Offshore software outsourcing industries comparison: Vietnam, India, Philippines, Poland

Software Outsourcing
Industries Comparison:
Vietnam, India,
Philippines, and Poland
Thanh (Bruce) Pham

Software Outsourcing
Industries Comparison:
Vietnam, India,
Philippines, and Poland
Written by Thanh (Bruce) Pham CEO of Saigon Technology Solutions.
© Copyright 2019 by Saigon Technology Solutions.
All rights reserved. No part of this publication text may be uploaded or
posted online without the prior written permission of the publisher.
For permission requests, write to the publisher, addressed “Attention:
Permissions Request,” to thanh.pham@saigontechnology.com.

Software Outsourcing Industries
Compared: India, Philippines, Vietnam, and Poland
Overview of Primary Outsourcing Destinations
1. India
- Key Facts about the Software Outsourcing
Industry in India
- Pros of Outsourcing Software Development in India
- Cons of Outsourcing Software Development in India
2. Philippines
- Facts about the Software
Outsourcing Industry in the Philippines
- Pros of Outsourcing in the Philippines
- Cons of Outsourcing in the Philippines
Table of Contents
01
02
03
04
06
08
09
10
11
© Copyright 2019 by Saigon Technology, Leading Software Outsourcing Company in Vietnam. All Rights Reserved.
sales@saigontechnology.com - (+84) 88873 9363

3. Vietnam
- Key Facts About the Software Outsourcing
Industry in Vietnam
- Pros of Software Development Outsourcing
in Vietnam
- Cons of Software Development Outsourcing
in Vietnam
4. Poland
- Facts about the Software Outsourcing Industry
in Poland
- Pros of Outsourcing Software Development to Poland
- Cons of Software Development Outsourcing to Poland
Conclusion
Table of Contents
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15
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Outsourcing software development has long been proven to
have significant benefits for most businesses globally. Having
access to highly qualified and dedicated teams or team exten-
sions can be the perfect fit for both established companies and
new startups. There are also thousands of outsourcing compa-
nies offering professional software development services. That
means there are plenty of options to choose from based on your
specific criteria like language requirements, time difference,
geographical proximity and also cultural similarity.
Cost is an influential factor for most companies when outsourc-
ing their software development needs. However, even if cost
saving on any project is critical for a business, you must remem-
ber other factors. Selecting the right country and vendor for your
project will comprise of a range of essential elements like the
availability of the required IT specialists, corporate tax rates,
time zones, infrastructure and general ease of operating busi-
ness within that area.
01
Software Outsourcing Industries Compared:
India, Philippines, Vietnam, and Poland

For enterprises that are interested in beginning or enhancing
their current software outsourcing activities, making a wise de-
cision regarding the right outsourcing destination is critical.
Below is a comprehensive guideline discussing the top out-
sourcing countries along with some pros and cons for every
country. Your final choice will depend on your internal criteria
like project requirements and financial implications. Neverthe-
less, all qualified software development outsourcing firms will
be ready to listen to your needs first before helping you make the
right choice.
Overview of Primary Outsourcing
Destinations
02

India is undoubtedly among the leading nations within the soft-
ware development outsourcing field. That is mainly because the
country has a massive talent pool with different skill levels that
combine to provide great value to any company. India is also
considered to be among the best countries to offer excellent
value software development services at affordable prices.
In addition to having a vibrant IT community, India has better
conditions and enough resources that favor the setup of ade-
quate offshore development facilities. Also, since the country
has dedicated itself to developing its capacity of offering val-
ue-oriented, affordable and timely services over a long period,
they have a proven ability to deliver software development out-
sourcing better than other countries.
KEY FACTS ABOUT THE SOFTWARE OUTSOURCING
INDUSTRY IN INDIA
1. India has Skilled Software Developers
India has the most extensive pool of talents within the software
development field. It has a large number of professionals within
the IT field compared to most countries. Hence, finding qualified
software engineers and other IT supporting skillset becomes
more comfortable for an offshore firm.
01
India
03

