The growth of abroad improvement bases by main home corporations is accelerating resulting from elevated developer demand pushed by synthetic intelligence (AI). These corporations’ abroad analysis and improvement (R&D) hub is Vietnam. It is because the variety of personnel with global-level sensible expertise in Vietnam is growing, labor prices are lower than half of Korea’s, and there’s relative freedom from home employment laws such because the 52-hour work restrict.
Nonetheless, as R&D methods primarily based on abroad personnel broaden, specialists level out that it turns into troublesome to rework Korea’s nationwide industrial construction towards R&D-centricity in the long run. Accordingly, specialists consider the federal government ought to resolve labor laws, so corporations can strengthen their R&D foundations each abroad, together with Vietnam, and domestically.
The newest instance of a serious Korean firm selling an R&D base in Vietnam is KT. The telecom provider is pursuing the development of a Vietnam International Growth Heart (GDC) as a part of its R&D offshoring technique. Offshoring is a administration technique the place producers relocate manufacturing amenities to international locations with low labor prices, reminiscent of China or Southeast Asian international locations, to cut back manufacturing prices. For the reason that pandemic, actions to construct improvement facilities in Vietnam to cut back not solely manufacturing but in addition R&D prices have develop into energetic within the business. Just lately, new demand resulting from AI is accelerating this pattern.
KT is reportedly contemplating Samsung Electronics and LG Electronics as benchmarking targets. Samsung Electronics accomplished an R&D heart close to Hanoi in December 2022. That is to make Vietnam a world strategic base that performs not solely manufacturing but in addition R&D past being a manufacturing hub. Presently, the variety of researchers there alone exceeds 2,000, and the burden it occupies in Samsung Electronics’ international technique is so vital that Chairman Lee Jae-yong visited the location straight throughout completion.
LG Electronics can also be fostering Vietnam as a world improvement hub by upgrading the R&D heart it established in Hanoi in 2016 to an official company in 2023. Analysis personnel exceed 1,000. This contains improvement for automotive enterprise in addition to house home equipment, that are LG Electronics’ essential merchandise. As well as, main group corporations reminiscent of Shinhan DS, an data know-how (IT) service firm of Shinhan Monetary Group, and Posco DX underneath Posco Group have been strengthening improvement facilities in Vietnam in recent times. Naver additionally established improvement facilities in Hanoi and Ho Chi Minh Metropolis respectively in 2021.
The rationale corporations are growing their R&D foundations in Vietnam is the mixture of respectable improvement capabilities and low wages. Presently, Vietnamese builders’ programming expertise are evaluated as upper-middle tier globally. Within the Worldwide Collegiate Programming Contest (ICPC), the world’s largest college scholar improvement competitors, Vietnam has recorded nineteenth place out of 118 international locations in cumulative nationwide efficiency rankings by way of this yr. Whereas decrease than Korea’s ninth place, it’s larger than Germany (twenty fifth) or India (thirty fifth). This means that Vietnam’s improvement schooling stage and {qualifications} usually are not inferior.
Labor prices are lower than half of home hiring. In response to ITviec, a neighborhood developer recruitment platform, the month-to-month wage of a 6-year full-stack developer in Vietnam is at present 36.35 million dong (2.05 million gained). Contemplating that the Korea Software program Business Affiliation proposed a mean month-to-month wage of 6.94 million gained for home utility SW builders in 2025, labor prices are one-third the extent. Kim Hyun-jun, industrial workforce chief at TalentGetGo, which verifies Vietnamese builders’ coding skills and matches and manages them with demanding corporations, defined, “When the worldwide developer provide scarcity occurred because of the pandemic, Vietnamese builders had alternatives to work at international corporations and gained international expertise by way of this,” including, “Since then, their attribute diligent tradition mixed with low wages has resulted in Korean corporations being energetic in establishing Vietnamese improvement organizations.” Above all, Vietnam’s employment laws being much less stringent than Korea’s was a key issue. An IT business official mentioned, “The truth that home labor legal guidelines are stricter is a vital level,” including, “When hiring abroad, intensive work throughout busy intervals can also be potential.”
Accordingly, native IT outsourcing corporations are additionally experiencing speedy development. FPT, Vietnam’s No. 1 IT outsourcing firm with over 20,000 native improvement personnel, has opened three extra workplaces in Korea together with Yeouido and Pangyo previously two years. KT is reportedly involved with FPT to organize for GDC institution.
Consultants consider the R&D offshoring phenomenon is prone to proceed for a while contemplating the pattern of abroad enterprise changing into common. Nonetheless, they level out that strengthening home R&D foundations also needs to be pursued in parallel. Lee Kyung-mook, professor of enterprise administration at Seoul Nationwide College, mentioned, “We must always take note of why corporations don’t have any selection however to go to Vietnam,” including, “Korea exceptionally regulates R&D working hours apart from Europe, reducing R&D productiveness and inflicting corporations to look abroad.” Lee continued, “To lift our nation’s per capita gross home product (GDP), we have to rework the nationwide financial system into an industrial construction specialised in R&D,” noting, “If the present scenario the place abroad R&D growth is advantageous for corporations continues, it might go reverse to the nationwide industrial construction we must always intention for.”
Accordingly, voices are rising that the federal government ought to take progressive regulatory enhancements within the R&D sector. Hwang Yong-sik, professor of enterprise administration at Sejong College, mentioned, “The home business is changing into more and more contraction-oriented, with growing labor laws and lowering workloads,” including, “Policymakers ought to hearken to voices from improvement websites and take into account alternate options to broaden home R&D employment collectively.”
