Vietnam has become the world’s top outsourcing destination for the first time in terms of costs, risks, and operational conditions, according to a new study released this week by global real estate adviser Cushman & Wakefield (C&W).
Newswire Vietnamplus reported Wednesday that the Southeast Asian country took first place in the C&W ranking, unveiled on Tuesday, as labor costs in China and India are increasing.
According to C&W, Vietnam has become a more attractive market thanks to several government reform policies which aim to promote the country as a key outsourcing destination.
The global real estate company asserted that Vietnam benefits from a stable source of labor while the average age of its workforce is under 30 and each year there are one to 1.5 million new people entering the job market, which creates a plentiful supply of workers.
On the other hand, Vietnam is now an attractive destination for many foreign investors as wages are still low compared with neighboring countries in the region.
The Southeast Asian country’s software industry has grown rapidly in recent years with over 1,000 operating companies using more than 80,000 laborers. Vietnam has become one of the world’s largest software exporters in the world and the second biggest outsourcing country for Japan.
Jonathan Tizzard, C&W Vietnam’s director of valuation and research, said the ranking reflects the government’s success in terms of building a stable business environment with policies which improve education quality and professional skills for the young generation.
Foreign direct investment in Vietnam is expected to surge thanks to the signing of the Trans-Pacific Partnership Agreement, which will possibly take place this year or in 2016, C&W said in its research.
Foreign investors will also be able to invest and operate their businesses more easily in Vietnam in July 2015 when the revised Laws on Housing and Real Estate officially take effect.
Richard Middleton, head of occupier services for APAC (Asia/Pacific region) and EMEA (Europe, the Middle East and Africa region), said that although Vietnam is not the cheapest outsource market, it is still very competitive compared to other countries, adding that increasing wages in China and India helped Vietnam top the 2015 outsource destination ranking.