2. Indians are Aggressive at Adjusting to Changes
Indian professionals are at the forefront when it comes to learn-
ing and working on the latest technologies. The latest IT compe-
tencies and skillsets include everything from artificial intelli-
gence and IoT to blockchain and cloud computing among others.
That is why Indian IT professionals are highly sought after
across all industries, and you will find most of these profession-
als holding pivotal roles within the IT industry.
3. Supportive Government
It is clear to see that India’s government is highly supportive of
the software outsourcing industry in the country. In 2017, the
government invested over 100 billion dollars on building infra-
structure and strengthening the IT sector to give companies
better opportunities and strengths.
PROS OF OUTSOURCING SOFTWARE DEVELOPMENT IN
INDIA
Besides the universal benefits of outsourcing such as cheaper
and quick work, India has many advanced features that lure es-
tablished enterprises, small businesses and new startups from
other countries to choose this destination for their offshore soft-
ware development needs. Here are:
1. Huge Talent Pool
India is not only the second most populated country in the world,
but it also has a remarkably large population of people with IT
qualifications. Hence, Indian IT firms can hire plenty of tech spe-
cialists with the necessary skillsets. You can get an outsourcing
firm with over 200 skilled IT professionals, which is highly bene-
ficial when working on large scale projects.
04

2. Cost
While cost should be the only factor when choosing an outsourc-
ing destination, it is hard to ignore India’s affordable yet valuable
solutions. Indian firms work on optimized, cost-effective strate-
gies that take advantage of the readily available skilled develop-
ers, thus giving the country an edge over similar countries. For
enterprises, it means better control of your budget and access to
highly skilled developers at low prices.
3. The Language Advantage
Even though some may rightly say that English is not the first
language in India, it is a language that is primarily used in the
business sector. Since India was under British colonial rule for
nearly two centuries, the country has deep-rooted connections
with the English language. That means better communication in
interactions between locals and outsources along with smoother
workflows.
4. Time Zone
The benefit of outsourcing is that you can work across multiple
time zones. The productivity and overall efficiency are signifi-
cantly boosted when you carry out 24/7 operations. A great ex-
ample here would be US-based companies that can utilize their
internal teams during the day and shift their operations to India
at night to provide always-available customer support.
05

5. Government Support
India was recently ranked highly among the top 100 countries in
regards to ease of doing business. There are sustained efforts in
the country to push positive business reforms and embolden its
position as one of the preferred destinations for IT outsourcing.
The security and IT laws have also been strengthened to help in
preventing data leaks and theft.
CONS OF OUTSOURCING SOFTWARE DEVELOPMENT IN
INDIA
1. Language barrier
Despite language being positive when outsourcing software de-
velopment in India, it can also be detrimental. Often the writing
skills of Indians will surpass their comprehension and speaking
skills. That means when you convey messages through tele-
phone or video calls, it is likely that certain phrases or words can
be misinterpreted. That is because the tone, intonation, and pro-
nunciation vary from how Indians speak English.
2. Quality of Results Can Suffer If You Choose Unreliable Agen-
cies
The outsourcing industry in India is thriving, and there are thou-
sands of companies. However, that does present a challenge for
external companies to choose the best one as only a few of these
outsourcing ﬁrms can deliver high-quality results. Thus, you
must be cautious at companies that look too eager to work with
you and have very low offers.
06

3. Different Work Culture
The work culture in India is unique in that some companies can
compromise on work quality to achieve their targets. That is be-
cause certain outsourcing companies may have limited people
management skills and may hire unskilled developers. Also, In-
dians don’t give too much value to time, which may lead to delays
in the entire project.
07

