Vietnam has jumped five places in 2017 Global Services Location Index

This is the highest ever ranking Vietnam has achieved in the Index, which is now in its eighth edition. It also marks Vietnam’s return to the top-ten for the first time since 2013. The Index analyses and ranks the top 55 countries for outsourcing worldwide based on metrics in three categories: financial attractiveness, people skills and availability, and business environment. Asian countries continue to dominate the Index.

Vietnam’s upward performance in this year’s Index reflects the country’s growing popularity for Business Process Outsourcing (BPO) centres. The BPO industry reached $2 billion in 2015 and has grown at a rate of between 20 and 25 percent annually for the past decade. This growth has been due to a number of significant factors. “Vietnam has a high number of young people who are fluent in English. Couple this with the low cost of labour, half of that in India and China’s tier 1 cities, and it’s clear why the country has become an increasingly attractive outsourcing destination in the heart of Asia,” said Soon Ghee Chua, Partner and Head of Southeast Asia at A.T. Kearney.
Japan is Vietnam’s primary client in the BPO industry, so continued growth of the sector will depend, in part, on the strength of the Japanese economy. But New Zealand is fast-becoming a top client as well. Since 2016, Augen Software Group has opened a technology development centre to service enterprise clients in Vietnam and other Southeast Asian countries. In addition, Kiwi Technology Centre, described as a hub for New Zealand tech companies investing and doing business in Vietnam and ASEAN, opened a development centre.
However, the sector faces challenges from advancements in technology. Automation, especially, has made significant progress in the past decade and now extends across business processes. Automation is being adopted at different levels and at a different pace for various BPO functions, depending on the ease with which machines can take on these tasks. A.T. Kearney’s analysis indicates that new technologies will most likely replace many finance and accounting jobs in the next five years, while customer service, sales, and human resources technologies have a lower likelihood of automation in this time frame. “With the advancements in automation many of the low-skilled and repetitive jobs in the BPO industry could be made redundant. While automation is expected to replace some jobs, it will also create new ones, that are required to manage more sophisticated technologies, bringing higher salaries to workers. However, these roles require highly skilled workers. It is important for Vietnam to ensure that its workforce employed in the sector continues to pick up new skills,” Soon Ghee added.