Starting operations in Vietnam can create value in many ways. For example, a company might resolve talent shortages faced in their home country, or significantly reduce their overheads. If the project involves software development, entering an emerging economy is a key strategy to get software on the market quicker and/or cheaper. This can extend the available runway, which is great news for startups or scaleups with limited capital.

However, if you speak to an entrepreneur with a lot of experience in the emerging economies of Asia, you’ll probably notice that starting operations can be a challenging experience. Registering a company is the traditional approach that foreign entrepreneurs would use to enter the market and then employ local staff in Vietnam. Despite improvements to the registration process in recent years, this approach exposes foreigners to a potentially lengthy and complicated process. Once the registration is completed, the managers of the Vietnamese company will face an ongoing administrative burden to operate the company and remain compliant with local accounting and labour laws.

In contrast to the traditional approach, many software development companies choose to use an Employer of Record to start rapidly and improve their odds of success. This article examines how an Employer of Record can benefit foreign-owned software development projects in Vietnam.

An Employer of Record

An Employer of Record takes the responsibility of payroll and compliance related to local employees working for you. You manage the staff on a day-to-day basis, but an Employer of Record will sign the labour contract with the staff, execute the payroll and submit all filings to labour and tax departments that are required for those employees. Essentially, the administration is handled by someone else.

The Benefits of an Employer of Record

There are many benefits of using an Employer of Record.

Lower the Risk of Market Entry

Using an Employer of Record to administer a team of developers in Vietnam makes a project much simpler. Rather than waiting for a company to be registered and investing significant capital in that company, you are able to start quickly and with limited investment. Using an Employer of Record is a great approach to test a market’s suitability, as you will not be faced with the difficulties of closing a company in the event that Vietnam is not the right choice for the project.

Ensure Compliance with Vietnamese Laws

Vietnam is an attractive opportunity but it remains an emerging market. Laws are changing regularly as the economy is modernized. Accounting law, corporate law and labour laws continue to evolve: keeping up with these developments is a chore, particularly when enforcement of a law may be significantly different to the law itself.

Better Focus on The Core Business

The core business of your company or project is no doubt complex and all-consuming. Rather than becoming distracted by administration and payroll, using an Employer of Record minimizes the time and effort that needs to be directed to these low-value tasks. Instead, there is more time available to direct to the core business, where the real value is being created.