Philippines Outsourcing vs. Vietnam Outsourcing: Which market should you consider?

Say “offshore team” in a planning meeting and someone will probably say “Philippines” within about ten seconds. 

Fair enough. The Philippines has helped establish Southeast Asia as a major outsourcing region, with more than 1.8 million people working in its IT-BPM industry. It also ranks second among Asian markets in EF’s 2025 English Proficiency Index, making it a natural destination for businesses looking to build offshore teams. 

But the outsourcing landscape has expanded significantly over the past two decades.  

Vietnam has built a substantial technology and professional talent market of its own, with strong growth across software, engineering, data, AI, and digital services. It also ranks among the world’s leading services locations. 

So how do Philippines outsourcing vs. Vietnam outsourcing compare? 

Here’s what the latest data says about talent, retention, salary growth, English proficiency, business continuity, and collaboration. 

Why compare Philippines outsourcing with Vietnam? 

The Philippines has a long-established position in global outsourcing, particularly across customer service, back-office operations, and business process outsourcing. 

Vietnam is continuously advancing in technology, software development, engineering, data, and digital services. That makes it increasingly relevant for businesses considering dedicated offshore teams over traditional BPO. 

When comparing the two markets, look at: 

• Talent availability and specialization

• Employee retention

• Salary growth

• English and communication capability

• Time-zone overlap

• Business continuity

• Provider and team model

Philippines outsourcing: four factors worth considering 

The Philippines remains one of Asia’s most established outsourcing markets. Its scale is a significant advantage, but businesses comparing offshore locations should also understand the factors that shape long-term team performance. 

1. Employee attrition affects team continuity

Turnover matters when an offshore team is expected to build knowledge of your systems, processes, customers, and ways of working. Aon’s latest Southeast Asia Salary Increase and Turnover Study recorded 2026 attrition at 17.3% in the Philippines and 16.2% in Vietnam. 

Both markets experience employee turnover, but the latest figures give Vietnam a modest retention advantage. 

For a business building a team over several years, every departure can create additional work: 

• Recruiting and interviewing a replacement

• Training someone on internal systems and processes

• Rebuilding project knowledge

• Transferring responsibilities

• Maintaining delivery while the role is replaced

For technical and professional teams, retention matters because employees build knowledge of your systems, processes, and business over time. 

Read More: The hidden risks of choosing the wrong outsourcing partner 

2. Salary growth shows where talent demand is rising

Aon recorded a 5.0% salary increase in the Philippines in 2026, with a projected 5.3% increase for 2027.  

Vietnam recorded a higher 6.6% increase in 2026, with salary growth projected at 6.7% in 2027.  

On salary growth alone, the Philippines has the advantage. Its lower rate of increase points to a more stable salary environment than Vietnam. But Vietnam’s higher salary growth also reflects stronger competition for skilled professionals as its technology and digital sectors expand. 

Aon links salary movements across Southeast Asia to labor-market dynamics and demand for skills. Vietnam’s higher salary growth therefore signals stronger competition for skilled professionals as its technology and digital sectors expand. 

For businesses comparing the two markets, the more useful question is what talent is available at the market rate, how effectively a team can be built around it, and what it can deliver over time. 

Read More: Cost comparison: U.S. vs. Vietnamese developer teams 

3. Business continuity should account for location

Weather exposure is one factor businesses should consider when evaluating continuity planning. PAGASA reports that an average of around 20 tropical cyclones enter the Philippine Area of Responsibility each year, with approximately 8 to 9 crossing the Philippines. 

For offshore teams, the relevant issue is continuity planning: backup connectivity, power, remote-work capabilities, and disaster recovery. 

4. Public holidays need to be part of resource planning

The Philippines’ 2026 holiday calendar includes regular holidays, special non-working days, and additional special non-working days. Planning around these dates is important for businesses that need consistent offshore coverage. This is especially relevant when project timelines, customer support, product releases, or development cycles depend on specific team availability. 

Vietnam has its own public holidays and leave schedules, so the same planning principle applies when comparing the two markets. Rather than treating local holidays as inherently negative, businesses should understand how a provider handles holiday coverage, leave planning, and resource continuity before building the team. 

What businesses often get wrong about Vietnam outsourcing

Vietnam is sometimes still viewed primarily as a low-cost outsourcing destination. The market has moved well beyond that description. 

Vietnam’s digital technology ecosystem now has significant scale. In 2025, the country had around 80,000 digital technology enterprises employing more than 1.9 million people, while more than 2,100 Vietnamese technology companies had expanded into overseas markets. Vietnam’s Ministry of Science and Technology reported that the sector had grown 1.4 times from 2020. The country is developing capabilities across software, engineering, data, AI, electronics, and other technology-intensive fields rather than relying on traditional labor-arbitrage models. 

Vietnam is also investing in specialized technical talent. Under the government’s semiconductor workforce program, the country aims to train at least 50,000 university-level professionals for the semiconductor industry by 2030, including at least 42,000 engineers and bachelor’s graduates, 7,500 master’s students, and 500 PhD researchers. Vietnam’s semiconductor workforce program also includes targets for AI specialists and semiconductor design, manufacturing, packaging, and testing roles.  

