The Importance of Cost Management for German CIOs in 2025 

As highlighted in the article 2025 CIO Agenda: Unlocking Cost Efficiency for German Enterprises, effective cost management is expected to be a top priority for CIOs in Germany. While Central and Eastern Europe (CEE) and Asia have become popular outsourcing destinations due to their lower labor costs and abundant pool of skilled IT professionals, Vietnam is rapidly gaining attention from German companies for compelling advantages: 

Cost-Efficiency 

Vietnam’s IT outsourcing rates are highly competitive compared to other regions. Let’s look at a quick price comparison for software development services: 

Project hourly rates 

As you can see, Vietnam offers competitive rates while maintaining a high standard of service. This cost advantage is especially significant for German enterprises looking to optimize their IT budgets without compromising quality. 

Vietnam is Gaining Attention as a Strategic Addition to China and India 

Vietnam is becoming a top IT outsourcing destination for German companies looking to expand beyond China and India. The region’s geopolitical tensions have led many to adopt a “China Plus One” strategy, with Vietnam offering advantages like lower labor costs, low turnover rate and a welcoming investment environment.  

Vietnam’s strong ties with the EU, especially Germany, also further boost its appeal. As companies face challenges like annual wage increase and high turnover rates in China and India (23% in the 2022-2023 period), Vietnam offers a cost-effective, stable alternative, making it an ideal location for German companies seeking to diversify and stay competitive. 

Beyond Cost: What Makes Vietnam an Ideal Partner? 

While cost is a significant factor, it’s not the only one that determines the success of an outsourcing relationship. Effective IT outsourcing also depends on other critical factors: 

1. A Stable Political and Economic Environment 

For many German companies, the uncertainty surrounding nearshore options like Ukraine has prompted a search for more reliable outsourcing partners.  

Unlike regions facing political instability, such as Ukraine, Vietnam offers a safe, risk-minimized landscape for foreign investment and business operations. Vietnam, with its consistent governance and commitment to economic growth, provides the stability needed to safeguard long-term business interests. 

2. Skilled IT Personnel with In-Demand Skills 

Vietnam has a growing number of IT professionals skilled in high-demand technologies such as artificial intelligence (AI), machine learning, blockchain, and cloud computing.  

• Vietnam ranks 10th in World Rank of Best Developers Survey.  

• Vietnam Ranks 3rd for Artificial Intelligence Coders according to Hacker Rank’s Report of 2021.   

• Vietnamese coders rank 11th globally in terms of their skill ratings according to the 2022 TopCoder Report’s Developer Skills Charts 

The age group dominating in Vietnam market now is from 20 to 34 years old. The highest ratio group is 20-24 years old (28.8%). At present, the number of Vietnamese developers at a young age account for the majority with 58.1% aged 20-29 years old. 

3. Security Measures & Infrastructure 

Vietnamese companies are strengthening their IT security measures to meet global standards, ensuring sensitive data is handled with the highest care. Many have obtained ISO certifications, showcasing their commitment to information security. In addition, advanced encryption, robust firewalls, and real-time intrusion detection systems are being implemented to safeguard data.  

Vietnamese companies working with European nations, particularly Germany, must adhere to strict security measures. Developers are required to complete GDPR training and pass certification tests to ensure compliance with data protection regulations, safeguarding sensitive information and meeting the high security standards expected by European partners. 

4. Working Culture 

Vietnamese workers are known for their strong work ethic, integrity, and professionalism. They tend to be highly motivated, with a focus on meeting deadlines and delivering quality results. Vietnamese IT teams are flexible and adaptable, making it easy for German companies to integrate them into their existing operations. 

Staff are encouraged to share knowledge, contribute creative ideas, and actively participate in projects, rather than simply following orders. This culture promotes greater ownership, teamwork, and continuous improvement, driving both personal and organizational growth. 

Leveraging Experience with Major Companies 

Vietnam has gained significant experience in working with global companies, especially in the German market. The country’s impressive strides in software development have earned it global recognition, with Vietnam now ranked 12th worldwide in the “Future of IT” report by Emerging Europe—surpassing traditional outsourcing destinations like Ukraine, Argentina, and even the entire African continent. 

For instance, Bosch, a German multinational, has over 6,200 employees in Vietnam and the country is the largest innovation hub for Bosch in Southeast Asia, with more than 4,500 engineers. This experience has enabled Vietnamese professionals to develop a deep understanding of the specific needs and expectations of German enterprises. 

The Path Forward 

For German companies aiming for sustainable growth and adaptability, tapping into Vietnam’s IT sector could be a crucial move toward building a resilient, future-proof business strategy. Incorporating Vietnam into the China + 1 approach not only reduces risks but also unlocks new growth opportunities, helping businesses maintain their competitive edge in a rapidly changing global market.