How to choose an offshore dedicated development company in Vietnam

A Singapore-based company decided to outsource its software development to Vietnam-based company, but with thousands of options out there, what should they consider first? This is a real challenge as there is no standard set on how to choose a custom software development company.  

Cost is typically the top priority of choosing an offshore software development vendor. However, it is not the only factor, and should not be solely used for making the choice. This article will bring you with a more comprehensive checklist for choosing the right one. It is for business leaders, CTOs, tech lead, who are struggling with software development partner selection.  

Key takeaways 

• Besides cost, there are multiple factors that should be considered when evaluating an offshore dedicated development company and making the selection choice.  

• The technical expertise of offshore teams is shown through the modern technologies they use, tech stack, and implementation capabilities.  

• When estimating the development cost, carefully review the pricing models available, hourly rate, hidden costs, and payment agreements.  

• If the offshore dedicated development partner has deep experience in your domain, it is a strength worth considering.  

• Ask if potential vendors have risk-mitigation practices, such as paid trial period, developer replacement, and data protection.  

What to expect in an offshore software development company

Vietnam is one of the most attractive outsourcing destinations for Singapore-based business, not only because of its strong highly skilled IT talent pool and competitive cost, but also the time zone similarity and working culture. Technology companies in this country typically offer some services, including custom software development, AI and data, and dedicated development team. However, they are not the same. Each company has its own advantages and limitations, meaning that Singaporean clients have to assess each criteria thoroughly to choose the right development partner. 

Technical capability  

The first factor that you should consider is the technical expertise: "How well does your  software development partner perform?" It is often demonstrated through:  

• The modern technologies that the custom software development use. For example, in an AI project, it is necessary for vendor to have AI-related technologies, such as Machine Learning and Big Data. 

• The tech stack that they work with. If an offshore dedicated team is specialized in only few tech stacks, that might be their strength. Meanwhile, if developers can apply a wide range of tech stacks, they can implement various projects.  

This information is usually publicly available on their website and can be discussed in more detail when client contacts vendor, since the software development company receives the project requirements.  

More importantly, the Singapore-based company should consider the partner's implementation capabilities. Sometimes, a good Proof of Concept (PoC) still goes with a failed development. It is better to read customer feedback on some reputable platforms, such as Clutch, GoodFirms, and DesignRush.  

Development cost  

Initially, the Singaporean businesses can review the rate card and average project budget of the offshore vendors, which can help you estimate the development cost. However, the total cost is more than that. Here are some factors that you should consider for cost estimation:  

Pricing model 

Pricing model has the greatest influence on the total development cost, determining how the offshore dedicated development company calculates the total cost. Applying which pricing model depends on each offshore dedicated development partner. Fixed price, Time and Materials, and Dedicated Team are the three most common.  

Hourly rate  

Hourly rate is a simple and common number to estimate the development cost. In Singapore, the hourly rate of software developers is around SGD $28 - 125 depending on the level, which is significantly higher compared to Vietnam-based developers, just at SGD $425 - 49.  

Despite its importance, hourly rate should not be considered the only factor influencing the development cost. Client should clarify what is covered in this cost.  

What is included in the development cost  

The total development cost often covers more than just the salary or hourly rates of software engineers. The exact components depend on the engagement model and offshore dedicated development partner. A typical offshore dedicated development cost might include:  

• Salaries or service fees for developers, which account for the largest share of total cost  

• Requirements analysis, planning, system architecture, and UI/UX design  

• Software development and integration  

• Supporting tools/ frameworks/ platforms 

• Third party serviecs, including API, payment gateway, AI/LLM, software license  

Potential hidden costs that often are overlooked  

There are some costs that are not covered in the total cost of hiring a dedicated development team (hidden cost/ additional cost) and overlooked, even though they can increase the total development cost:   

• Maintenance and ongoing support, including bug fixes, system updates, and technical support. Is it charged separately after the project launches or within the warranty period?  

• Developer replacement is the resources (cost and time) needed to loop a new developer in the project when one leaves.  

