Offshoring software development to Vietnam has now risen as a solution for Singapore firms who are looking to get ahead in the crowded and expensive marketplace. However, a lot of businesses are still new to the concept of offshore developers and how much they cost. With the internet full of confusing and conflicting information, even understanding the basics of calculation can be quite a task.

And more often than not, the cost is based on their own judgment after some basic online search and comparison from different hiring platforms. The problem with this method is that you only take into account the developer salary while leaving out other costs such as office space, equipment, and retention. Resulting in an underestimate of the project cost which often leads to even more resource wasting.

To avoid such mistakes, we will take a different approach and examine the cost from the perspective of an expert Vietnamese recruiter.

 

Vietnam IT Income Salary

According to our finding, the average pay for IT talents across Vietnam in 2021 can be divided based on their experience level and title:

Vietnam IT Income Salary In 2020

With a detailed explanation of how the ranking works:

    • Intern/Fresher: Little knowledge of the language or tech stack. Limited or no professional programming experience.
    • Junior: Some knowledge of the language or tech stack.
    • Senior: Strong knowledge of the language or tech stack. 
    • Tech Lead/Manager: Mastery of the language or tech stack. Great mentor.

When it comes to tech positions, the salary rate also fluctuates.

Tech JDI Salary Guide

While the statistics can be various from different sources, it is clear that Vietnamese developer salary is substantially lower (at least 50%) when compared to Singapore. This means startups could leverage the cost advantage to build their own offshore tech team instead of settling down with just local hires. 

Moreover, the software industry has the highest turnover rate of any industry at over 13% due to large constantly growing demand, leaving many developers feeling undervalued when their employer fails to keep up with the market and their increasing skills. Thus, attractive employee benefits and compensation are a must. 

We recommend a 20% increase in salary offer compared to the average pay rate for Vietnamese developers would be a great starting point.

 

Offshore Developers Cost For Software Development Team

Now that we have some basic understanding of the IT salary rates in Vietnam, it is time to consider the offshore tech team structure that you want to go with. 

From our experience, small software development teams are more productive because it’s easier to coordinate their efforts and recognize the individual contributions of their members. Therefore, the ideal size should be around 3~5 people. 

Let’s say you just want to expand at the smallest scale to minimize the spending, the team structure will be something like this: 

    • One senior backend engineer (4~6 years of experience) as the team leader
    • One junior frontend engineer (2 years of experience)
    • One junior mobile developer (2 years of experience)
Senior Backend Engineer (Lead)Frontend EngineerMobile developer
Monthly Basic Salary*$2,300$700$1000
Monthly SIHIUI (Vietnam)/ CPF (Singapore)**$540.5$164.5$235
Annual Hiring Cost Subtotal$34,086$10,374$14,820

* Gross Salary

** 23.5% of Gross salary

You are paying a total of $59,280 annually for an offshore tech team of 3 people in Vietnam. However, this is only the cost of recruitment and we still have to take care of their welfare and other benefits to improve employee retention.  

In fact, the software industry has the highest turnover rate of any industry at over 13% due to large constantly growing demand, leaving many developers feeling undervalued when their employer fails to keep up with the market and their increasing skills. Thus, attractive employee benefits and compensation are a must. 

 

Office, Welfare and Employee Benefits

Lucky for us, Vietnam is well known for its affordable IT talents so your budget can afford those wonderful bonuses to attract them.

Senior Backend Engineer (Lead)Frontend EngineerMobile developer
Annual Office + Equipment Expense$2,160$2,160$2,160
Annual Leave & Encashment$1,760.62$1,760.62$1,760.62
Annual Wage Supplement (13th Month) *$2840.5$864.5$1235
Performance Bonus (paid in Q1) **$2840.5$864.5$1235
Group Hospital Insurance + Outpatient Benefits Cost$180$180$180
Annual Medical Checkup Cost$58$58$58
Annual Optional Welfare***$768$768$768
Annual Cost Subtotal$10,608$6,656$7,397

* Based on the monthly hiring cost

**The bonus is equal 1 month of salary

***In the Vietnamese culture, having gifts, bonuses, and incentives is a big thing as it shows that the company cares about their employees. For more detail, please check here.

With the additional $24,660 from welfare and employee benefit, your offshore tech team of 3 people will cost $83,940 per year ($6995 monthly) to set up and run. The number might not seem impressive at first glance but they are: 

    • 40% cheaper than hiring local developers in Singapore.
    • 15% cheaper than Work Pass Hiring 
    • Better quality control than outsourcing

This gives you ample resources to spend on your core business, interact with potential clients, and grow your business without having to worry about not being able to accommodate them.

 

Conclusion

There’s no doubt that the IT landscape has become incredibly saturated with tech start-ups mushrooming like never before. Competition is at an all-time high, operational costs are always climbing, and talent is getting scarcer by the day.

It is crucial to set up your offshore tech team in Vietnam correctly in order to take advantage of the cost difference. For startups that are unfamiliar with the local market, we recommend you to seek professional support from trusted Venture Studio that specialized in offshore venture and HR services in both Singapore and Vietnam startup landscapes. 

Through their services, you are free from the burden of scaling your offshore team as the recruitment, administration, onboarding, and so much more are all taken care of.

 

Contact Tech JDI for Offshoring Tech Talent In Vietnam