Another popular outsourcing destination in Asia is the Philip-
pines. Many international companies choose this particular
country for their IT outsourcing needs since it has numerous,
top-tier software development vendors that give access to an ex-
cellent and skilled talent pool. Furthermore, like India, the Phil-
ippines software development outsourcing industry is backed
by firm governmental support.
Based on data from the Philippine Software Industry Association
or PSIA, the nation currently has over 120,000 software develop-
ers. The PSIA predicts that a high number of experienced devel-
opers will rise to more than 200,500 by 2020. Also, the country’s
software industry, which is currently valued at $3 billion, is pro-
jected to rise to 7 billion dollars by 2020.
According to Jonathan De Luzuriaga, the PSIA President, the
country will also increase its market share in the universal IT
sector from 12% to 15%. Currently, the IT sector in the Philip-
pines is going to generate approximately 10% of the nation’s
GDP. Overall, the sustained growth of the IT industry here is sup-
ported by strong government incentives.
A crucial factor that helps outsourcing software development
ventures in the country is the English language fluency, which is
critical for successful communication and cooperation. The
nation is even listed amongst the top 30 nations in the world with
high numbers of software specialists that can communicate flu-
ently in English. However, despite the country making signifi-
cant progress in various domains like software engineering, the
volatile political situation hurts the economy.
02
Philippines
08

FACTS ABOUT THE SOFTWARE OUTSOURCING INDUSTRY
IN THE PHILIPPINES
1. Culture and communication
The people of the Philippines spent four decades under colonial
rule by the US. Hence, the nation is quite westernized, and the
English language is widely used across the country. This out-
sourcing destination is regarded as a US-friendly country in
Asia, and it is ranked highly in similarities to Western cultures.
2. Focus on Emerging Technologies
In addition to having a strong economy, the IT sector is one of the
fastest growing and dynamic industries in the Philippines. Many
companies specialize in various aspects of software develop-
ment as well as emerging technologies like blockchain and AI.
3. Skills and Education
The Philippines is ideal for outsourcing due to its highly-educat-
ed labor pool. They have an internationally-respected education
system that produces highly quailed graduates. Furthermore,
there are more than 15,000 graduates from technology courses,
which is among the highest rates across the world. That access to
expert skills has led the state to be identiﬁed as among the lead-
ing outsourcing destinations for software development.
09

PROS OF OUTSOURCING IN THE PHILIPPINES
1. Outstanding Understanding of the Western Culture
Once the Americans successfully liberated the Philippines
during World War II from Japan, the citizens have adapted and
embraced Western cultures in their daily lives. English is taught
as one of the primary subjects within their education system and
a large percentage of advertising, business and television are
also done using English.
2. The American Accent
Communicating speaking to Filipinos is possible thanks to their
American accents. That strong influence by America on the Phil-
ippines wired the citizens to speak with better accents, especial-
ly when compared to a country like India.
3. Cheap Labor Costs
The economy in the Philippines is not the strongest due to suc-
cessive corrupt governments. In the last two decades, two previ-
ous presidents faced corruption charges and are currently
under investigation. Corruption and a low performing economy
mean that the American dollar is quite influential in the country
compared to the Pesos. Hence, organizations interested in off-
shoring and outsourcing software development to this country
can end up saving more than 70% thanks to cheap labor costs.
4. Remarkable Talent and Unique Recruitment Processes
The leading software outsourcing companies located in the Phil-
ippines hire candidates who have college degrees and proven ex-
perience in their respective fields. Additionally, the country has
a unique recruitment process. Employers here can request
10

potential candidates to sit for additional IQ exams and also to
categorize the candidates using various criteria like marital
status, gender, and age.
5. World Class IT Infrastructure
Due to significant investments and ongoing improvements, the
Philippines boasts of similar world-class IT infrastructure as
other Asian giants like South Korea, Hong Kong, and Japan. Nu-
merous established ISPs are offering high-speed, dedicated fiber
optic internet connections all over the country. Various leading
technology firms like Avaya and Cisco even have local offices lo-
cated in Manila to provide expert networking and data solutions
for software outsourcing organizations.
CONS OF OUTSOURCING IN THE PHILIPPINES
1. Unpredictable Weather Conditions
The country experiences an average of twelve tropical typhoons
per year that can cause floods and other disasters. That means
there is a potential that works in specific areas could be affected
by such types of weather, which could delay ongoing software
outsourcing projects.
2. Numerous Holidays
While the US only has eleven official holidays, there are 18
non-working holidays in the Philippines. Also, since most Filipi-
nos are Catholics, the Holy Wee represents the most extended
holiday within the country. These extended breaks could be
quite costly, especially when working on time-sensitive projects.
11

