How to Set Up an Offshore Development Center in Vietnam
How to Set Up an Offshore Development Center in Vietnam
Offshore development centers (ODCs) have become increasingly popular for businesses looking to tap into global talent at a fraction of the cost of traditional in-house development teams in recent years. Access to a larger pool of developers and expertise in specific technologies and industry verticals can be provided by ODCs. Surprisingly, even during and after the peak of the Covid-19 pandemic, Vietnam has established itself as an Asian hotspot for offshore software development services. According to Statista’s report on the software industry’s revenue in Vietnam (2016 – 2020), Vietnam reached $5.44 billion of total revenue in 2020, up $500 million from the previous year. As a result, businesses in the United States, Europe, Australia, and Singapore are increasingly turning to Vietnam as a strategic partner for establishing offshore development centers. This article will provide a concise checklist to follow to establish an efficient offshore development center in Vietnam.
What Is an Offshore Development Center (ODC)?
An offshore development center (ODC) is a software development center in another country that can help reduce in-house costs and workload. Offshore development centers are typically located in countries with lower living costs, such as India, China, the Philippines, and Vietnam. Furthermore, those countries have political stability and resources for developing and integrating an ODC software process.
Offshore Development Center Model (ODC model)
The flexibility and scalability of a typical ODC are its key benefits. Additional resources can be contracted separately or added to the core team if you require a solution built from scratch or an update to an existing application. This model of offshore development centers should also be suitable for ongoing maintenance and support.
Typical ODC roles include:
Project Manager
Understand and evaluate your company’s needs and challenges, ensuring that expectations are met for each project. Manages a team of 5-20 offshore developers, typically taking on the role of lead developer or delivery manager.
Senior Developer
Capable of comprehending and resolving your business requirements and managing a team of 2-5 offshore developers. In charge of designing the application architecture and building the core modules. He typically has 5-8 years of experience in the relevant technical field.
Intermediate & Junior Developers
Deliver high-quality software following the specifications. Emails and instant messages are used to communicate with you in English. Intermediate developers have 3-5 years of experience, while junior developers have 1-3 years.
How do you set up an offshore development center in Vietnam?
Vietnam is one of the top destinations for offshore development centers established in collaboration with many ODC service providers. As a result, if you are new to ODC, establishing an offshore development center in Vietnam may present several challenges but are not as difficult as you think. To get the most out of your Vietnam ODC services, go through our checklist for setting up an offshore development team more efficiently.
1. Determine the Offshore Development Center Model that best meets your requirements.
Before establishing an offshore development center in Vietnam, consider your requirements and goals to determine which ODC model best fits your business process. The ODC services are divided into two major models, each of which will serve your purposes differently:
Managed ODC Services
This ODC model is intended for clients who want to outsource all or most of their Vietnam offshore development center operations and services. Clients will have their offshore development centers built by remote third-party companies under this model. The service providers are fully responsible for staffing, managing, and running the development center. Clients are only responsible for completing the project. As a result, this ODC model enables businesses to concentrate on their core competencies, reduce risks, and improve the quality of offshore teams (or services) while lowering overall costs.
BOT (Build – Operate – Transfer)
The BOT model is a popular model for offshore development centers. In this arrangement, your contract with an outsourcing company to build your ODC from the ground up. Once completed, the Vietnam ODC services provider transfers ownership of the offshore development center to your company. It will be easier for you to grasp the concept of this ODC model if we divide the development cycle into three phases: build, operate, and transfer.
- Build: During the build phase, an outsourcing company in Vietnam is hired to construct your offshore development center from the ground up based on your specifications and needs. In other words, the clients will determine the team structure and sizes, as well as the other infrastructure required to serve their purposes, and the middleman company will handle the execution, which includes recruiting IT talent, training employees, organizing cooperation processes, and establishing operational units, eventually building an offshore development center as needed.
- Operate: In the second phase, the outsourcing vendor will take over the offshore development center and align it with the standards, regulations, and systems of the client company. This phase will cover the entire process, from team formation, management, operation, and maintenance, to optimization until the offshore development center is fully operational and ready for transfer.
- Transfer: When the time comes, the outsourcing company will give the client legal ownership of the entire offshore development center, including all assets. The outsourcing vendor will provide post-completion support as an IT partner until the clients are fully autonomous with their ODC.
