Vietnamese companies spent approximately 2 billion USD on outsourcing services last year, which is 10% less than Indonesia but 25% more than Malaysia.

An outsourcing service is simply a method of assigning a portion of a company’s workload to an external partner to complete or hiring staff from a business that specializes in such services to work for a certain period of time.

Vietnamese companies have been spending more money on outsourcing services recently, said John Antos, Strategic Vice President of Global Payroll Services and Asia-Pacific. Particularly, the practice of outsourcing staff is changing from being a “fire fighting” response to a shortage to an essential component of the company’s long-term development strategy.

However, compared with 50 billion USD in the Philippines – which is known as the paradise of the outsourcing service industry, the spending of Vietnamese businesses outsourcing is still modest.

According to Mr. John Antos, the outsourcing industry in Vietnam is moving in a similar way to the rest of the world at a time when companies in the manufacturing, banking, technology, and retail services sectors are favoring it the most. This model is appropriate for organizations that need to merge, grow, or have just undergone organizational restructuring, as well as for global corporations.

Mr. John Antos said, “There are examples where the business outcomes have improved by times after 1-2 years of adopting this model.

Mr. John mentioned Prudential as a successful example. This company led the life insurance market prior to 2017 with a market share of over 30%. But during the following years, this figure consistently fell, and the ranking fell to fourth.

The operational model or a lack of personnel skills, according to Ms. Bui Thi Thanh Thuy, deputy general director of human resources at Prudential Vietnam, is what we anticipate to be the cause. Since then, the business has started to outsource personnel to modernize procedures and add highly qualified human resources to important areas. The business is back at number 3 on the market share rankings less than two years later.

Ms. Thuy believes that in addition to cost reductions, the human resources department must offer a number of larger benefits in order to persuade the leadership that it is time to bring in outside support.

Sharing the same opinion, senior leaders of many businesses said that in addition to answering the question of why I want to hire external personnel and how long to hire, it is necessary to balance the ratio of official and outsourced employees so that it is sufficient. The reason is that outsourcing too much can cause corporate culture to be mixed.