Guidelines for hiring a Software Outsourcing Company in Vietnam

First of all, what makes Vietnam a top destination for software outsourcing?

The demand for software outsourcing in Vietnam has been steadily increasing for years. As reported by CIO magazine, offshoring your software development to Vietnam can help saving up to 90% of expenses, compared to having it done in the United States. Even when put next to India, Vietnam still wins over with the rates cheaper between one-third to one-seventh times. TopDev’s statistics released in 2020 demonstrate Vietnam to be an ideal destination for IT outsourcing as it has about 400.000 IT engineers currently active and more than 50.000 graduates from over 153 IT institutions every year. According to Vietnam Economic Times, Vietnam’s population is also categorized as highly educated people with a 96% literacy rate, and 80% of college graduates take degrees in sciences.

Such an abundant IT workforce is not everything that the country can put on the table though. For those who care much about quality, software companies in Vietnam offer skilled programmers who are entirely capable of satisfying world class standards. Their expertise covers the gamut, from mobile app, web app, IoT development, quality assurance to newly emerging fields such as big data, business intelligence, blockchain, AI. The fact that most of the industry’s conglomerates like Intel, IBM, Microsoft, Apple have started investing in Vietnam or at least have a plan for it, says something.

In the context of Covid-19, Vietnam is becoming even more favored, as its government has been doing an excellent job in handling the pandemic, thus maintaining a great socio-economic stability for the domestic business environment.

If such insights have casted a spell on you, the next step is getting to know how to select the right software outsourcing company and make the collaboration as rewarding as possible.

This article will walk you through 3 phases from scanning, selecting to working with your outsourcing partners in Vietnam, with a number of best practices to help you make the most out of your future projects.

Phase 1 - Pre-selection

1. Figure out your business goals, thus putting together a set of requirements and acceptance criteria

Lack of mutual understanding about a project’s context and objectives is one of the most common reasons causing the project to fail. This issue is even added with another layer of challenge when it comes to offshoring, since your partner might probably be new to not only your business but also your culture and market landscape. That’s why it’s crucial to clearly identify your business needs and the goals you want to accomplish prior to kicking off any further effort. Thus, make a list of specified requirements, try to make it detailed yet concise. Typical points to include are project timeline, deadlines, contract duration, scope of work, desired product functions, features and technologies, etc. The next cornerstone in this preparation stage is acceptance criteria, which determines how the output will be approved and what actions to make according to different scenarios. With these documents in place, you are just ready to move to the next step.

2. Pull a list of potential software outsourcing companies and narrow it down

The first question you are concerned with might be where to get their names.

Here are the major sources that you can start with:

  • Referrals: This is unnecessarily the best, but often the safest source. If you find out among your network someone that knows the IT outsourcing landscape in Vietnam and has first-hand experience there, go ask for their advice. Even when you might not end up hiring the firms they recommend, there would be many useful insights you can learn, especially for the purposes of benchmarking and rate comparing.
  • Search engines (mostly Google): literally everything you need you can find it on Google. However you risk getting lost among too many options or even worse picking out wrong candidates. To make the most of Google search results, try to use keywords that are relevant and varying in types. Beside common phrases like “software outsourcing company in Vietnam” or “Vietnamese IT outsourcing firm”, try also the ones that are more specific to your particular project, for example “IoT development company in Vietnam”. Be careful with the superlative words like “best” or “top”, because sometimes they are resulted from SEO tactics rather than being truly “top”.
  • Industrial directories: For the software industry in particular, some of reliable listing platforms are Clutch.co, G2.com, sortlist.com, goodfirms.co. These sites offer insightful categorizations of vendors as well as insightful information such as client reviews, benchmarking against competitors, etc. One small thing to keep in mind: Rankings suggested in the directories are not necessarily applicable to your unique case. As a rough guide, a position within top 30 is acceptable to go further. The rest of your decision making should base on further attributes.

By immersing yourself in those sources while taking into account your project’s characteristics and criteria, you will quickly detect certain company names standing out. Try to narrow your list down to an appropriate number (10 or fewer for a small or medium-sized project) and move on to the next step!

3. Check the companies’ credentials and client testimonials

Client reviews might say tons of interesting things about the company in question. Where could you find those testimonials? Once you have determined a list of potential companies, their own websites will be the first places to go. However, testimonials on these sources are often “filtered” and edited by their teams for marketing purposes. Luckily, there are better alternatives: directory websites. Not only being more authentic, company reviews on platforms like Clutch.co, G2.com, sortlist.com or goodfirms.co offer also more diverse insights such as project sizes, budget, timeline and clients’ ratings for different facets, giving you a comprehensive story of each collaboration.

Phase 2 - Pre-contract

1. Conduct interviews and selections

After thorough investigations, your list is better refined now. Start to contact each candidate for RFQ and then interview them. During interviews, try to discover and judge all the insights that are not shown explicitly on public channels, for example their resource availability, communication skills, problem solving competency, levels of expertise, project results, and so on. From such interviews, you can short-list 3-5 offshore partners that are the best fits for your project and put them in priority order. Go further with the top vendor but still keep the others in the list as backup plan.

2. Make a win-win contract with the company

Now it is time to make a deal with your chosen outsourcing partner. Specificications of the contract will differ depending on your particular case. However, in general, essential points may include payment terms, liability, warranties, notice periods, confidentiality and data protection, intellectual property rights, non-solicitation clause, as well as jurisdiction. Regarding the contract type, there are three main pricing models: fixed-price, time & material, and dedicated team. To achieve a win-win situation and minimize potential risks, don’t underrate any single element related to the contract. It would be definitely worth consulting a lawyer since an effective contract will help you prevent hiccups in further cooperation with your outsourcing partner.

Phase 3 - During the project

1. Ask your outsourcing team for documentation

While documentation could be made simple and minimal within in-house agile teams, it becomes a must for outsourcing projects. Try to be hands-on in every single progress that the partnered team is handling. Detailed and updated project documentation is particularly crucial every time a new product or feature is enhanced, since it can help to prevent potential issues and critical misunderstandings. Though this requirement might create some additional cost to the project in advance, it would save your money at the end by minimizing significantly duplicate work.

2. Get demos early and often

A periodic project trial can be a great solution to help you keep track on the vendor’s progress and detect issues as soon as they occur.. Have the proper schedule for all parties involved to do the demos will make this process run well. You can set the schedule to get demos preferably every one to two weeks, or tailor it according to both parties’ convenience, as long as it is conducted routinely.

3. Establish effective communication and management systems

Communication gaps are among the most common reasons that make an outsourcing project fail. To forestall this issue, effective communication channels and management systems need to be built and agreed between parties in very early stages. Regular updates and follow-up through meetings or reports should be planned to ensure a mutual understanding and problem solving capacity. You can make use of some pre-built project management tools like Trello, ClickUp, Jira, Asana.

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Implemented right, outsourcing your software development to Vietnam could be a wise strategy. By sharing the aforementioned guidelines and best practices, we hope that you would be assisted in finding an outsourcing partner to go together for the long run. Don’t forget to explore our services and feel free to get in touch at [email protected] if you need any advice!

Our team of experts at Enable Startup is thrilled to learn about your next projects.

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