3. Labor Codes Favor Employees
The labor codes here greatly favor the employees. For instance,
an employer can’t ﬁre a non-performing worker at will before
providing proper documentation and cause. The termination of
workers also demands that the organization offer the prescribed
severance pay and any other dues.
4. Extra Pay for the 13th Month
The other fascinating thing about the Filipino labor code is that
it requires organizations to pay workers for an extra month an-
nually. That incremental 13th-month pay must be paid out in
December, and it acts as a compulsory bonus to employees.
12

Despite being a moderately new concept that was started more
than one decade ago, the software outsourcing industry in Viet-
nam has grown quite significantly. Some of the earlier entrants
into the country include Intel and Oracle who saw the potential
that the country had in developing software solutions. Also, the
government has implemented attractive policies to attract IT en-
trepreneurs along with substantial investments in the STEM
fields to create robust and qualified technical engineers.
The technology industries in Vietnam and subsequent outsourc-
ing services have experienced remarkable growth over the last
few years. The country was recently ranked among the most at-
tractive destination for outsourcing countries in the GSLI 2017
report. That favorable data shows that more businesses are
choosing to use Vietnam over other competitors like India.
KEY FACTS ABOUT THE SOFTWARE OUTSOURCING IN-
DUSTRY IN VIETNAM
1. Dedicated Labor Force
Vietnam has plenty of tech-savvy, young citizens that are ex-
ceedingly interested in pursuing IT-related careers. Also, the
government encourages continued investment in software
parks, dedicated tech zones and provides tax incentives for the
establishment of IT firms. Today, Vietnam is gradually develop-
ing its young workforce to obtain the necessary technical skills
and easily compete with other Asian countries. The IT workforce
continues to increase every year with more than 40,000 gradu-
ates across the over 290 universities in the country.
03
Vietnam
13

2. A Culture of Loyalty
An important factor that contributes to many outsourcing soft-
ware development firms choosing Vietnam is the remarkable
staff loyalty. Most people practice the base concepts of Buddhism
within the country. An important principle here is the impor-
tance of loyalty, and the local people immensely value it. That
means that you should expect reduced staff turnover rates. The
employee retention data in the IT industry varies between 92%
and 94%. In comparison, India has an 80% retention rate, with
many Indian skilled engineers willing to relocate outside the
country to pursue IT careers abroad.
3. Economic and Political Stability
Vietnam is considered as the black horse within the software
outsourcing industry, as it is one of the famous, most consistent
and fastest growing BPO markets. The country’s GDP has also
snowballed every year by about 7% during the last decade of glo-
balization. Also, Vietnam enjoys a safe and peaceful working en-
vironment with minimum conflicts in religion and social poli-
tics. All these factors add up to create a stable ecosystem for in-
ternational companies to thrive with minimal risks once they
outsource their software development to Vietnam.
4. Presence of Major Companies
IBM, Intel, Canon, and Fujitsu are some of the leading investors
that have already made their way into the Vietnam outsourcing
industry. These companies and many others have helped to im-
prove the country’s IT infrastructure and also assisted in in-
creasing the interest about the IT field.
14