• Scope changes can lead to additional costs, depending on the pricing model agreed before.  

Payment  

Agreements on payment of expense also significantly affect the cost:  

• Payment term: the deadline for payment (monthly or quaterly), the percentage of upfront payment and when to pay the remaining balance.  

• Exchange rate: the currency used for payment, the exchange rate and exchange rate timing  

• Payment method: bank transfer, credit card, or payment platform (note transaction/ bank fee)/  

• Determining withholding tax, VAT, and related tax obligations.   

Team size and composition  

Assess the number of available developers of the offshore dedicated development company, as well as their seniority (Junior, Mid-level, Senior, or Tech Leader)  

Clarify how the outsourcing companies in Vietnam structure a dedicated development team. For example, in a SaaS platform scaling team, Adamo APAC often provides 1 Tech Lead, 3 Senior Backend engineers, 2 Senior Frontend engineers, 1 DevOps, and 1 Tester.  

Scaling up: Clarify the time required to add personnel, costs associated with adding personnel, onboarding time, and knowledge transfer processes.  

Scaling down: Define the notice period for staff reductions (typically 30–45 days, depending on the contract), responsibilities regarding the handover of work, source code, and documentation.  

Domain experience

When hiring an offshore dedicated development team, it is better to check whether your dedicated teams have experience in your domain. If yes, it is a real strength as they have a deep understanding of the industry's specific characteristics, as well as a strong network of third-party service providers within the sector.  

For example, Adamo APAC focuses on two domains that many technologies treat as sidelines: Travel &  Hospitality and Healthcare. For travel software development, Adamo builds solutions for OTAs, tour operators, hotels, airlines, and travel marketplace.  

Delivery process 

How your Vietnam-based offshore teams deliver the production? 

• Considering the technical expertise is not enough. It's better to clarify the vendor's process for taking a product from requirements to production.  

• Outsourcing companies in Vietnam should establish a clear workflow, incorporating development methodologies such as Agile. Agree on clear communication and reporting protocols, including daily stand-ups, weekly meetings, and sprint reviews.  

• Define the process for source code storage and handover to the client.  

If these clear processes are not in place from the outset, the arrangement should be reconsidered. 

Risk-free practices  

Hiring an offshore dedicated development team entails risks, as the offshore team operates externally, outside the client's control, and is located far away. Therefore, a vendor should implement risk-free practices: 

• A trial period (usually paid) allows both parties to assess their compatibility.  

• If a developer underperforms, replacing solution should be implemented quickly (vendor typically covers this cost).  

• When the project expands and additional personnel are needed, the onboarding process should be as fast as possible to avoid disrupting the project schedule (ideally 1–2 weeks).  

• Any changes to scope or timeline must be clearly reported to the client before implementation.  

• Regular handovers and knowledge transfers are essential to prevent a "single point of failure" if a developer leaves the team. 

Compliance  

When working with Singapore-based businesses, vendor should pay attention to the PDPA (Personal Data Protection Act) which governs how to collect, store, and use personal data. Also, many specialized sectors, such as healthcare or fintech, are subject to strict security regulations.  

A trusted offshore software development vendor should basically ensure: 

• Having ISO certifications, typically ISO 27001 and ISO 9001:2015 

• NDAs signed within 24 hours  

• IP and source code transferred to client since day one, well note how they store and deliver the code.  

Why Adamo APAC is your best fit 

Adamo APAC is a premier AI and software development company, delivering dedicated development team for clients across Asia Pacific. With 170+ software engineers based in Vietnam, we assemble dedicated teams of Middle to Senior developers, integrated directly with your processes and led by your roadmap.  

Our highlights:  

• Working according to Agile methodology, direct communication via Slack, Jira, and GitHub  

• 2-week paid trial period, with 3-month minimum before rolling monthly  

• Replacing developers without any additional cost  

• Transparency through daily standups, sprint demos, and tracking  

Discuss your team needs and we provide you with a senior engineering team within few weeks.