The IT Services Boom in Southeast Asia: Market Size, Trends & Growth for 2026

This article breaks down the current state of the country’s IT services industry with verified data, so you can assess the opportunity with clarity rather than marketing claims.

How Big Is the Market?

The IT services segment in this region generated approximately US$0.70 billion in revenue in 2024, according to Statista. Projections place that figure at US$0.83 billion in 2025 and US$0.98 billion by 2026, with a trajectory toward US$1.28 billion by 2028.

The broader IT services market, which includes consulting, managed services, and offshore, reached US$2.37 billion in 2025 and is forecast to hit US$3.98 billion by 2030, per Mordor Intelligence. Software delivery accounts for roughly 40% of that total.

A note on context: you may encounter figures citing the national ICT industry at US$165+ billion. That number includes hardware manufacturing dominated by Samsung’s factories and is not representative of the software services market. The distinction matters when benchmarking.

Growth rate: Statista reports a CAGR of approximately 12.2% for the IT segment (2024–2029). Some industry sources cite figures as high as 17%, though this likely reflects a narrower market definition. A reasonable range is 12–17% annual growth, which outpaces most mature offshore destinations.

The Tech Talent Pool: Scale and Composition

The country currently has between 530,000 and 560,000 software developers, with approximately 55,000–60,000 new tech graduates entering the workforce each year. The government has set a target of producing 80,000 ICT graduates annually by 2030, with at least 15,000 specializing in AI.

The workforce skews young. Over 58% of developers are under 30, which presents both an advantage (adaptability, current training in modern stacks) and a consideration (less senior talent available domestically). About 30% of the workforce is mid-level, with the remainder split between junior and senior roles.

Technical strengths concentrate in JavaScript, Java, Python, .NET/C#, and PHP, with growing proficiency in cloud platforms (AWS, Azure, Google Cloud) and DevOps practices. English proficiency ranks 8th in Asia according to the 2024 EF English Proficiency Index, and Japanese and Korean language skills are increasingly common, reflecting key client markets.

The talent is concentrated in three main hubs:

• Ho Chi Minh City (55% of the IT workforce): The largest talent pool, strongest startup ecosystem, and home to Quang Trung Software City and Saigon Hi-Tech Park.

• Hanoi (35%): Stronger in deep-tech R&D, with government-backed initiatives including a US$24 million venture capital fund targeting AI and semiconductors.

• Da Nang (growing): The most cost-effective option, emerging as a viable third hub for distributed software teams.

What’s Driving Growth in 2026

The Shift from Cost Arbitrage to Strategic Partnerships

The early appeal was straightforward: developer rates of US$20–40 per hour compared to US$80–150+ in the US. That cost advantage remains (savings of 50–70% versus Western markets and 15–30% below Indian rates, depending on the role), but the industry narrative is changing.

More companies are establishing dedicated development centers rather than project-based engagements. This reflects a maturation from “find the cheapest option” to “find a reliable long-term engineering partner.” Technology firms based in the region are increasingly involved in product development and IP creation, not just the execution of specifications.

AI and Data Infrastructure Investment

FPT, the country’s largest IT services company, signed a US$200 million partnership with NVIDIA to build an AI factory powered by H100 GPUs. NVIDIA also announced its first local R&D center in December 2024. CMC Global sealed a US$1 billion data center deal with Samsung C&T.

These are not incremental moves. They signal that the nation is positioning itself in the AI infrastructure supply chain, not just as a source of developers who can write Python scripts. The country hosted 41 active data centers with 221 MW capacity as of late 2025, with a government target of 1,000 MW by 2030.

For buyers of offshore services, this means locally based teams will increasingly have access to high-performance computing infrastructure, relevant if your projects involve machine learning, large-scale data processing, or AI-powered applications.

Government Policy Tailwinds

The national government has been unusually deliberate in supporting IT sector growth:

• National Digital Transformation Program targets the digital economy, contributing 30% of GDP by 2030 (up from roughly 20% in 2025).

• Corporate income tax (CIT) exemptions (3 years) for newly established SMEs took effect in May 2025.

• 5-year multiple-entry visas for high-tech experts simplify talent mobility.

• A regulatory sandbox launched in 2025 covers fintech, digital banking, and data platforms.

• Personal Data Protection Law takes effect in January 2026, aligning the country’s data governance with international expectations.

The government declared 2026 the “Year of Acceleration,” signaling a shift from planning to measurable output in digital transformation.

Global Positioning: Where the Country Ranks

The nation ranked 7th globally in the 2023 Kearney Global Services Location Index, evaluated across financial attractiveness, talent, business environment, and digital readiness. It consistently places among the top 6–7 countries for software delivery and ranks 2nd in Southeast Asia, according to Accelerance.

These rankings reflect a combination of cost competitiveness, workforce scale, and improving infrastructure. The limitation worth noting: the senior talent pipeline is thinner than India’s or Poland’s. Companies needing a team led by architects with 15+ years of experience may need to plan for a hybrid model, senior leadership onshore or nearshore, with mid-level and junior execution handled by the outsourced team.

FAQs

1. How large is this market expected to be in 2026? 

The IT segment is projected to reach approximately US$0.98 billion in 2026, based on Statista data. The broader IT services market, including consulting and managed services, is on track toward US$3–4 billion by the end of the decade.

2. What is the average cost of hiring developers through local firms? 

Client-facing rates typically range from US$26 to US$40 per hour, depending on seniority and specialization. AI and machine learning roles command the higher end of that range. These rates represent what the service provider charges, not individual developer salaries.

3. How does this market compare to India for offshoring? 

The country offers 15–30% lower costs than India for comparable roles, a younger workforce, and smaller time-zone gaps with East Asian markets (Japan, Korea, Australia). India has a larger senior talent pool and more established enterprise relationships. The choice often depends on project scale and required seniority.

4. What are the main risks of delegating software development to this region? 

The most commonly cited challenges are a thinner pool of senior/architect-level talent compared to more mature markets, time-zone differences with US and EU clients (7–12 hours), and evolving IP protection frameworks. These are manageable with proper team structure and legal agreements, but they should be factored into planning.

5. Is the government supportive of foreign companies building teams here? 

Yes. Policies include corporate tax exemptions for new businesses, expedited visas for tech professionals, regulatory sandboxes for fintech, and a national target of 30% digital economy contribution to GDP by 2030. A new Personal Data Protection Law (effective January 2026) also signals a commitment to international compliance standards.

Key Takeaway

This IT services market is growing at 12–17% annually, backed by a young workforce of 530,000+ developers, significant infrastructure investment from global players like NVIDIA and Samsung, and proactive government policy. The market is transitioning from a cost-driven proposition to a value-driven one, which matters more for long-term partnerships than for one-off projects.

If you’re evaluating this region as a destination for your next development team, explore how experienced technology partners here approach long-term software engagements to understand what a strategic partnership looks like in practice.