American Companies Enlist Vietnamese in Quest to Acquire Customers | Article

Atlanta outsources to VietnamWitness Systems decided early on to use offshoring as a core business strategy. In 2003 the software developer of analytic-based solutions for workforce-enterprise optimization and security was developing a product that generated a great deal of excitement. Naturally, it was in a hurry to bring this product to market. The Atlanta-based company, which Verint Systems later acquired, opted to outsource to increase capacity and meet the necessary release deadline.

“We decided to go outside the United States to build this particular project with the timeframe and budget we had,” says Shimon Keren, vice president, engineering, for Verint’s Witness Actionable Solutions business line. So it outsourced the work to Vietnam.

Why Vietnam

After the merger in 2007, the combined company decided to continue its investment in the Vietnam center, choosing CSC (Computer Sciences Corporation) Vietnam as its go-forward offshore development center. Driving its decision were the following considerations:

  • War for talent. Keren says, “Every country is looking to be an outsourcer.” Big companies are poaching great talent wherever they can find it. This leads to attrition rates “as high as 40 percent.”
  • Rising salaries. Keren says wage inflation is becoming a challenge everywhere.

Verint chose Vietnam because:

  • Cost. Keren says this is one of Vietnam’s main advantages. Verint has engineers in multiple locations in the U.S. including Atlanta and the Silicon Valley; a comparable fully loaded Vietnamese employee costs just 25-35 percent of their salaries. At the moment location optimization studies show the Vietnamese are at least 20 percent more cost efficient than other offshore suppliers.
  • The size of the labor pool. Keren says today 60 percent of the population is under 30. “There is a large pool of young, highly motivated, intelligent people,” he observes.
  • Quality of the education system. Keren praises the university training his engineers received.
  • Work ethic. The Verint executive says his Vietnam team has a high work ethic. “They’ll work long hours and weekends if they need to in order to get the job done,” he reports.
  • Sense of teamwork. He says his team in Vietnam considers itself a true Verint partner. “We don’t have a typical buyer/supplier relationship,” Keren says. “We don’t give them code to build. We give them products to own and a roadmap they follow release after release.”
  • Quality. “They really care about what they build,” adds Keren.
  • Low attrition rate. Until this past year, Keren says the Vietnamese attrition rate was significantly lower than his office in the United States and other countries. In 2006, the attrition rate in Vietnam was less than 10 percent compared to 30 percent in other countries. In 2007, the attrition rate was 20 percent, as the world has discovered Vietnam. Big companies have fired the first salvos in the war for talent.
  • Culture. Keren says striving for perfection is built into the Vietnamese psyche. He says they produce quality work but can also tend to be “risk averse.”

Verint Systems, a software developer of analytic-based solutions for workforce-enterprise optimization and security, continues to increase the amount of work it sends to its Vietnamese offshore partner, CSC.

The original CSC Vietnamese engagement began nearly five years ago with 10 people working on development, maintenance, reengineering, and quality assurance. Today there are 100 engineers on six different teams.

Verint invites members of its CSC Vietnamese-extended team to work in its U.S. offices on a rotating basis. “This helps reinforce our vision and mission. It also helps emphasize our commitment to the offshore team and their success, which in turn can motivate and create greater loyalty,” says Keren. “Thanks to offshoring, Verint’s suite of workforce optimization and actionable intelligence solutions has increased its market share significantly.”

CSC’s Vietnam operations started in 1995. “Six years ago, we struggled to make the operation work in Vietnam because we couldn’t get anyone to send work there. Now, it’s a differentiator for us,” says Josh Lieberman, managing director of CSC Software Services. He says now buyers the world over “are looking for an alternative to India to diversify their geopolitical risk, tap into new labor pools, and cut costs.”

Lessons from the Outsourcing Journal:

  • Outsourcing to Vietnam is growing because buyers want to diversify their geopolitical risks, tap into new labor pools, and cut costs.
  • A company that sent work to several countries around the world, including Vietnam, chose Vietnam based on cost, the size of the labor pool, the quality of the education system, the work ethic, the sense of teamwork, quality, low attrition rate, and culture.
  • The war for talent, infrastructure, and rising costs are hurting other countries compared to Vietnam.

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