In Focus: The Rapid Progress of Digital in Vietnam and the Philippines

Information Technology is reaching new heights in Southeast Asia. In the last decade, IT outsourcing in Vietnam & the Philippines and tech-related developments have risen substantially more than the previous years combined. Both are converting fast from agriculture-heavy economies and investing in industrial and technological advancements.

This positive outcome was made possible thanks to rapid growth in their economy from foreign investment and a progressive approach by their respective governments. Vietnam’s e-commerce market alone was worth US$6.2 billion in 2017 and is estimated to have reached around US$10 billion in 2020. As for the Philippines, its robust IT-Business Process Management (IT-BPM) is foreseen to have a 9.2% growth in revenues from 2016 to 2022 or a value of about US$38.9 billion.

Vietnam: Taken by the Tech Storm

Three decades ago, Vietnam planted the seeds of digital transformation by investing in 2G network technology and introduced a few tech-related businesses. Today, web and mobile app development as well as other digital roles in public and private sectors are boosting the country’s standing in the digital arena as they begin rolling out 5G networks. The UN e-Government survey 2020 gave Vietnam a score of 0.66 on the e-Government Development Index (EGDI), a good notch better than its neighbors’ average scores.

The country’s digital economy had an estimated value of US$14 billion and a 16% YOY growth in 2020. As Vietnam becomes increasingly digital, industries such as Financial Technology (Fintech) sweep the country by storm. Current trends reveal that cashless and electronic transactions, as well as software, are lucrative businesses, with the export of the latter valued at US$3.5 billion in 2018. Multinational corporations (MNCs) such as Nokia, Microsoft, Samsung (Display division), and Intel have taken a liking to Vietnam for their outsourced software requirements.

With the country blossoming as a fast-rising digital economy, even the average salary of a mobile app developer or AI engineer in Vietnam looks sweet. The latter can easily catch paychecks of around US$1,600 or higher. Blockchain and Software-as-a-Service products are also entering Vietnam’s tech scene, with more businesses backing up and expanding the industry. Increased activity also means increased hiring: recruitment company ManpowerGroup reported that the IT industry experienced 14% higher recruitment rates in 2018 vs 2017.

The demand for digital is mounting so fast that Vietnam is being pressured to first improve internet accessibility.

The Philippines: Expanding the digital workforce

US companies have a long history of employing Philippine talent even before the digital age. As the second decade of the millennium begins, the Philippines has become more than just a hub for IT services and outsourcing for its Western partners – it has become a prized center for recruitment for Australia, and East Asia, and other nations.

Investors have since slowed down for the island nation since the early 2000s, but consistent effort to hasten digitization is renewing interest for companies to set up shop in the Philippines. Their workforce has been continually re-skilling and up-skilling to meet evolving global market demands. In line with this, Philippine Software Industry Association President Jonathan de Luzuriaga mentioned that the BPO sector of the Philippines is on solid ground thanks to the presence of a skilled workforce, and it remains an attractive market for multinational companies.

True enough, US-based technical care firm Asurion will open new facilities in Iloilo city this 2021. The new facility expects to hire at least 1,200 people for tech support services, in addition to their current 4,000 IT services personnel in Manila. Investment pledges in the first half of the previous year also rose by 37%, amounting to PHP11.4 billion (approximately US$237 million) compared to PHP8.32 billion (about US$173 million) of 2019 in the same period.

Active players in a thriving regional market

Southeast Asia, where Vietnam and the Philippines are located, is a thriving regional market set to grow even bigger as more countries in the region embark on digitalization. Its online industry is projected to be worth around US$309 billion in gross merchandise value by 2025, according to a Google-Temasek-Bain industry report.

Surprisingly, the pandemic of 2020 even helped propel the region’s embrace of digital: COVID-19 created a permanent and immense drive to adopt digital practices and tools.

Vietnam and the Philippines, with their outstanding commitment to improving digital services, are now contributing richly to the region’s internet economy, challenging early digital adopters like Singapore and Malaysia.

Conclusion

The enormous profitability of internet-based businesses is fueling Vietnam and the Philippines as investment and outsourcing hubs. Startups spring up left and right creating, a great need for competitive providers of mobile and web app development services. To answer these needs, Singapore-based FRONTLINE Mobile App Development has employed expert talent from both countries and many others to deliver exceptional digital products. Frontline specializes in usability testing, UI/UX design, web and mobile app development. For more information, you can reach out to us via https://www.frontline.com.sg/contact/.