2. Location
Choosing a location that meets all of your needs and expectations. Ho Chi Minh City is an excellent location for establishing your Vietnam offshore software development center. This is Vietnam’s largest city, with a large IT talent pool, convenient transportation and logistics, a low cost of living, and ample resources and infrastructure.
2. Select the Best Outsourcing Partner for Vietnam ODC Services
After you’ve determined which ODC model is best for your company’s needs, the next step is to find a potential Vietnamese service vendor who can complete your project. Many top IT outsourcing companies in Vietnam currently specialize in setting up offshore development centers for global businesses. Each has its advantages, and it is up to you to make the best choice for your specific needs. If you’re still unsure about how to select the best outsourcing partner for ODC setup, here are a few critical factors to look for in a Vietnam ODC services provider before making an informed decision.
Technical Knowledge and Experience
These are a good offshore development center’s first and most essential characteristics. Because the service providers will be in charge of recruiting IT talent and building the offshore development team, these companies must thoroughly understand your project’s technical requirements and hands-on experience managing ODCs. They should also be capable of ensuring work quality and meeting deadlines. On the other hand, Vietnam has a large pool of top IT talent, primarily in Ho Chi Minh City, Hanoi, and Da Nang, so an outsourcing partner with strong technical expertise and experience will be able to find, screen, and assemble a strong team for your ODC.
Previous Experience
Examine the portfolios of the outsourcing vendors to assess their technical expertise and experience. The list of clients they have provided services to will reveal a lot about their abilities. Do they have prior experience in your field? What kind of outsourcing services did they offer to their customers? Do you have any clients who have project requirements similar to yours? How satisfied are their customers with the quality of work delivered by the vendor’s ODCs? These are some essential questions to ask when reviewing portfolios or interviewing partners. The more thoroughly you examine the track records, the easier it will be to evaluate the potential candidates correctly. Before making a final decision, you can contact some clients to get first-hand feedback on the outsourcing vendor you are considering.
Pricing
This is one of the most important aspects of outsourcing services, and it is also the primary reason why many businesses worldwide outsource their IT needs to Vietnam. Vietnam is well-known for its high-quality yet low-cost outsourcing services. According to CIO Magazine, the costs of IT outsourcing services in Vietnam are 90% lower than in the United States. However, establishing offshore development centers is a long-term investment that may incur unexpected costs during the development process. As a result, you must compare price quotes from various vendors to select the best ODC services. An ideal ODC setup outsourcing partner should be able to meet your specific budget and project requirements without any hidden costs.
Technical Support
Your outsourcing partner should be able to provide technical support before, during, and after the project is completed. In the event of unforeseen issues, the company should also have a team of experienced professionals who can handle your ODC’s maintenance tasks. In summary, technical support is essential for an ideal ODC services provider.
Working Methodology
Before making your decision, you should consider the vendor’s working style and process. Check to see if their working style is compatible with yours. As a client, you can request that the offshore development centers be customized to your specifications, but it is challenging to do the same for the working environment. Because the outsourcing vendors are in charge of establishing the ODC and recruiting employees, they tend to impose their energetic style on the newly formed team. As a result, it is critical that you understand the outsourcing company’s working style and how they tend to shape the ODC to determine if their working style matches yours. You can also be more active by showing vendors the type of work you want for your upcoming ODC team.
3. Intergate the Offshore Development Team with Your Internal Team
Your offshore development center’s IT engineers should be able to integrate with your in-house team seamlessly. As a result, ensure that you and the vendor collaborate to assist the offshore team in quickly adapting to your company culture and business processes. Communication is the key to successfully integrating your offshore development team with your in-house team.
Three factors directly influence communication between the ODC and in-house teams:
- Time Zone: Make sure there is a significant time difference between the two teams so they can work on the project during their work hours. You can appoint a project manager as a liaison between the two teams, allowing the ODC team in Vietnam and the in-house team to collaborate smoothly.
- Language: Select a vendor whose team members are fluent in English. This will aid in the prevention of misunderstandings and miscommunications during the project development process. You need not be concerned about this because the IT workforce in Vietnam is fluent in English.
