How to Set Up an Offshore Development Center in Vietnam

In recent years, Offshore Development Centers (ODCs) have become increasingly popular for businesses seeking to tap into global talent at a fraction of the cost of traditional in-house development teams. ODCs provide access to a larger pool of developers and expertise in specific technologies and industry verticals. Surprisingly, even during and after the peak of the COVID-19 pandemic, Vietnam has established itself as a prominent Asian hotspot for offshore software development services. According to Statista’s report on the software industry’s revenue in Vietnam (2016–2020), the country reached $5.44 billion in total revenue in 2020, an increase of $500 million from the previous year. Consequently, 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 provides a concise checklist to follow when establishing an efficient offshore development center in Vietnam.

What Is an Offshore Development Center (ODC)?

An Offshore Development Center (ODC) is a software development hub located in another country that helps reduce in-house costs and workload. ODCs are typically set up in countries with lower living costs, such as India, China, the Philippines, and Vietnam. These countries also offer political stability and the resources necessary for developing and integrating ODC software processes.

Offshore Development Center Model (ODC Model)

The flexibility and scalability of a typical ODC are its key benefits. If you require a solution built from scratch or an update to an existing application, additional resources can be contracted separately or added to the core team. This model is also well-suited for ongoing maintenance and support.

Typical ODC Roles:

• Project Manager: Responsible for understanding and evaluating 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 while managing a team of 2–5 offshore developers. In charge of designing the application architecture and building the core modules. Typically has 5–8 years of experience in the relevant technical field.
• Intermediate & Junior Developers: Responsible for delivering high-quality software according to specifications. Communication is conducted in English via emails and instant messages. Intermediate developers have 3–5 years of experience, while junior developers have 1–3 years.

How to Set Up an Offshore Development Center in Vietnam

Vietnam has become one of the top destinations for offshore development centers, with many ODC service providers collaborating with global businesses. As a result, if you are new to ODCs, establishing an offshore development center in Vietnam may present some challenges, but it is not as difficult as you might think. To maximize the benefits of your Vietnam ODC services, follow our checklist for setting up an offshore development team efficiently.

1. Determine the Offshore Development Center Model

Before establishing an offshore development center in Vietnam, assess your requirements and goals to determine which ODC model best fits your business process. ODC services are generally divided into two major models, each serving different purposes:

• Managed ODC Services
• BOT (Build – Operate – Transfer)

Managed ODC Services

This managed ODC model is designed for clients who want to outsource all or most of their Vietnam offshore development center operations and services. Under this model, remote third-party companies build the offshore development centers. The service providers are fully responsible for staffing, managing, and running the development center, while clients focus solely on project completion. This ODC model allows businesses to concentrate on their core competencies, reduce risks, improve the quality of offshore teams (or services), and lower overall costs.

BOT (Build – Operate – Transfer)

The BOT model is a popular approach for offshore development centers. In this arrangement, you contract 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. The development cycle can be divided 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 based on your specifications and needs. Clients determine the team structure, size, and other required infrastructure, while the outsourcing company handles execution, including recruiting IT talent, training employees, organizing cooperation processes, and establishing operational units.
• Operate: In the second phase, the outsourcing vendor aligns the offshore development center with the client’s standards, regulations, and systems. This phase covers everything from team formation, management, and operation to maintenance and optimization until the center is fully operational and ready for transfer.
• Transfer: When the time comes, the outsourcing company transfers legal ownership of the entire offshore development center, including all assets, to the client. The outsourcing vendor continues to provide post-completion support as an IT partner until the client is fully autonomous with their ODC.

2. Location

Choose a location that meets all your needs and expectations. Ho Chi Minh City is an excellent location for establishing your Vietnam offshore software development center. It 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.

3. Select the Best Outsourcing Partner for Vietnam ODC Services

After determining which ODC model best suits 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 specialize in setting up offshore development centers for global businesses. Each has its advantages, so it’s up to you to choose the best fit for your specific needs. If you’re unsure how to select the best outsourcing partner for ODC setup, here are a few critical factors to consider before making an informed decision:

Technical Knowledge and Experience

These are the first and most essential characteristics of a good offshore development center. Since the service providers will be responsible for recruiting IT talent and building the offshore development team, they must thoroughly understand your project’s technical requirements and have hands-on experience managing ODCs. They should also be capable of ensuring work quality and meeting deadlines. 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 outsourcing vendors to assess their technical expertise and experience. The list of clients they have served will reveal a lot about their capabilities. Do they have prior experience in your field? What kind of outsourcing services did they offer their customers? Do they have clients with project requirements similar to yours? How satisfied are their customers with the quality of work delivered by the vendor’s ODCs? These are essential questions to ask when reviewing portfolios or interviewing partners. The more thoroughly you examine track records, the easier it will be to evaluate potential candidates. Before making a final decision, you can contact some clients to get first-hand feedback on the outsourcing vendor you are considering.

