Luxoft's Entry Another Outsourcing Endorsement for Vietnam

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Just last week I blogged about Vietnam'sgrowing allure for foreign investors, illustrated by Intel's construction of a semiconductor manufacturing facility in Ho Chi Minh City.


Other companies that have invested in Vietnam include recruitment specialist Harvey Nash. Microsoft's Bill Gates talked up the country's potential as a site for call centers, software development and other commonly outsourced skills during his 2006 visit to Vietnam.


The country's credibility as an outsourcing destination got another big boost this week, with the decision of Luxoft, a Russian IT services provider, to open an office in Ho Chi Minh City. Luxoft's VP of marketing tells SearchCIO.com that Vietnam is "one of the best-kept secrets of Southeast Asia," with salaries and attrition rates lower than India or China.


Russia and Vietnam also share cultural similarities, perhaps because of their past histories under Communist control. Vietnam's educational system borrowed heavily from Russia, emphasizing the mathematical and scientific aspects of engineering. Many older Vietnamese IT pros even speak Russian.


SearchCIO.com notes that a company like Luxoft, with its workforce of 2,800, is better positioned to capitalize on opportunities in Vietnam because its staffing needs are more modest than big service providers like India's Wipro or Infosys Technologies.


The article also quotes an Aberdeen Group analyst who opened a software development facility in Vietnam when he was the CTO for Brooks Automation. In addition to the aforementioned low salary and retention rates, he lists Vietnam's central Asian location, young workforce and respectable infrastructure ("as good as what I saw in India") as strengths.


Luxoft has a stellar reputation in the outsourcing industry. As I blogged last year, it racked up a number of awards, including top honors in the product engineering category of the Big Black Book of Outsourcing produced by Brown & Wilson Group.