asian countries. Despite low proficiency in English, its literacy rate remains quite high. According to UNESCO, 94% of the adults in the country are literate and the number of its annual university graduates is 506,000.
Same as the Philippines, one of the bottlenecks that prevent Thailand to develop its outsourcing industry is the political instability. With the effort to attract foreign investments and build strong domestic infrastructure from the government, we hope to see the breakthrough in Thailand’s economy soon. Also, the property in Thailand is far cheaper than in other countries.
Software piracy levels in Thailand are up to 75%. Thailand has yet to have a robust system to assure data security and privacy. However, the government is putting effort to lower the percentage and prevents data leakage as much as possible.
Another advantage that Thailand has over competing outsourcing countries is the relatively stable internet and electricity on hand. It may sound obvious, however, even one of the biggest outsourcing countries, India, still experiences power outages for hours frequently.
Not having the historic close relationships with Western countries, Thailand is still growing as one of the leading nations in IT outsourcing. Thanks to the economic boom in the late 80s and early 90s, the amount of foreign money flows into Thailand increased by 400% in just 3 years. And seeing the potential in Southeast Asia, Thailand caught their attention and started considerably growing in different areas, including IT outsourcing.
Do you want to talk about countries with dramatic economic growth over the last century? Look no further than Japan. Vietnam is the new software outsourcing “paradise”. This country has one of the most skilled and educated workforces in the world and it’s in the top five when it comes to purchasing power and importing and exporting.
Over the last decade, the percentage of Vietnam’s growth in the BPO industry has been 20–35% consistently. Data from Vietnam Software and IT Services Association (VINASA) shows that Japan has been the biggest investor in the industry. Why does Japan see Vietnam as a lucrative investment?
The talent pool in Vietnam is continuously growing with more than 100,000 developers and 75,000 content specialists. The IT field is becoming increasingly attractive. There are more than 40,000 IT graduates a year.
Another advantage for Vietnam is its convenient geographic location. The timeline is flexible to adapt to many time zones in different continents. Even Canada and America choose Vietnam for outsourcing. While they are sleeping, the work is completed overnight. It is also easy to travel from Vietnam to major city centers.
Although the Ministry of Education and Training has put much effort into improving the English proficiency of the population, it’s not enough to compete with other outsourcing countries. Compared to countries such as the Philippines and India, Vietnam still has lots of communication problems and this can raise the final costs and effort. Vietnam can lose one of the biggest advantages: low costs.
However, there are many ways to fix this. Most companies have professionals that can speak English fluently to assist in getting the ideas across from the parent companies to outsourcing companies.
The leap in the IT outsourcing industry in Vietnam
Unlike Thailand, Vietnam’s economy had no chance to develop until 1975, when the war officially ended. However, its GDP was stuck between $200–300 and Vietnam remained one of the poorest countries in the world. This changed only after 1986. After the Đổi Mới, launched in 1986, Vietnam has spurred rapid economic growth both in politics and economy. According to Worldbank, poverty rates declined sharply from over 70% to below 6% (US$3.2/day PPP), and GDP per capita increased by 2.5 times, standing over US$2,500 in 2018.
The growth in economy helps a lot in the growth of the industry. By applying the policy of “multi-lateralization and diversification”, Vietnam has been more open to the regional and global economies and attract much more foreign investments. With low labor costs and tax incentives updated, Vietnam is a strong competitor in cost reduction to foreign business advantage.
From 2016–2017, according to AT Kearney Consulting Firm’s announcement about the ranking of the Top 55 most attractive countries for Global Outsourcing Services (GSLI 2017), Vietnam’s outsourcing services world ranking has risen up 5 levels from 11th to 6th. These results show that the IT outsourcing industry in Vietnam has been growing steadily and continuously. Vietnam’s BPO industry reached 2 billion USD in 2015 and has grown at a rate between 20–25% annually for the past decade.
This leap in the IT outsourcing industry made Vietnam a tremendous competitor with India as big companies started to recognize Vietnam as a new destination for outsourcing, including Intel, IBM, Samsung Display, Nokia and Microsoft.
There are many emerging countries for outsourcing in Asia. The best offshore software development countries for you depends on your needs. Recognizing this potential, AgileTech has a pool of talented and skilled individuals who are capable of outsourcing. We also provide an extensive variety of services from guided development, graphic design to software development, and web development…
We hope this article helps you to understand more about the Asian Pacific market for outsourcing. With these advantages, we believe that these 3 countries will soon become the leading outsourcing markets. We want to hear your opinions on this subject as well, share with us at firstname.lastname@example.org or (+84) 936 281 059.