Vietnam has been revealed as the world’s top outsourcing location for the first time, according to new research from global real estate adviser Cushman& Wakefield.

Published this April, Cushman & Wakefield’s Where in the World? Business Process Outsourcing & Shared Service Location Index assesses factors likely to affect the successful operation of outsourcing functions around the world.

Costs, risks and operating conditions are analyzed by the report to provide insight into which markets are particularly attractive in the current global environment, the company claimed.

The report stated that with one of the highest growth rates in outsourcing, Vietnam has established its presence in the sector as an alternative destination for low-cost offshore services, marking an increase from fifth place in the last year’s index.

The government has put in place policies to promote Vietnam as an outsourcing destination, with the services segment expected to expand rapidly.

Cushman & Wakefield’s (C& W) head of research and valuation in Vietnam, Jonathan Tizzard, said that this report demonstrated the success that the Vietnamese government has had in providing a stable business environment along with policies that would raise the education and professional standards of its young and ambitious population.

‘’Vietnam is currently witnessing an influx of foreign direct investment and when the flurry of free trade agreements is signed this year or next, this is expected to increase. In addition, legislation making it easier for foreign enterprises to invest and do business in Vietnam comes to effect mid-2015, suggesting Vietnam is a country that will continue to dominate headlines in the business press for the foreseeable future,’’ said Tizzard.

Meanwhile C& W’s head of occupier services for APAC and EMEA, Richard Middleton, said that while not the cheapest outsourcing destination, Vietnam was still very competitive when compared to other global locations and wage rises in India and China largely contributed to it surging up the ranking to take the first place in 2015.

KMS Technology Josh Lieberman, president of KMS Technology, which currently provides IT services across the software development life cycle with offices in Atlanta and Ho Chi Minh City, said he was unsurprised that Vietnam was being talked about as an alternative, admin rising costs and attrition rates in popular destinations like China and India.

‘’Tech giants like Samsung, Microsoft, LG and Intel have invested in large operations in Vietnam, and a growing number of technology start-ups have secured investment. The entrepreneurial spirit on the streets in Ho Chi Minh City is palpable,’’ he told Tech Crunch, a news website focused on information technology companies. 

- By Bich Ngoc - (April 2015 Cushman & Wakefield)

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