PwC, also known as PricewaterhouseCoopers, a multinational professional service company covering investment, tax, legal, accounting and consulting matters throughout Vietnam, have recently released their forecasts that outsourcing will be among the top five most attractive sectors for foreign investment in the country.
The company’s new report titled 'Spotlight on Vietnam' highlights business process outsourcing as a key opportunity for foreign investors in the country, along with renewable energy, luxury hotels, modern agribusiness and the food sector, and retail banking.
Vietnam is hosting the APEC Economic Leaders’ Week this month which has been the factor that they developed a report about emerging markets and business opportunities in the country. The country’s outsourcing industry is said to have a “tremendous room for growth” since its grown between 20 and 35 percent annually over the past decade, reaching $2 billion of revenue in 2015.
According to PwC, the two key drivers for outsourcing in Vietnam are the rise of skilled workforce and improvements in infrastructure. Annually, Vietnam welcomes 40,000 new IT graduates and 45 percent of Vietnamese people are under 35 years of age. This demographic provides a steady supply of educated, young, and low-cost workforce for the country, which is also ideal for knowledge-intensive outsourcing services.
While on infrastructure, internet and mobile phone connectivity in Vietnam has expanded dramatically. In only less than five years, more than 55 percent of the Vietnamese population owns a smart phone. The fast pace of connectivity provides a strong foundation for outsourcing work, said PwC.
Dinh Thi Quynh Van, general director of PwC Vietnam said, “In the past decade, Vietnam has usually been known as a cheap production base for garment, textiles, and electronics parts. These activities provide no added value to the company and the country, while business process outsourcing does. The next generation of well-trained workers and better infrastructure can bring Vietnam up to higher-value-added outsourcing services.”
Outsourcing has been an important contributor to economic development in many countries around Asia. Among all Asian countries, the two most prominent destinations are India and the Philippines. These countries are well-known to provide outsourcing services in IT, call centres or data management for North American, Australian, and European countries. Both countries have a high demographic for skilled workforce with good command of English and low wages.
According to Van, Vietnam will go through a similar development phase and emerge as the next hotspot for outsourcing. This is especially true as the wages in India and the Philippines are rising due to higher costs of living. Moreover, Vietnam has one added advantage as an upcoming manufacturing hub for companies moving out of China. He added, “The growth so far has been encouraging—Vietnam is already the second largest outsourcing partner for Japanese IT firms, just behind India. We hope to see many more industries in the future.”
PwC will also publish the APEC CEO Survey on November 8, aside from ‘Spotlight on Vietnam’. These reports are carried out as part of the firm’s role as knowledge partner to the APEC CEO Summit 2017.