Thanks to globalization and digital transformation, businesses can now operate beyond their geographical boundaries. Businesses are no longer restricted by borders and can now access new markets and tap into new talent pools by outsourcing their IT needs to third-party companies in nearshore or offshore locations.
Software development and IT-specific outsourcing services have been booming around the globe. The global pandemic has also been a key driver of the growth of outsourcing as businesses seek to cut costs and become more agile. It is forecasted that software development outsourcing will continue to grow and soon reach 70% by 2023.
To leverage the cost disparity as well as other competitive advantages of IT outsourcing services, many businesses have been turning to software outsourcing destinations in Asia. This article will explore the top 4 outsourcing countries in Asia and provide an updated list for 2023.
Why outsource IT needs to Asia?
There are many reasons to consider outsourcing IT needs to companies based in Asia. Here are some of the main reasons:
Competitive pricing
The wage gap between developed and developing countries is still significant, making Asian countries an attractive destination for businesses looking to reduce costs. In addition, many Asian countries offer a lower cost of living, which can further help to reduce the overall cost of doing business.
Abundant talent pool
As the world’s most populous continent, Asia is home to 60% of the world’s population. This provides a large talent pool for businesses to choose from when outsourcing their IT needs. Additionally, many Asian countries have a high concentration of youth, which means that there is a constant supply of fresh talent. This is also the primary reason businesses of all sizes delegate software development projects to Asia to deal with the shortage of developers.
English proficiency
Although not all Asian countries have a high level of English proficiency, many of the countries that are popular outsourcing destinations, such as India and the Philippines, do have a high level of English proficiency. This is due to the fact that English is one of the official languages in these countries. This makes communication between businesses and IT service providers easier and more efficient.
Time zone differences
One of the main benefits of outsourcing to Asia is the time zone difference. This can be beneficial for businesses as it allows them to get work done outside of normal business hours. Additionally, it can also help to avoid or resolve issues in real time as there will always be someone available to provide support.
Cultural similarities
Many Asian countries have similar cultures to western countries, which can make communication and collaboration easier. Additionally, many Asian countries are former British colonies, further increasing cultural similarities.
The four best countries in Asia to outsource software development
Now that we’ve explored some of the reasons why businesses should outsource their IT needs to Asia, let’s take a look at the top 4 outsourcing countries in Asia.
#1 Vietnam
Vietnam is currently one of the fastest-growing economies in Asia and is quickly becoming a popular destination for businesses to outsource their IT needs. This is partly because Vietnam offers a combination of low costs, high-quality talent, and good infrastructure. Additionally, Vietnam has a young population and a high level of English proficiency.
With a vast and sustainable pool of 450,000 IT professionals, top IT outsourcing companies in Vietnam have been empowering a lot of IT businesses around the world and contributing to the success of a great number of all-sized projects. Compared to IT outsourcing giants like India or China, Vietnam is not inferior in the quality of IT human resources; in addition, the salary for software developers in Vietnam is much more competitive, which is around 1/3 of that in developed countries.
#2 India
India is one of the most popular outsourcing destinations in the world and has been for many years. This is due to the fact that India offers a large talent pool, competitive pricing, and good infrastructure. Additionally, India has a high level of English proficiency and a large number of IT professionals. India is also home to some of the world’s largest IT service providers.
However, since India has become the too popular IT outsourcing location, the competitiveness in this country has increased, which makes IT outsourcing companies in India charge more for their services. As a result, many businesses are now turning to other countries, such as Vietnam, to outsource their IT needs.
#3 China
Similar to India, China is another popular outsourcing destination due to the fact that it offers a large talent pool of IT professionals, competitive pricing, and good infrastructure. However, one of the main issues with outsourcing to China is the language barrier, as not all Chinese IT professionals have a high level of English proficiency.
Additionally, the Chinese government has been known to be hostile toward foreign businesses, which can make doing business in China difficult. The hourly rate of software developers in China is lower than in the U.S or Europe but not as competitive as in Vietnam. That’s why a majority of businesses that are already outsourcing to China decide to turn to Vietnam for software development services to save their project budgets.
#4 The Philippines
Not so famous for outsourcing software development as India, China, or Vietnam, the Philippines is, however, one of the most popular countries for businesses to outsource their customer service needs. This is mainly because language proficiency is the biggest advantage of this country, as English is one of the official languages ubiquitously used in the Philippines.
Besides, with a large population of over 100 million, the Philippines has an abundant supply of college-educated workers, which is another big plus for businesses looking to outsource their customer service as well as IT needs. The hourly rate for software developers in the Philippines is around $25, which is much cheaper than that in developed countries.
