Vietnam on Track to Become Offshore Power

Ann All

It isn't clear whether Vietnam is more of a crouching tiger or a hidden dragon, but it seems obvious that it is well on its way to becoming an offshore power.


On the heels of Intel's decision to invest $1 billion in a semiconductor testing and assembly plant in Ho Chi Minh City, Taiwan's Hon Hai Technology Group, which produces electronics for the likes of HP and Apple, has announced plans to pour $5 billion into Vietnam. Hon Hai has already built two factories in Vietnam and has plans for several more, reports the Seattle Post-Intelligencer.


The Intel and Hon Hai investments are part of a broader trend of electronics manufacturers outsourcing production to low-cost locales in Asia. Research firm In-Stat predicts the Asian electronics manufacturing market will be worth $281.8 billion in 2011, up from $121.5 billion in 2006.


With foreign investment projects worth more than $8 million already approved for this year, Vietnam is on a pace to beat last year's record-setting $10.2 billion level of foreign investment.


Microsoft Chairman Bill Gates talked up Vietnam's potential as a site for software development, call centers and other types of commonly outsourced skills in a visit to the country last year.


Recruitment firm Harvey Nash, which earlier this year paid $1.8 million for a recruitment business based in Ho Chi Minh City, believes Vietnam's popularity as an offshore destination could rival India and China within five years, according to a story on silicon.com. Working in its favor: More than half of its population of 84 million is under 25, and 83 percent of its university graduates earn science-based degrees.


Some experts are more conservative than Harvey Nash, noting that Vietnam's educational system, which produces some 80,000 IT graduates a year, has catching up to do to match India's and China's 2.5 million graduates a year.

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Add Comment      Leave a comment on this blog post
Sep 3, 2007 10:28 AM Paul Smith Paul Smith  says:
Interesting comment on Vietnam. Harvey Nash have been developing software for UK and USA clients in Vietnam with 2500 engineers for over seven years now. What is really interesting about Vietnam is that their graduate population go straight to a job, many being supported through university by western businesses. China on the other hand produces so many graduates that the quality is suspect and most cannot find a job, going back home to work the land or into a factory. Silkroad is a software development company rather than a recruitment outfit. We expect to take our CMMI 5 team to 3500 people in the next two years. Our view is that Vietnam is and will become the outsourcing destination of choice. That is not the biggest but maywell be the best. The Vietnamese are good to do business with, loyal and very bright.Paul Smith Managing Director Harvey Nash Reply
Sep 5, 2007 8:44 AM Bao Nguyen Bao Nguyen  says:
I heard the problem with outsourcing to India is that the Indians all ultimately want to come to the US. In Vietnam, the engineers want very much to remain in Vietnam. In fact, many overseas Vietnamese repatriate themselves, hoping to become a part of the boom. Reply
Dec 12, 2010 9:09 AM Ngoc Linh Chau Ngoc Linh Chau  says:

Vietnam has developed quite nicely since this story was written. The number of well educated developer has risen, but local business still struggles to meet all the global quality requirements. At the moment international companies that work locally with partners or their own Vietnamese employees in Vietnam are the best bet. Kloon provides such service to small- and medium sized enterprises in Europe and the US.


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