- Cultural Distinctions: Cultural differences between the two teams may impact their communication. As a result, you should ensure that the Vietnamese vendor you select has a team of professionals who understand your company’s culture and values. Alternatively, you can hold virtual team-building activities to help all team members get to know each other better and establish a good rapport.
4. Monitor Performance and Feedback
We’re almost to the end of the checklist, and this is the last but not least step in establishing an offshore development center. You should also regularly monitor your ODC team’s performance and provide feedback to help them improve the quality of their work. This will help ensure that your offshore development center is performing as expected. It will also assist you in identifying any potential issues early on so they can be resolved quickly. This is not something you can assess at a glance; you will need reports to precisely track the performance of your ODC team. The ODC services provider should report on progress regularly to the project managers. These reports should be detailed and straightforward to comprehend. They should also include key performance indicators (KPIs) and metrics so you can get an accurate picture of their work quality.
Offshore Development Center Security
The offshore development team must treat its clients’ intellectual property with the utmost care. A Non-Disclosure Agreement (NDA) is required with each client before beginning a business relationship. This NDA establishes the standards and obligations of the two gatherings and is strictly adhered to by all representatives. The nuances of the substance for which IP insurance is guaranteed are also remembered for the agreement.
Bestarion ensures all related IP protection in physical and electronic arrangements throughout the task cycle. Following working hours, security techniques and safeguards are also efficiently implemented.
For security reasons, we provide anti-virus and firewall security, data backup and recovery, a legal contract for data handling, and restricted access to the internet, drives, media, workplace, and so on.
ODC security policies
The team should maintain strict confidentiality and security in each venture to verify the customers’ records and models. Customers’ data is kept strictly private using the Active Directory (AD) framework to communicate with the clients’ specialists. Under AD, only authorized personnel have access to information, and all duplicates or versions of information are recorded in logs that customers can access at any time. Customer database data is protected throughout the task, with access to sensitive information restricted to a critical individual. Equivalent security measures are taken to avoid data leakage and unauthorized access to the organization’s computer system and ensure safe conveyance administrations.
To ensure that all employees are fully aware of and sensitive to the fundamental importance of protecting clients’ rights, all Bestarion representatives sign material classification contracts alongside their representative understanding upon joining the organization. These agreements confirm that the representatives will follow Bestarions’ IP assurance guidelines for private data.
Why Should You Use Vietnam ODC Services?
Vietnam ODC services have become an excellent choice in recent years. Vietnam has been a popular destination for IT outsourcing due to its low labor costs compared to other countries, a large pool of IT talent with foreign language proficiency, and the government’s open policies toward foreign companies.
- Ho Chi Minh City has been named one of the top outsourcing cities for the eighth year in a row (Tholons, 2009-2016)
- Vietnam is ranked first in terms of innovative location and cost environment (Cushman & Wakefield business process outsourcing and shaped service location index, 2016-2017)
- Top ten countries with the highest number of engineering graduates (Forbes, 2015)
How can Bestarion’s offshore team help our clients achieve a win-win situation?
The following are some of the reasons why clients select Bestarion as their Vietnam offshore development center:
Bestarion is the best offshore software development center in Vietnam.
- Competitive Hourly Rate
- Transparent delivery management and service metrics visibility
- Predictability and transparency
- Close collaboration.
- Flexible Team Structure
- Latest Development Methodologies: Agile, Scrum, Extreme Programming (XP), and Test-Driven Development (TDD)
You can concentrate entirely on core activities such as business, sales, marketing, and operations while we focus on product development, with the following advantages:
- Competitive pricing and easy team expansion
- Good at both technical expertise and English.
- One-month trial period with a money-back guarantee if not satisfied.
- Transparency is essential for long-term collaboration.
The following are the top reasons to hire Bestarion developers – Vietnam offshore development services:
- English communication—Our team generally can read and understand spoken English.
- Cost-effectiveness: You can find excellent developers at reasonable hourly rates.
- They have good communication skills and aren’t afraid to speak up or challenge you. They want to succeed and do a good job.
- Young developers who studied and worked in the United States, Australia, Northern Europe, or Japan.
- High level of technical skills — Excellent at analysis, troubleshooting, and brainstorming tech solutions. They are enthusiastic developers who are interested in self-development.