How Much Do Companies Really Save by Building Offshore Teams in Vietnam?

If you’re considering Vietnam for engineering capacity, the cost conversation can get misleading fast. The “headline” savings are real—but the real number depends on how you hire, what you build, and how you run delivery.

YMYL note (financial/business decisions): This is general information, not financial, tax, or legal advice. Validate assumptions with your finance/legal teams and request written rate breakdowns from vendors before committing.

The honest answer: savings come from “total cost of delivery,” not just salary gaps

In practice, companies save money in Vietnam through a mix of:

• Lower compensation baselines (especially for mid-level and senior IC roles)
• Lower overhead embedded in vendor rates (office, HR, payroll, recruiting)
• Faster scaling compared with saturated markets

But the “true” savings is the difference between:

1. Your fully loaded onshore cost (salary + benefits + payroll taxes + recruiting + management overhead)

and

2. Your Vietnam delivery cost (vendor rate or local employment cost + delivery overhead + coordination costs)

In other words, don’t compare US salary to Vietnam salary. Compare fully loaded to fully loaded.

If you want a quick baseline on delivery models and how global teams are typically structured, this overview of global engineering delivery models can help frame the options without getting stuck on buzzwords: read the primer here.

What Vietnam compensation benchmarks suggest (so you’re not guessing)

Vietnam salary data varies by city, company type, and tech stack. One transparent, role-based benchmark comes from ITviec’s IT Salary & Recruitment Market Report 2025–2026, based on 1,839 respondents and showing medians by role and years of experience.

Examples from the report (median million VND/month): (ITviec)

• Back-end Developer: entry (<1 year) 12.4, 3–4 years 30.1, 5–8 years 39.9, >8 years 54.9
• Full-stack Developer: entry 10.1, 3–4 years 34.5, 5–8 years 41.8, >8 years 44.8
• Tester: entry 14.15, 3–4 years 20.7, >8 years 36.5
• Tech Lead: 3–4 years 53.85, >8 years 68.45 

To translate those into USD, you still need an exchange-rate assumption. Reuters reported ~26,060 VND per USD in mid-2025 (rates move, so update this when you run your model). (Reuters)

Vendor rates vs. local payroll: choose the model before you estimate savings

Most “savings calculators” ignore a critical fork:

Model A) Partner-led team (most common for first-time buyers)

You pay a monthly or hourly rate that usually includes:

• compensation, benefits, and payroll handling
• office/IT, HR/recruitment, and vendor margin
• some level of delivery management (varies a lot)

A Vietnam-focused white paper that recalculates rate data from the Accelerance 2024 Global Software Outsourcing Rates and Trends Guide shows monthly median ranges for Southeast Asia by seniority (used here as a directional reference, not a guarantee). It also explicitly states it’s “intended for reference only” and disclaims responsibility for decisions made from it—so treat it as a benchmark, then verify with quotes.

Model B) Captive team (you employ locally through an entity or EOR)

You may get a lower ongoing cost, but you take on:

• recruiting capability and employer branding
• HR/legal/payroll complexity
• retention strategy and career ladders
• compliance and contracts

Rule of thumb: Model A is easier to start and easier to price; Model B can be cheaper at scale, but only if you can operate it well.

A practical way to estimate “real savings” (6-step calculator)

Here’s a decision-grade approach I use because it makes hidden costs explicit.

1) Define the team shape (roles + seniority)

Example: 1 tech lead, 3 senior/mid engineers, 1 QA, 1 PM/BA.

2) Calculate fully loaded onshore cost (not salary)

In the US, benefits are a major cost driver. BLS Employer Costs for Employee Compensation (June 2025) reports wages/salaries at 61.5% of employer costs and benefits at 38.5% (averages vary by industry and company). (Bureau of Labor Statistics)

So if you start from wage/salary alone, you will undercount meaningfully.

3) Estimate Vietnam cost using your chosen model

If partner-led, use vendor quotes (best) or market ranges (second best).

If captive, use local salary benchmarks + employer burden + recruiting cost.

4) Add “delivery overhead” explicitly

Common line items:

• Product management time, architecture oversight, QA strategy
• Extra ceremonies and documentation (especially early)
• Tooling, security controls, environments

5) Add one-time setup costs

• Transition/onboarding
• Initial travel
• Legal + contracting review

6) Apply a conservative productivity adjustment

This is where many models get honest:

• What if velocity is 10–20% lower for the first 8–12 weeks?
• What if some work shifts onshore (design authority, approvals)?

