What are the Rates for Offshore Development in Vietnam? IT Talent Salaries and Latest Trends

"I'm interested in offshore development in Vietnam, as it is said to have low unit costs."
"I want to know the specific salary range of engineers in Vietnam."

While considering offshore development, you may have had such concerns or questions.

This article explains the unit costs of offshore development in Vietnam. We will also introduce the salary range for IT personnel in Vietnam, comparing it with other countries.

Additionally, we will discuss common patterns that lead to high costs in offshore development in Vietnam and provide tips on how to avoid such failures.

If you want to succeed in offshore development, make sure to read on.

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Unit Cost of Offshore Development in Vietnam

The "unit cost" refers to the cost incurred when one IT personnel works for one month.

Here, we will introduce the unit cost for offshore development in Vietnam. We will also compare the unit costs of other countries, so use this information as a reference when considering your options.

Unit Cost of Offshore Development in Vietnam (by Job Role)

The unit cost of offshore development in Vietnam varies by job role.

The latest unit costs (2023) for different roles such as programmers, senior engineers, bridge SEs, and project managers (PM) are as follows:

Job Role	Unit Cost	Year-on-Year Change
Programmer	¥402,200	+26.75%
Senior Engineer	¥491,300	+23.20%
Bridge SE	¥577,300	+12.44%
PM	¥793,800	+37.00%

In comparison, the unit cost for a junior system engineer (SE) in Japan ranges from ¥600,000 to ¥800,000.

It is clear that the unit costs in Vietnam are lower than those in Japan. However, please note that the unit cost can vary based on the career and skill levels of the personnel, so these figures are for reference only.

Below is an example of the development structure and pricing at our offshore development company, Solashi Co., Ltd.

We compared the development costs between a Japanese development company and our lab-based development model over a 3-month project period.

Source: Our Company Overview_Web Public (Excerpt)

The unit cost in Vietnam is lower than that in Japan, allowing for an overall reduction in development costs.

Another noteworthy point is the development structure. In Japan, the development team typically consists of only 2 SEs, while at our company, we have 2 SEs, a lead engineer, a BeSE, QA, and senior members.

This means that offshore development in Vietnam, such as with our company, can offer lower prices compared to Japan while also providing a more robust development structure.

Trends in the Unit Cost of Offshore Development in Vietnam

Knowing the trends in the unit cost of offshore development in Vietnam will help you make informed decisions regarding the selection of the development country and city. Here, we discuss two key trends.

Unit Costs are Rising Across All Job Roles

According to the "Offshore Development White Paper (2023 Edition)," the unit cost of offshore development in Vietnam has increased across all job roles compared to the previous year.

Among these, the unit costs for programmers, senior engineers, and PMs have risen by 20% to 30%. Despite the increase in costs, IT personnel remain abundant in Vietnam, which is a key point to note.

Vietnam has a national policy for IT education, ensuring a stable supply of talent. Furthermore, you can build a complete development team with highly skilled engineers while keeping development costs lower than in Japan.

Source: Offshore Development White Paper (2023 Edition) | TechnoDigital Co., Ltd.

Emerging Cities Tend to Have Lower Costs

Offshore development companies are being established in emerging cities like Da Nang, Hue, and Can Tho in Vietnam.

The "Offshore Development White Paper (2023 Edition)" indicates that companies in emerging cities tend to have lower unit costs. Particularly, Da Nang not only has lower labor costs but also a low turnover rate in the IT industry.

Due to the low mobility of IT talent, it is easier to accumulate client-specific knowledge within the company, which is another advantage.

While unit costs vary depending on the scope of the project, companies that want to reduce costs may consider outsourcing to emerging cities.

However, the major cities of Hanoi and Ho Chi Minh City are home to well-established development companies with strong track records. These cities are known for their higher educational standards, and the level of IT talent graduating from universities there is also high.

Therefore, outsourcing to offshore companies in Hanoi or Ho Chi Minh City could bring benefits such as higher quality and smoother overall development.

Additionally, many companies in these two cities have experience working with Japanese and Western companies. These companies are also focusing on their marketing and branding strategies, leading to differentiation in the market.

As a result, the competition has been evolving, and the various strengths of offshore companies are becoming more clearly defined. By carefully researching and comparing the information about offshore development companies in different cities in Vietnam, you can choose a company that best fits your needs.

Source: Offshore Development White Paper (2023 Edition) | TechnoDigital Co., Ltd.

Comparison of Unit Costs Between Vietnam and Other Countries

Here is a summary of the unit costs of offshore development in different countries by job role:

	Programmer	Senior Engineer	Bridge SE	PM
Vietnam	¥402,200	¥491,300	¥577,300	¥793,800
China	¥505,100	¥617,900	¥792,900	¥921,400
Philippines	¥358,300	¥533,300	¥812,500	¥708,300
Myanmar	¥274,700	¥541,600	¥683,300	¥975,000
Bangladesh	¥441,300	¥461,300	¥909,600	¥586,300
India	¥508,300	¥687,500	¥942,900	¥1,114,300

Compared to Vietnam, countries like China and India have generally higher unit costs.

Myanmar and Bangladesh offer some lower-priced roles than Vietnam, but political instability and less developed infrastructure could be concerns.

Looking at the unit costs, Vietnam offers a highly competitive price while ensuring a stable supply of talented IT personnel.

(Reference: Japanese IT Engineer Salary Range | Job Box Salary Navi)

Trends in Offshore Development in Vietnam

Vietnam ranks first in the country-by-country ranking for offshore development considerations, with 48%, significantly ahead of other countries.

