Vietnam is an ideal location for producing software. IT companies in high-income countries like the United States, Hong Kong, Singapore, Australia and others are seeking to overcome challenges in their home markets, including costly labour and talent shortfalls. As a result, offshoring and nearshoring has become a common strategy.
This article links to a number of our more detailed guidances on issues relevant to new IT companies in Vietnam. Click through for more extensive content on any particular issue.
Why launch a new tech company in Vietnam?
Vietnam has much to offer a new tech company. Vietnam is seen favorably in comparison to many other countries, including Indonesia, the Philippines, Thailand and China. The country is attractive for many reasons, but particularly the low cost of labour, the ready availability of development talent and the political stability. Vietnam offers the range of skill sets that might be required for a tech startup’s product, including developers, designers, testers and project managers.
How much does it cost to launch a new IT company?
Startup costs will vary depending on the specific requirements. Administrative costs typically include company registration and a lease for an office. Once the company is operational, accounting costs and taxation will become relevant.
Labour costs also need to be considered at the outset. After including taxes and insurance, full-time developers can be hired for under $1,000 USD per month, but specific technical skills, high levels of English or additional years of experience can add to this amount. More detail on salaries for production teams are available here.
How do new companies structure their tech teams?
Having your own team offers some significant advantages. While some new companies may be tempted to outsource the production, there is much to be said for internal capability and know-how. You’ll also get better understanding of your users/customers by using this approach. Outsourcing will also cost significantly more than an internal resource.
The structure of your team really depends on the complexity and budget that you’re working with:
- Some companies will begin with a very small team, often a talented full stack developer working closely with an experienced CTO (or similar).
- Other companies with more complicated programs of work will require a small team of 4-5, at least initially. Companies working with an Agile philosophy may choose to structure their teams as a Squad of 6-8 members.
- Teams can often grow to 30+ members where there is significant revenue or the company has been well-funded to pursue an ambitious suite of products.
Each type of tech team presents different strengths and weaknesses!
What are the first steps to launching a new tech team?
You’ll need to choose a city to base your team. There are normally three cities that will be considered: Ho Chi Minh City (also known as Saigon), Hanoi and Da Nang. The IT labour force is concentrated in these cities, and the tech sector is strongest in Ho Chi Minh City.
You’ll also need to prepare some material for company registration. The exact list will vary depending on your ownership structure and the type of company preferred by your startup. Approval may also be required, depending on the industry you will focus on.
Setting up an office using a standard commercial lease in Vietnam can be complicated and risky, particularly for a startup. However, it’s relatively simple to get a small team started if you know how, particularly if a flexible space (such as coworking) will be suitable. This approach avoids lengthy lease terms and large costs for deposits and fits-outs.
Finding your first employees in Vietnam will no doubt offer a new challenge for founders and executives from high-income countries. Nonetheless, these challenges can be overcome. If you’re hiring developers, you should also consider the issues specific to this job type.
Metasource has built many offshore software development teams for foreign entrepreneurs and can rapidly accelerate your commencement date, reduce your administrative overheads and the costs you are exposed to for company registration. Enquire for more information.
How do new tech companies achieve success?
Foreign-owned IT companies in Vietnam should be guided by some general rules to ensure the team is successful. This is a complex and expansive topic that includes the preparation to offshore, the initial commencement and subsequent operation of the team. Remember that Vietnam has specific compliance and accounting requirements.
Close attention will also need to be paid to the structure of your project and the management of the team. Teams that operate remotely have specific considerations. The selection of remote team members, the management of the remote team and communication within the remote team are all exceptionally important to the team’s success. The right tools are also vitally important to ensure the remote team can perform as expected.