If savings still look strong after conservative assumptions, you’re likely in a good range.

Worked example (directional): what savings can look like

Onshore benchmark (US): CareerOneStop’s 2024 national median for “Software Developers” lists about $133,080/year. (careeronestop.org)

If you convert wage to a rough “employer cost” using the BLS average share (wages ≈ 61.5% of total), a simplified fully loaded estimate becomes about $216K/year per developer ($133,080 ÷ 0.615). (Bureau of Labor Statistics)

Important: this is a broad average, not your exact company profile.

Vietnam partner-led benchmark (illustrative): A recalculation from Accelerance-based data shows a Vietnam/Southeast Asia senior developer monthly median in the neighborhood of ~$5,920/month (≈ $71K/year) in that benchmark set.

Directional savings (per senior dev):

• Onshore fully loaded: ~$216K/year
• Vietnam partner-led: ~$71K/year
• Gross delta: ~67% lower 

Now subtract the reality costs:

1. extra product/engineering oversight (often 5–15% depending on maturity)
2. onboarding + ramp time
3. occasional travel and planning cycles

Even after that, many companies still land in a 30–60% savings band when the work is well-scoped and the collaboration system is solid.

When savings shrink (or disappear)

In practice, cost advantages compress when:

1. Requirements are unstable and you’re still discovering the product weekly
2. The system is highly coupled/legacy, and changes require deep tribal knowledge
3. You’re buying “cheap hours” instead of outcomes (rework eats savings)
4. Governance is missing (unclear acceptance criteria, weak QA gates)
5. The vendor rate is low because seniority is low (hidden as “full-stack” titles)

A quick pitfall checklist I’ve seen help:

• Ask for named seniority bands and sample CVs before kickoff
• Require a rate card by role (not blended) and clarify what’s included
• Define what “done” means: coding standards, tests, documentation, security checks
• Track early signals: cycle time, escaped defects, rework rate

What to ask vendors so you can trust the numbers

Before you sign anything, get answers in writing:

1. Is pricing hourly, monthly, or outcome-based—and what’s included?
2. What portion is delivery management vs. pure engineering?
3. What is the replacement policy if someone leaves?
4. How do they handle security controls and IP protection in contracts?
5. What is the expected ramp timeline for your stack?

Also, sanity-check rates against broader market ranges. Clutch notes that hourly rates across providers can range widely (often $25–$150+, depending on region and expertise). That doesn’t validate one quote, but it helps catch obvious outliers. (Clutch)

FAQ

1) What’s a realistic monthly cost for a mid-level developer in Vietnam?

Role and seniority matter more than titles. Benchmarks like ITviec show clear step-ups by years of experience (e.g., back-end medians rising from ~30.1M VND/month at 3–4 years to ~39.9M at 5–8 years). (ITviec)

2) Should I model savings using salary or vendor rates?

Use vendor rates if you’re outsourcing delivery. Use salary + employer burden only if you’re employing directly (entity/EOR). Mixing these is the #1 spreadsheet mistake.

3) What hidden costs most often reduce savings?

Onboarding time, management oversight, rework from unclear acceptance criteria, and turnover churn are the usual culprits.

4) How long does it take for a Vietnam-based team to reach full speed?

Commonly 4–12 weeks depending on codebase complexity and how well the scope is broken down. If you have high domain complexity, assume the longer end.

5) Is Vietnam still cost-competitive compared to other Asian hubs?

Many benchmarks still show Vietnam as highly competitive in the region, but “cheapest” depends on role availability, seniority mix, and vendor maturity. Use multiple quotes and compare apples-to-apples.

6) What’s the simplest way to validate my savings estimate?

Run two scenarios: optimistic (fast ramp, stable scope) and conservative (slower ramp, added oversight). If both still work financially, you’re likely safe.

Conclusion: one next step

Build a one-page “real savings” model for your exact team (roles, seniority, ramp, overhead), then use it to request apples-to-apples quotes from 2–3 providers.

When you’re ready, use this guide as the foundation for understanding delivery models and terminology, then link your cost model back to the approach that fits your situation: get the foundational overview here.