PROS OF SOFTWARE DEVELOPMENT OUTSOURCING IN
VIETNAM
1. IT-Specialized Education Institutions
Vietnam has massively invested in its education system with
multiple IT-related courses and easily accessible universities
and vocational schools. There result is that more students now
have the chance of pursuing IT careers like software develop-
ment.
2. High Level of Education
Besides having considerably high literacy rates, Vietnam also
boasts of up to 300,000 college and university graduates annual-
ly. Outsourcing companies, therefore, have more than 50,000
fresh talent to choose from every year.
3. Young and Vibrant Population
A significant benefit of outsourcing development of software to
this country is the access to its vibrant, young population. Over
70% of Vietnamese are below 35 years, which means that more
active people are ready to work. Additionally, the high literacy
rate means that nearly all these people are well educated and
skilled in their respective areas.
4. Proficient English Communication
A huge challenge that faces the outsourcing sector is communi-
cation. The Vietnam government has tackled this issue by heavi-
ly investing and incentivizing its citizens to speak in English.
There are numerous native English teachers hired across the
country, and there has been a considerable improvement in
15

English proficiency in the country over the last decade. Also,
most of the young Vietnamese people can communicate fluently
in English.
5. Affordable Labor Costs
You can quickly hire experienced software developers in Viet-
nam for a significantly lower price as compared to American de-
velopers. Since cutting costs is part of outsourcing specific tasks,
Vietnam developers are more cost-effective as they cost up to
30% less compared to Indian developers.
6. Calm and Stability
Compared to other Asian countries like Sri Lanka, Vietnam
doesn’t have any political instability. The past three decades
have been quite calm and stable, which has a positive impact on
the countries ever-rising GDP.
CONS OF SOFTWARE DEVELOPMENT OUTSOURCING IN
VIETNAM
1. Attitude and Motivation
For most young adults in Vietnam, the IT sector is highly valu-
able as it guarantees better job opportunities along with greater
pay. Hence, most students are choosing IT jobs when selecting
their future work life and careers because it is a trend and not
because they are passionate about this sector.
When these students complete their college or university train-
ing, most enter IT and make lots of money. That makes some to
become easily satisfied and arrogant in their line of work. It also
explains the reasons why some software engineers in Vietnam
are falling behind when it comes to keeping up with current
16

trends. Hence, if they don’t have sufficient dedication and stron-
ger work ethics, then they could end up losing out to their Indian
counterparts.
2. Lack of Soft Skills and Practice in Education
Despite all the extensive efforts to improve the Vietnam educa-
tion system, the country still lags in overall soft skills and prac-
tice. The educational teaching methods used in most schools,
particularly in rural regions could significantly affect students’
creativity and motivation. The result is that students aren’t en-
tirely equipped with the necessary soft skills that will be critical
in their future careers, such as negotiation, presentation and
teamwork skills. These soft skills have become crucial in the
software development outsourcing industry.
3. Too Many Outsourcing Vendors
As the popularity and profitability of software outsourcing in-
creases in Vietnam, more vendors are now entering this indus-
try. Nevertheless, that haste causes most new software sourcing
firms to make multiple wasteful mistakes. Most vendors try to
grab lots of money while sacrificing on the delivery of quality
outsourcing solutions. Also, there is minimal knowledge sharing
going on such that various software offshore startups are lagging
far behind.
17

Eastern European countries are highly ranked when it comes to
outsourcing software development services. Poland is the lead-
ing country in Eastern Europe and mainly across the world for
efﬁcient software outsourcing solutions. Here are some of the
critical facts about this outsourcing destination and why it con-
tinues to attract numerous multinational organizations.
FACTS ABOUT THE SOFTWARE OUTSOURCING INDUSTRY
IN POLAND
1. Highly Educated Society
The primary reason for the increasing interest in offshoring
software development to Poland is having access to the best edu-
cated and youngest society. Poland trains over 2 million students
annually, and nearly 500,000 graduate out of higher learning in-
stitutions per year. These students become highly successful in
the IT sector, which is seen by how they beat other countries at
prestigious software and programming competitions.
Poland Has the Latest Cutting Edge Tech Solutions
The technologies and tools used in Poland are quite modern, and
the vendors there work with the most up to date products. Most
importantly, these ﬁrms use scrum and agile methodologies to
provide timely, high-quality results.
04
Poland
18

