UK-based recruitment and outsourcing services provider Harvey Nash’s offshore services business flourished in its most recent fiscal year, with sales growing by 47%. The base for this operation is not India, however, but Vietnam.
The company opened its first Vietnamese center in 2000, under a partnership agreement with local software and services provider FPT Soft. Harvey Nash has a headcount of over 1,500 in the region and, according to managing director of software development and offshore global marketing Paul Smith, the company is taking in around 300 graduates per year.
Harvey Nash’s primary offshore base is in Hanoi, but it also has smaller operations in Saigon, Ho Chi Minh City, and Da Nang. The company provides application development services to clients including Honda, Mastek, and Orchard Systems from centers that are CMMI level five and BS7799 accredited.
When most UK companies make the decision to set up offshore, they immediately think of India, and Harvey Nash was no exception. However, the company also investigated a number of other potential destinations and identified a number of key advantages held by Vietnam.
We were impressed by Vietnam’s lack of employee churn [the average rate of attrition is just 5%, compared with over 15% in India] and by the availability of skills, said Smith. There are around 80,000 IT graduates in the Vietnamese labor pool, a level that is increasing by around 9,000 per annum.
Smith revealed that Harvey Nash’s decision was also driven by a desire to not be just another UK company setting up in India. We wanted to be an elephant and not a flea, said Smith. That way, you can attract the best skills. Smith added that offering offshore services from Vietnam, rather than India, helps during the contract tendering process, as it makes the company stand out from its rivals.
Smith admitted that there were initial problems setting up Harvey Nash’s Vietnamese operation. While English is well taught in the country’s schools and universities, many early applicants did not have a lot of practice at actually speaking English. Consequently, Harvey Nash employs a large number of people who were born in Vietnam but left to be educated in the west, only to return home to find work. These Viet Q, as they are known, have excellent language skills that have been honed by their time overseas.
The evolving nature of the Vietnamese economy also meant that, back in the early part of the decade, laws and regulations were often changing, making setting up a business more difficult. Smith said travel was also initially an issue, with restricted access and a lack of direct flights from Harvey Nash’s base in the UK.
In November 2006, the World Trade Organization approved Vietnam’s membership, and the country became the 150th affiliate in January 2007. It had been waiting 12 years to gain entry, and Smith sees it as a major event. Being a member of the WTO has already begun to change people’s views of the country. The tourist industry, for example, is really beginning to explode, he said.
Smith is an evangelist for Vietnam as a country and as an offshore location. Vietnam has overtaken Thailand and Sri Lanka in the last few years, Accenture and Unisys have large contingents there, he said. Intel has invested hundreds of millions of dollars, Bill Gates has visited twice, Fujitsu are there, so are HP.
The only downside to this increased popularity is that Harvey Nash may not be an elephant for very much longer.