Viet Nam makes top 10 for outsourcing

Business Desk
Viet Nam News
Publication Date: 08-06-2009

Viet Nam ranks as one of the 10 most attractive destinations in the offshoring industry, according to a report recently released by the global management consulting firm AT Kearney.

"Viet Nam is a country to watch as it has climbed the rankings nine spots into the 10th place since 2007," according to the report The Geography of Offshoring is Shifting.

This was the biggest change in the Global Services Location Index rankings among Southeast Asian countries.

"This change reflects an increasingly busy offshoring industry, especially focused on IT," the report said.

Japanese companies, for example, have outsourced IT services work to Viet Nam for several years, which prompted Russia’s Luxoft, an IT outsourcer, to open a centre in HCM City with the purpose of targeting the Japanese outsourcing market, according to the report.

The 50 countries included in this year’s index were selected on the basis of corporate input, current remote services activity, and government initiatives to promote the offshoring sector.

AT Kearney evaluated countries according to 43 measurements across three major categories: financial attractiveness (40 per cent of the total weight in the index), people skills and availability (30 per cent) and business environment (30 per cent).

Viet Nam was one of the three top countries in financial attractiveness, according to the report, but it was 28th in "people skills and availability".

Availability was measured by several factors, including the total workforce, language capability, attrition rates, and education levels.

Radical shifts

Deteriorating cost advantages and improved labour quality are driving a dramatic shift in the geography of offshoring, according to AT Kearney.

"While costs remain a major driver in decisions about where to outsource, the quality of the labour pool is gaining importance as companies view the labour market through a global lens driven by talent shortages at home, particularly in higher, value-added functions," said Norbert Jorek, a partner with AT Kearney and managing director of the firm’s Global Business Policy Council.