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Outsourcing to Vietnam

Vietnam offers a young and talented labor market with hard-working and skillful individuals, which makes it one of the best destinations for outsourcing your activity in Southeast Asia. Outsourcing to Vietnam will give you access to a rapidly-growing talent pool of IT engineers and software developers, which currently counts more than 400,000 individuals.

The outsourcing service we offer gives you great flexibility and a competitive edge through a significant reduction of labor costs. Thanks to our services, you can fully manage your employees in Vietnam without setting up a local subsidiary. Moreover, local employees can be fully integrated into your already-established central teams.

Content:

  • Advantages of Outsourcing to Vietnam
  • FMC Group’s Outsourcing Approach
  • Advantages of Outsourcing with FMC Group
  • Labor Laws in Vietnam
    • Working Hours
    • Annual Paid Leave
    • Other Types of Paid Leave
    • Minimum Wage
    • Social Contributions and Taxes
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Get in touch with us

Portrait of Peter Heidinger, Managing Partner at FMC Group

Peter J. Heidinger

Managing Partner

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+49 711 490 945 31
p.heidinger@fmcgroup.com

Advantages of Outsourcing to Vietnam

  • The Vietnamese labor market is young and talented. The median age of Vietnam’s workforce is only 30.5 years and Vietnamese employees are known to be hard-working and skillful. The literacy rate in the country is over 95% and 80% of Vietnamese university graduates have degrees in science and technology and can communicate very fluently in English.
  • Vietnam counts more than 400,000 IT engineers and the talent pool grows by about 50,000 every year, thanks to the 153 different institutions in the country that offer training in the IT sector.
  • Software development salaries in Vietnam are considerably low in comparison to some neighboring countries. They can range from VND 8,370,000 (<EUR 340) to VND 27,400,000 (~EUR 1,100) per month, depending on experience, but they average around VND 17,400,000 (<EUR 700). The average monthly salary translates to less than EUR 3.70 per hour.
  • Many Vietnamese employees in the IT sector have had experiences working for some of the tech giants that decided to expand their manufacturing and R&D activities to Vietnam, such as Intel, Samsung, Microsoft, etc.
  • Vietnam enjoys great political stability. The current ruling party has been in power since the reunification of Vietnam, over 30 years ago, and the Vietnamese people are generally very harmonious. The lack of ethnic and religious conflicts in the country reinforces this stability.

FMC Group’s Outsourcing Approach

Selection

  • We preselect employees based on your criteria and conditions;
  • We create recruitment reports with candidate resumes and evaluations;
  • We conduct hiring interviews;
  • We conduct personality tests if needed.

Recruitment

  • We let you make the final hiring decision, based on video interviews, or other formats if desired;
  • We invite the employees you choose to work at our local company.

Operation

  • We give you complete functional management of the employees;
  • We take care of the administrative management of the employees (contracts, payment, etc.);
  • We provide your employees with all the necessary infrastructure (office, phone, computer, etc.).
Approach for Nearshoring

Advantages of Outsourcing with FMC Group

  • We search for candidates according to your skill and qualification requirements;
  • We advertise the job through the most adequate methods and we look for matching candidates in our already-established database;
  • We reduce the cost and time spent on the recruitment process;
  • We allow you to expand into new markets without the need for setting up a local company;
  • We offer flexibility and the option to test out your business potential in a new country with no long-term commitment;
  • We give you the ability to completely manage the functions of your employees.

Labor Laws in Vietnam

Working Hours

  • Employees in Vietnam can work up to 48 hours per week and have to take a full day of rest weekly. Working hours are usually split up into 8 hours per day.
  • Employers have to pay their employees for overtime work. The hourly overtime rate is 150% of the regular rate on weekdays, 200% on weekly days off, and 300% on public holidays.
  • Employees cannot exceed 50% of their total working hours as overtime work. The maximal amount of overtime work is also set at 30 hours per month and 200 hours per year.

Annual Paid Leave

  • Employees in Vietnam earn 12 days of paid leave every year, which increases by one day for every five years of work for the same employer.
  • Vietnamese people celebrate six public holidays:
    • January 1st: New Year’s Day (1 day)
    • Late January or early February: Vietnamese New Year (5 days)
    • Mid-April: Hung Kings’ Festival (1 day)
    • April 30: Reunification Day (1 day)
    • May 1st: Labor Day (1 day)
    • September 2nd: Independence Day (2 days)

Other Types of Paid Leave

  • Maternity Leave: New mothers can take 6 months of paid maternity leave (7 months for complicated or multiple births), including 2 weeks before the child’s birth. They receive their full salary during this period, paid by social security.
  • Paternity Leave: New fathers can take 5 days of paid paternity leave, covered by social security.
  • Sick Leave: Employees can take up to 30 days of sick leave per year where they receive 75% of their salary, paid by social security. The maximal annual duration of the sick leave extends to 40 days after employees contribute to social security for 15 years, and to 60 days after 30 years of social security contribution.

Minimum Wage

  • Minimum wage in Vietnam varies between VND 3,070,000 (<EUR 122) and VND 4,420,000 (<EUR 176), depending on the region.
  • Salaries in Vietnam are paid every month.
  • The most common bonus in Vietnam is the 13th salary, despite it not being legally required. Employers usually pay the bonus at the Vietnamese New Year or the end of the year.

Social Contributions and Taxes

  • Employer contributions in Vietnam add up to 21.50% of the gross salary and they include contributions to the Labor, Accident, and Occupational Disease Fund (0.50%), the Retirement and Death Gratuity Fund (14.00%), the Sickness and Maternity Fund (3.00%), health insurance (3.00%), and unemployment insurance (1.00%).
  • Employee contributions add up to 10.50% of the gross salary and include a contribution to the Sickness and Maternity Fund (8.00%), health insurance (1.50%), and unemployment insurance (1.00%).
  • The income tax ranges from 5.00% to 35.00% based on the employee’s monthly salary.