Vietnam IT talent recruitment market trends and IT talent management in 2024

In this week's Kocham IT column, we post excerpts from an interview with reporter Daeyoung Kim of the Korea Economic Daily on June 1, 2024, to Kocham member companies in advance. The newspaper article will be officially published around June 14th.

Will the demand for Vietnamese IT developers remain high in 2024?

Demand for IT development in Vietnam in 2024 is higher than supply. Approximately 50,000 new IT personnel are produced from Vietnamese universities each year, but this is not enough to keep up with demand.

In developed countries, enthusiasm for education is still high, but due to a relatively small young population, intensifying competition in the domestic market, and inflation, they are actively seeking cost-effective IT personnel from developing countries.

In particular, the overseas outsourcing market is expected to grow further as the market is expected to grow in the future toward AI, ML (Machine learning), Data Science, and Game.

The global IT outsourcing market is growing not only in Vietnam but also around the world, and the cross-boarder outsourcing method will become established in the market from simply outsourcing to a specific country.

Growing cross-border outsourcing market

While the first generation IT outsourcing market started as a global IT outsourcing market centered around India and China, as of 2024, the market is gradually expanding to Southeast Asia (Vietnam, Indonesia, Philippines, Thailand...), South America, and Africa.

In Vietnam alone, due to the lack of IT supply in Vietnam, the number of Vietnamese outsourcing companies hiring Vietnamese students from nearby Cambodia and Myanmar as interns and carrying out projects is increasing.

India, the world's No. 1 IT outsourcing company, also established a company in Vietnam and hired large-scale IT engineers there to carry out global projects.

A large Korean company has also established a Global Development Center (GDC) in Vietnam and is sourcing more than 100 people to promote project development in Korea.

Recently, major Vietnamese outsourcing companies have established Korean offices and begun active sales targeting Korean companies in Korea. However, there is also a lot of criticism that the company makes unreasonable orders for projects by making aggressive cold calls and hiring Koreans as salespeople.

It’s not easy to find developers in Vietnam either.

Recently, Tech Valley Vietnam posted a job advertisement to seek cloud engineers and AI (NLP, LLM) developers.

In the case of cloud engineers, many engineers applied through Vietnamese recruitment sites, and most of them revealed in interviews that they prefer to work freelance or part-time while maintaining their current jobs.

It is not easy to hire them as full-time employees, and even if they are freelancers or part-timers, there are many cases where they ask for a salary equal to what they are receiving at their current job, and exaggerate the salary conditions of their current job and their actual experience and skills.

The pros and cons of the Vietnamese job market

Currently, the IT recruitment market in Vietnam seems to be full of bubbles. Having worked on large and small projects and hired people in Vietnam since 2013, I think there are the following problems in the Vietnamese job market.

First, is it really possible to properly hire full-time employees?

What I felt through this recruitment process is that applicants want to work freelance or part-time (only when work is available) while maintaining their current job. In most cases, there is a strong tendency for gig workers to work as full-time employees and are very interested in job postings. And as soon as an announcement is made, they immediately send out their CV (resume) and aggressively ask how much they can pay for me to work as a freelancer.

And when they say they will hire full-time employees, they ask for a salary increase of more than 30% at their current workplace. Of course, I don't know the exact salary of my current job. It is highly likely that you will earn more than 30% of your desired salary. And if you teach well and your skills improve, a 10-15% salary increase every year is common. Rather, such cases are more likely to occur if Korean companies are small or new.

Second, there are too many headhunter companies and they are overheated.

In Vietnam, there are many Vietnamese and foreign headhunting companies, and there are many cases where individuals work as headhunters (without business registration). The headhunter's fee is approximately 17% of the hired person's annual salary and is only guaranteed for three months after hiring. (When the hired person is not a good fit for the company, the headhunter often tells them to wait for about 3 months and then they will introduce them to another company.) The problem with Vietnamese headhunters is that they are unable to accurately measure the capabilities of IT developers, and rather, they are unable to accurately measure the capabilities of IT developers. They are also urging the company to raise the annual salary.

Lastly, the capabilities of the outsourced developer

In Korea, it is not easy to find applicants even if the developer's salary is very high or the salary is high. Therefore, we have no choice but to hire Vietnamese IT workers as an alternative, but a Vietnamese outsourcing development company is currently playing the intermediate supply role.

However, Vietnamese outsourcing companies do not accurately understand the requirements of Korean companies and tend to focus on supplying the manpower they have or, if the relevant developers are not available, sourcing from freelancers or other developers. And it is not easy to meet the schedule and quality as desired by Korean companies. Also, the amount is about 70% of the salary of a high-level Korean developer, and the quality may be at that level or lower.

In most cases, when an outsourcing company carries out a Korean project, problems such as language barriers, time consumption due to interpretation, and lack of IT experience of the interpreter may arise as both companies communicate in English. In the case of outsourcing companies, service planning, design, and UI/UX are handled in Korea. You should keep in mind that it is not as good as it could be.

Are there any other countries besides Vietnam?

Another thing I learned through this recruitment process is that quite a few developers from nearby Cambodia, Myanma, Sri Lanka, and Bangladesh, other than Vietnam, also applied. (via LinkedIn job posting)

These countries have relatively lower wages for IT personnel than Vietnam, and the IT development market in their countries is relatively low.

I actually interviewed several applicants, and their English skills are not bad, there are people who studied abroad in neighboring countries such as Vietnam and Thailand, and interns abroad (although some of them are illegal), and they seem to have a sincerity and passion for entering overseas markets.

There is a recent example where a Korean fintech company established Cambodia as a new GDC (Global Development Center) in conjunction with Cambodian University of Technology, fostering and testing IT education, and hiring about 200 people as its own IT personnel.

It will still take some time for Vietnam's neighboring countries to become equal to Vietnam's IT technology, but given that IT technology does not have a high initial investment cost compared to other industries and technology is quickly introduced to the capabilities of companies and individuals, it is like outsourcing from China to Vietnam. As the market seems to have moved on, it is expected that Next Vietnam IT outsourcing alternatives will emerge in the near future.

Developer interviews, continuous competency evaluation, and outsourced developer management

Technologies such as AI, machine learning, and data analysis are gradually penetrating not only the IT industry in the past but also general industries. Therefore, many people ask me to participate in interviews for AI development, cloud operation, etc., but I am actually not confident in interviewing at the professional engineer or developer level. ^^;

While running a company, I realized that there was a need for a platform that could quickly and easily evaluate a candidate's technical abilities during the hiring process and promote IT experience and growth even after hiring. .

Vietnam's TechValley and Korea's Code Presso are strategic partners in the Vietnamese market and provide a recruitment, evaluation, and management platform for various programming, cloud, AI, and data for large corporations, small and medium-sized businesses, and startups that are having difficulties with IT recruitment and IT human resource management. We provide it in SaaS format.