Vietnam is becoming a popular outsourcing location for foreign businesses thanks to the country’s recent rapid growth in the outsourcing sector. Free trade agreements (FTAs) and an escalating regulatory environment for businesses are driving the nation’s rapid expansion. Both economic and demographic considerations contribute to the advantages of Vietnam sourcing. In addition to having a business environment that is open to international investment, the nation also has an excellent position in the manufacturing and IT sectors due to affordable labor.
In order to draw in international investment, the country has made significant advancements in its regulatory framework, taxation, and GDP growth. To make an informed decision, a small business must be aware of the pros and cons of Vietnam sourcing.
What are the pros of Vietnam sourcing?
Due to international influences as well as characteristics unique to the country, Vietnam is rapidly becoming a preferred site for manufacturing.
- Low labour costs: Many big industries have moved a chunk of their manufacturing to Vietnam because of the country’s accessible labour market. Shipping costs and the level of development of the present supply networks play a role in many supplier sourcing firms’ decisions to forego relocations entirely or to relocate only a section of the production.
- Large workforce: Over the next decade, it is expected that Vietnam’s population will grow significantly. The country’s population is expected to increase massively by the year 2030 and get somewhere close to 106 million. This will obviously cause the labour pool to grow.
What are the challenges of Vietnam sourcing?
Small businesses must be aware of the challenges of Vietnam sourcing to identify them. Here are the challenges, as mentioned below:
- No consistent data protection legislation: There is no federal data protection law in Vietnam. It adheres to a set of laws, rules, and actions that form the basis of its system for safeguarding personal data. Given that there is no reliable law to protect investors’ intellectual property rights, this is a significant setback for Vietnam sourcing.
- Poor command of English: The population’s limited command of English is another significant barrier to outsourcing. Despite the fact that English is the official language in this nation, only professionals with foreign degrees are versed in it. The language barrier makes it difficult to communicate with an outsourced worker or software developer.
Despite these challenges, Vietnam’s outsourcing sector is flourishing, with many businesses expanding to meet the rising demand for software product development around the world. To find the best firm for supplier sourcing in Vietnam, you must opt for a specialised vendor directory rather than rely on a general search engine inquiry. Choosing Vietnam as your outsourcing location ultimately depends on your company’s demands and objectives. Due to its affordability, socioeconomic stability, large talent pool, friendly investment climate, and resistance to the current epidemic, Vietnam is indeed a strong candidate for outsourcing in Southeast Asia.