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Typology of offshore outsourcing providers in Vietnam

I have been living and doing business in Vietnam for eight years now, and one of the most remarkable things is how the country and its people have managed to keep their very own identity throughout history.

I am always amazed to see flags popping up at every street corner on national days, or hordes of bikes racing around Saigon after the football team’s victories. And what is true for everyday life also translates into the way you want to do business in Vietnam.

To illustrate this, it’s best to address a topic I am familiar with: the outsourcing market. The three types of outsourcing providers I will define and describe each have their own pros and cons. The most important thing is to clearly understand what to expect, from the “exotic” local provider to the “factory-style” global one, to be able to select the one that fits your business the best.

Global providers

A long list of global providers is flooding the market. These large delivery centres are always unified with other locations like the Philippines or India, the only difference for you being which destination to book when you want to visit them.

As you may expect, these large groups frequently show very little experience of the local market, especially for a relatively new destination like Vietnam. Often offering inflated salaries, they have struggled in recent years to identify talented profiles, some of them even leaving the country with the – mostly unjustified – reason that “skilful resources are still too rare”.

If your plan is to deal with points of contact directly in the country, you will also find it difficult to identify local representatives, and you will be lucky if they meet you. These two “entry barriers” passed, it may then not be a very wise decision to initiate a project, as it most probably means they do not receive enough projects from their mother company, and hence are not in the mothership’s books.

Lastly, the very compliance-oriented management style has a few noticeable impacts on people: you will face difficulties in leveraging the strengths of Vietnamese profiles and style, and dedication to the company tends to be low due to the difficulty people have in adapting to the large corporation environment.

The positive aspects of picking a large global provider are of course nonetheless significant. You will not bear the cost of a poor choice of outsourcing destination, and the level of service is very well streamlined all across the company.

Project management and process documentation are done according to the latest standards (think ITIL and PMBoK), which also makes a change of project manager much less hazardous.

Last but not least, you will benefit from the financial strength of a big corporation if things go south.

Local providers

At the extreme opposite of the spectrum, we find local providers. FPT, the largest IT outsourcing provider of the country, is a very good example, openly promoting the supremacy of “Vietnamese style”.

It is difficult to talk about the local style without mentioning a few anecdotes which will definitely raise some eyebrows if it is your first time in Vietnam. For instance, napping at noon is a way of living, not just a few people following the latest advice for wellness at work. Hence, don’t be surprised to find the full “nap package” lying around the office, from pillows to camping mattresses. That said, to put this into perspective, you need to know that before coming to the office, most people wake up at 5am, walk around for morning gym, go to the local market, cook breakfast, do housecleaning and maybe even meet friends for coffee. Let’s call this… local folklore.

When it comes to business itself, there are a few cultural gaps which will make communication complex. First of all, asking questions isn’t the norm – and don’t take “yes” as “I fully understand what you just explained”. You surely read about it already, but you will definitely need to understand how to deal with it. Second, what may seem obvious to you is not necessarily that obvious for people on the other side of the world. I’ll always remember this mail starting with “Hello Hugo Boss…”, for which I had to explain that no, Hugo Boss is not the name of the interlocutor here.

Don’t be surprised if some words are cut or shortened, too. Vietnamese is a monosyllabic and very contextual language, so shortening words in a context makes sense. When taken out of context, it becomes awkward, and a portfolio manager suddenly turns into a… portfolio.

Last but probably the most important, “managing expectations” is not yet a very well understood concept (especially the under-commit and over-deliver idea), so be ready for an emotional rollercoaster experience.

Now if you feel you can go through all the above, you will uncover very interesting opportunities brought to you only by local providers.

Obviously, you will first of all benefit from much cheaper proposals than what global providers will ever offer you, due to the low concentration of “expat” profiles in the org-chart.

Scalability is another positive aspect: local companies have a very strong network, and it will be very easy for them to recruit among friends of employees, young grads and experts in the field they are specialised in.

Finally, once you get the relationship going and learn how to interact with them, you will realise that local providers often bring a different and valuable viewpoint to the table when it comes to business or technological choices.

Glocal providers

At the intersection of these two extreme types, you will find providers which are attempting to mix the best of both worlds: let’s call them glocal.

When the model is successfully implemented, you will truly benefit from Vietnam’s local specificities, while not having to compromise on business relationship or delivery standards.

Obviously, the next question is: how do you know that the glocal model is properly implemented?

At least two signs will tell you that the company is not just here to “exploit” the local workforce:

  • What is the vision of this provider? You want to see a strong focus on developing the knowledge of the staff, and a consciousness towards social responsibility as a foreign company in Vietnam. If the discussion quickly comes to “cheap resources” when discussing “why Vietnam”… run!
  • Are expats (and locals) at all levels of the organisation? This is related to the first item, and particularly important to measure the fairness of the company’s structure. It can easily be noticed by visiting the provider, and see the overall atmosphere. You should be able to talk to most people, and perfect lines of desks with people silently doing their job is again not necessarily what you want to see.

The right balance of local and international culture is tricky to attain: there are very few examples to follow, cross-cultural management books won’t help much (not to say they will be a liability), and just hiring locals hoping their “Vietnam attitude” will flow through the company won’t simply cut it.

Lastly, achieving this balance comes at a cost. More expats as well as more investments to maintain a unique corporate culture will often make glocal providers as expensive as global ones, without displaying the fame of a big name.

Challenges and rewards

This is my experience of Vietnam, but it can surely be generalised to other markets such as India or the Philippines.

Obviously, the choice of a provider will often come down to your company’s general preferences and policy towards “risk”. Both local and glocal types are by essence more challenging choices, but they are also the only options which will give you a chance to truly taste the Vietnam difference.

Comparison table

* This article is originally published on outsourcemagazine.co.uk

Comments (1)
  • Dear Sylvain,

    Thank you so much for the insightful article. Really helps to set the perspective right for someone looking to outsource their business. I will be glad to connect with you to understand the topologies in detail at your convenience. Please feel free to connect with me.

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