Pricing

Pricing is one of the most important aspects of outsourcing services and is the primary reason 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 cost of IT outsourcing services in Vietnam is 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. Therefore, you must compare price quotes from various vendors to select the best ODC services. An ideal ODC setup outsourcing partner should 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, consider the vendor’s working style and process. Ensure that 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. Since outsourcing vendors are in charge of establishing the ODC and recruiting employees, they tend to impose their working style on the newly formed team. Therefore, it is critical to understand the outsourcing company’s working style and how they tend to shape the ODC to determine if their style matches yours. You can also be more proactive by showing vendors the type of work you want for your upcoming ODC team.

4. Integrate the Offshore Development Team with Your Internal Team

Your offshore development center’s IT engineers should seamlessly integrate with your in-house team. Therefore, ensure that you and the vendor collaborate to help the offshore team quickly adapt to your company culture and business processes. Communication is 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: Ensure there isn’t a significant time difference between the two teams so they can collaborate effectively during their working 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 work together smoothly.
• Language: Choose a vendor whose team members are fluent in English. This will help prevent misunderstandings and miscommunications during the project development process. Fortunately, the IT workforce in Vietnam is generally fluent in English, so this shouldn’t be a major concern.
• Cultural Differences: Cultural differences between the two teams may impact communication. Ensure that the Vietnamese vendor you select has a team of professionals who understand your company’s culture and values. Alternatively, you can organize virtual team-building activities to help all team members get to know each other better and establish a good rapport.

5. Monitor Performance and Provide Feedback

This is the final step in establishing an offshore development center, but it is by no means the least important. You should regularly monitor your ODC team’s performance and provide feedback to help them improve the quality of their work. This will ensure that your offshore development center performs as expected and will help you identify and resolve potential issues early on.

This isn’t something you can assess at a glance; you’ll need reports to accurately track the performance of your ODC team. The ODC services provider should regularly report progress to the project managers. These reports should be detailed, easy to understand, and include key performance indicators (KPIs) and metrics, giving you a clear picture of the team’s work quality.

Offshore Development Center Security

The offshore development team must treat 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 both parties and is strictly adhered to by all representatives. The specifics of the intellectual property protection are also detailed in the agreement.

Bestarion ensures the protection of all related IP in both physical and electronic formats throughout the project lifecycle. Security measures and safeguards are efficiently implemented even after working hours.

For security reasons, we provide antivirus and firewall protection, data backup and recovery, legal contracts for data handling, and restricted access to the internet, drives, media, workplace, and other sensitive areas.

ODC Security Policies

The team must maintain strict confidentiality and security in every project to protect customers’ records and models. Customer data is kept private using the Active Directory (AD) framework, which facilitates secure communication with clients’ specialists. Under AD, only authorized personnel have access to information, and all copies or versions of information are recorded in logs that customers can access at any time. Customer database data is protected throughout the project, with access to sensitive information restricted to key personnel. Equivalent security measures are taken to prevent data leakage and unauthorized access to the organization’s computer systems, ensuring safe service delivery.

To ensure that all employees fully understand and appreciate the importance of protecting clients’ rights, all Bestarion representatives sign confidentiality agreements alongside their employment contracts upon joining the organization. These agreements confirm that representatives will adhere to Bestarion’s IP protection guidelines for private data.

Why Should You Use Vietnam ODC Services?

Vietnam ODC services have become an excellent choice in recent years. Vietnam has gained popularity as an IT outsourcing destination 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 eight consecutive years (Tholons, 2009-2016).
• Vietnam is ranked first in terms of innovative location and cost environment (Cushman & Wakefield Business Process Outsourcing and Shared Service Location Index, 2016-2017).
• Vietnam is among the 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?

Here are some reasons why clients choose Bestarion as their Vietnam offshore development center:

• Bestarion is the leading offshore software development center in Vietnam.
• Competitive Hourly Rates
• 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 focus entirely on core activities such as business, sales, marketing, and operations while we handle product development, with the following advantages:

• Competitive pricing and easy team expansion
• Proficiency in both technical expertise and English
• One-month trial period with a money-back guarantee if not satisfied
• Transparency is essential for long-term collaboration

Top Reasons to Hire Bestarion Developers – Vietnam Offshore Development Services:

• English Communication: Our team generally reads, writes, and understands spoken English well.
• Cost-Effectiveness: You can find excellent developers at reasonable hourly rates.
• Good Communication Skills: Our developers aren’t afraid to speak up or challenge ideas. They are committed to success and doing a good job.
• Young Talent: Many developers have studied and worked in the United States, Australia, Northern Europe, or Japan.
• High Level of Technical Skills: Our developers excel in analysis, troubleshooting, and brainstorming tech solutions. They are enthusiastic and committed to self-development.

Ready to build an Offshore Development Center in Vietnam? Contact Bestarion today to discover how our tailored solutions can drive your project’s success!