2. No Cultural Differences
For companies located in Europe or the US, working with Poland
is a no brainer as there aren’t any cultural differences, particu-
larly when compared to India and Vietnam. That means simple
communication, and the result is successful collaborations with
outsourcing agencies or teams.
3. An Acceptable Time Difference
There is a nine-hour difference between Warsaw and San Fran-
cisco. Even when dealing with US companies, Polish companies
will still find the right time for communication that fits both
teams. For closer outsourcing destinations, you will see that the
time difference is quite smaller, which allows for smooth cooper-
ation and an excellent experience for all who are involved.
PROS OF OUTSOURCING SOFTWARE DEVELOPMENT TO
POLAND
1. Strict Security Standards
Data protection is a huge worry for most companies that are con-
sidering outsourcing software development, mainly when deal-
ing with critical customer details or financial records. Choosing
an EU country like Poland which has stringed data protection
laws is, therefore, a smart decision. Poland follows strict guide-
lines regarding how the vendors manage and operate the data.
2. Relatively Low Prices
Even though the cost per every working hour in Poland are not
necessarily quite low as those in India, Polish contractors pro-
vide higher skill levels along with better quality products. Also,
since Polish developers use better procedures and technologies
19

they can complete projects quickly and significantly help to keep
the overall costs very manageable.
3. Well-Established Software Development Process
It is likely that the agency you choose in Poland has completed
numerous software development projects. That extensive expe-
rience means that the vendors here have already created good
practices and methodologies for communication, product
design and also ensuring that the results fit your needs. Also, the
country has highly advanced technology infrastructures in place
ready to support a wide range of software requirements.
4. A similarity in Work Ethics and Culture
Polish people have a similar work ethic and culture to most
Western countries like the America, Germany, France and the
UK. It is why communication and cooperation tend to go more
smoothly in software projects that are outsourced to Poland.
5. Healthy and Stable Economy
Poland was recently ranked the seventh position globally by
Ernst & Young with regards to investment attractiveness. Also,
during the period from 1990 to 2015, the country experienced
the largest per capita GDP growth among OECD and European
countries. The GDP increased more than seven times during that
period, which was quite remarkable.
6. Eye-catching Tax Incentives
Most Polish states, including the major ones like Katowice or
Krakow, are considered as distinct economic zones that grant
some attractive tax benefits and exemptions. These states offer
technology incubation, tax exemptions and even land to
20

companies that are interested in setting up IT services in the
country. The entire market is geared towards supporting inno-
vative technologies.
CONS OF SOFTWARE DEVELOPMENT OUTSOURCING TO
POLAND
1. High Turnover Rates
Due to the increased competition in the outsourcing software
development industry in Europe, many local agencies struggle
with retaining software developers.Most developers are always
looking for better job opportunities due to the high costs of liv-
ing,which mean high turnover rates.For local vendors, it’s also
easier to replace employees than retaining the existing labor.
2. Higher Developer Costs
When compared to other Eastern European countries, Poland
vendors pay their developers up to $1,000 more than their
neighboring countries. For instance, while developers earn
$2,000 per month in Ukraine, the same professionals would
make over $3,000 in Poland. Nevertheless, most Polish compa-
nies dedicated lots of attention to developing their employees,
which is done through organizing workshops, training, and
other professional development courses.
21

Finally, you should consider visiting the vendor or country
before initiating the project. That allows you to examine the
quality of work and working conditions of your future software
engineers. It also gives you a better feel of that vendor’s work
ethic to check if it aligns with your project and even the sur-
rounding culture of the area. Most importantly, think of software
development outsourcing as more than external resources to
use, but strategic partners that share your goal for building top
quality products.
The success of your outsourcing project for software develop-
ment services will ultimately depend on how well you communi-
cate your requirements and have them adequately fulﬁlled.
There are several pros and cons of all the various outsourcing
destinations you can choose, from Poland and India to Vietnam
and the Philippines. Hopefully, you know have a clearer picture
of what you should expect when dealing with the countries men-
tioned above.
Conclusion
22

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