Vietnam is Ranked the 1st in BPO
According the BPO and Shared Service Location Index 2016 by Cushman and Wakefield, the BPO and shared service sector will move the investment focus from traditional to pioneering countries due to the changes of economic and political conditions.
In the global BPO market, the mature destination including India and the Philippines still remain the leading position, accounting for 56% and 15% respectively of total share. Other traditional main provider for Latin America is Costa Rica; for European area are Romania and Poland. Although those countries have the advantages of skilled talents with multilingual capabilities, the cost environment and risks related to operations and operational conditions are key drivers in redefining BPO sector globally.
In addition, areas such as banking, human resource and healthcare management, in which demands for BPO are dominant, are in pressure of cost cutting and operating efficiency. For instance, the banking industry is striving to reduce cost by reallocating to cheaper delivery locations. While the wage level gap expected between emerging locations and European and US market is closer, from around 1/3 ratio today to ½ in next 15 to 20 years, the trend of re-shoring is almost inevitable.
In the leading group of pioneering BPO destination 2016, Vietnam is ranked the 1st. Vietnam leads in cost environment including labor productivity, lower rental payments and building costs. The labor cost in Vietnam is approximately 50% lower than that of India or China or South East Asian neighbors and the lower attrition rate is an advantage comparing to India.
More importantly, Vietnamese Government also encourages foreign investment and development by tax incentives for Information Technology and BPO industry. With the dramatic drop in political risk and strong GDP output, the BPO sector in Vietnam is expected to develop significantly from the current rate of 20% to 35% annually.