Offshore Development Consideration Ranking by Country:
1st: Vietnam: 48%
2nd: Philippines: 21%
3rd: India: 13%
4th: Bangladesh: 8%
5th: China, Myanmar: 4%
6th: Ukraine: 2%
*"No specification" accounts for 64% overall
(Reference: Offshore Development White Paper (2023 Edition) | TechnoDigital Co., Ltd.)

There are several reasons why Vietnam is gaining popularity, one of which is the ease of securing IT talent.

In Vietnam, the government leads the training of IT personnel, ensuring an abundant supply of talent. For example, computer education starts in the 3rd grade of elementary school, and software coding and IT subjects are taught in middle school.

With the government's strong focus on modern digital information technology education, there are high expectations for continued IT talent development in the future.

Another recent trend is the entry of offshore development companies specializing in specific fields.

• Strong in specific technological areas
• Can support from the business startup phase
• Can handle everything from upstream to downstream processes
• Can establish flexible development systems
• Easy communication in Japanese

There are various companies in Vietnam, and with a wide range of options, you can find a company that suits your needs.

"Solashi Co., Ltd" hires mainly graduates from top schools such as Hanoi University of Science and Technology and Vietnam National University.

There are Japanese staff with experience in business startups who can support projects. Local members can also communicate in Japanese.

If you are looking for high technical skills or Japanese communication, feel free to contact us.

Two Patterns Leading to Increased Costs in Offshore Development in Vietnam

Offshore development in Vietnam allows you to secure excellent IT talent while achieving cost reductions.

However, depending on how you proceed, there may be cases where costs increase. Below are two patterns that can lead to cost failures.

Increased Costs Beyond Personnel Expenses

Even if you manage to reduce the man-month unit cost of offshore development, there are cases where costs other than personnel expenses increase. Some common examples include:

[Personnel Expenses]

• Engineer personnel expenses
• Costs for arranging interpreters or bridge SEs
• System design costs, direction costs
• Operation and maintenance costs

[Other Than Personnel Expenses]

• Travel and accommodation expenses

Additionally, depending on the contract type, there may be cases where additional revision costs arise due to low-quality deliverables.

If the main goal is cost-cutting, unexpected cost increases may lead to losing the benefits of offshore development.

For more details on costs, please refer to Offshore Development Costs: Country-Specific Rates and Cost-Saving Methods.

Rising Development Costs Due to Yen Depreciation

Since offshore development involves international transactions, there is always the risk of exchange rate fluctuations. If the yen weakens, development costs may ultimately increase.

Offshore development costs are generally paid in the local currency (Vietnamese Dong). From 2019 to 2021, the exchange rate hovered around 200–220 VND per JPY.

However, since 2022, the exchange rate has fallen below 200 VND, marking a period of yen depreciation and dong appreciation.

(Reference: XE Currency Chart: JPY to VND | Xe)

Three Key Tips to Avoid Offshore Development Failures in Vietnam

Cost-related failures can often be prevented with the right strategies. Implement the three key tips introduced here to ensure the success of your offshore development project in Vietnam.

Accurately Calculate the Total Cost

Carefully estimate the total cost of offshore development.

Costs are divided into personnel and non-personnel expenses. Personnel costs are calculated as the engineer’s monthly rate × workload. These values vary depending on the project scope, so it is crucial to assess them properly.

Although personnel costs make up the bulk of offshore development expenses, other costs should also be accounted for, such as expenses for on-site inspections.

By calculating total costs in detail, you may find ways to reduce expenses, such as:

• Developing only essential features while eliminating unnecessary ones
• Assigning experienced personnel to increase development speed and reduce workload

Manage Exchange Rate Risks

Another key tip is to manage exchange rate risks effectively.

For long-term or large-scale projects, exchange rate fluctuations can have a significant financial impact.

Mitigation strategies include using hedging contracts to fix exchange rates or conducting transactions in yen.

Additionally, setting aside a flexible budget for unexpected expenses can help ensure financial stability.

Select a Company That Optimizes IT Investments

Optimizing IT investment in offshore development means investing the right amount at each project phase.

For example, systematizing everything in the early stages can lead to high initial costs and reduce flexibility for future modifications.

If you choose a company that does not optimize IT investments, you may not fully benefit from offshore development cost advantages.

Solashi Co., Ltd prioritizes appropriate IT investment at each project phase, avoiding irreversible mistakes and supporting long-term business success.

Why Choose Solashi for Offshore Development in Vietnam?

Labor costs for offshore development in Vietnam are increasing across various job categories. However, emerging cities still offer lower rates, making cost-effective development possible.

For high-quality development, Hanoi and Ho Chi Minh City are recommended despite their higher costs, as they provide access to experienced engineers and robust development structures.

Since offshore development companies in Vietnam are becoming more specialized, selecting a company that matches your project’s needs is crucial.

For high-quality system development, consider consulting with Solashi Co., Ltd. They not only help reduce project costs but also focus on optimizing IT investments.

Solashi adopts a lean startup approach, allowing for small-scale development while monitoring customer feedback.

With extensive experience working with Japanese companies, the team is committed to providing professional support. Feel free to request a quote.

Akira Shimazoe

Representative of Solashi Japan LLC. Born in April 1989 in Fukuoka Prefecture. Graduated from the Graduate School of Information and Mathematical Sciences at Osaka Prefecture University. Joined Suntory System Technology Co., Ltd., an IT subsidiary of Suntory Holdings, in 2014. Broadly responsible for the development, operation, and implementation of vending machine delivery management, efficiency improvements, and sales management systems. Founded Yper Inc. in 2017, serving as CTO and CPO. Contributed to the launch and growth of the app-linked delivery bag "OKIPPA." Selected for Toyo Keizai's prestigious "Amazing Venture 100" and Forbes' "Forbes 30 Under 30 Asia 2019."