This gives Vietnam a technology ecosystem that extends beyond traditional labor-arbitrage models, with growing depth across software, engineering, data, AI, and electronics. 

Is English proficiency a barrier to outsourcing to Vietnam? 

This is one of the most common questions businesses ask when comparing outsourcing destinations. 

The Philippines does have the stronger national English proficiency score. EF’s 2025 index gives the Philippines a score of 569, ranking it #28 globally and second in Asia, while Vietnam scores 500, ranking #64 globally and 7th in Asia. 

This gives the Philippines an advantage at the national level. However, country-level rankings tell only part of the story. When hiring an offshore team, businesses should assess the communication skills of the actual candidates rather than assume that a national average reflects every professional. 

At Away Digital Teams, we see this in our own team. Laura, one of our Vietnam-based employees, is a great example of the English communication skills professionals in Vietnam can bring to international teams. 

Ultimately, English proficiency should be assessed against the needs of each role. A software engineer, finance specialist, designer, or project manager will have different communication requirements, which can be evaluated during recruitment through: 

• Written English

• Spoken English

• Technical vocabulary

• Ability to explain complex ideas

• Communication with international stakeholders

• Role-specific collaboration

With the right assessment, businesses can identify talented professionals in Vietnam who communicate effectively and collaborate confidently with international teams. 

Read More: English proficiency and English education in Vietnam 

Does Vietnam have enough skilled talent to scale? 

Vietnam’s talent market is much broader than software development alone. Businesses can build teams across: 

• Software development

• Data and analytics

• Engineering

• Finance and accounting

• UI/UX and design

• Digital marketing

• Quality assurance

• Product and project support

Talent availability will still vary by role, seniority, technology stack, and location. But the broader direction is clear: Vietnam’s talent market is growing alongside its digital economy. 

Read More: Vietnam’s tech talent boom – What the U.S. should know 

Is Vietnam only a low-cost outsourcing destination? 

Kearney’s latest published Global Services Location Index ranks Vietnam #7 globally and the Philippines #12. The index considers four dimensions: 

• Financial attractiveness

• People skills and availability

• Business environment

• Digital resonance

Vietnam’s ranking reflects the development of its broader services ecosystem, not simply labor costs. 

Vietnam vs. Philippines: Time-zone overlap supports day-to-day collaboration 

Vietnam operates on UTC+7, while the Philippines operates on UTC+8. 

For Australian businesses, both markets offer relatively close working-hour alignment, although the exact difference depends on the Australian state and daylight saving. Vietnam can provide a slight advantage for businesses operating across Southeast Asia or with teams in multiple Asia-Pacific markets. 

For U.S. businesses, both locations can support a follow-the-sun workflow, allowing offshore teams to progress work while U.S. teams are offline.  

That can make everyday activities easier, including: 

• Daily standups

• Technical discussions

• Design reviews

• Client feedback

• Issue resolution

• Project management

Time zone should therefore be assessed against the working hours and collaboration model the team actually requires. 

Philippines vs. Vietnam outsourcing: key factors compared 

Factor	Philippines	Vietnam
2026 attrition	17.3%	16.2%
2026 salary increase	5.0%	6.6%
Projected 2027 salary increase	5.3%	6.7%
EF English Proficiency Index 2025	569, #28 globally	500, #64 globally
Kearney Global Services Location Index	#12 globally	#7 globally
Time zone	UTC+8	UTC+7
Talent profile	Large, established IT-BPM workforce	Growing technology and professional workforce
Digital ecosystem	Mature BPO and business-services market	Rapidly expanding technology and digital-services ecosystem

The Philippines has the stronger national English score and lower salary growth, while Vietnam has lower reported attrition, a higher Kearney services-location ranking, and a strong technology-focused talent market. 

For businesses building dedicated offshore teams, the choice should come down to the roles required, the talent available in each market, and how well the provider can support the team over time. 

What to evaluate when comparing Philippines outsourcing vs. Vietnam 

Look beyond the headline labor rate 

Compare the full cost of building and maintaining the team, including recruitment, employment, workspace, equipment, management, replacement, and retention. 

Evaluate how the provider recruits 

Ask how candidates are sourced, screened, assessed, and selected. 

For specialized roles, recruitment quality can have a significant effect on how quickly a team reaches full productivity.  

Look for: 

• Technical assessments

• English assessments

• Structured interviews

• Candidate screening

• Replacement processes

• Employee development

• Retention data

Make team visibility part of the model 

A dedicated team gives the client direct visibility into who is hired, what they work on, and how the team develops. 

Ask: 

• Who interviews candidates?

• Who makes the final hiring decision?

• Who manages priorities?

• How is performance measured?

• How does the team communicate with the client?

• How can the team scale?

The provider should also be able to handle local employment, HR, workspace, equipment, and compliance requirements. 

Plan for continuity before the team starts 

Continuity should be part of provider evaluation from the beginning.  

Ask about: 

• Backup connectivity

• Workspace contingency

• Business continuity

• Holiday coverage

• Employee replacement

• Escalation processes

A strong offshore operation should have a plan for maintaining momentum when circumstances change. 

Read More: Overcoming outsourcing pitfalls: How to succeed after a bad experience? 

Why businesses should explore Vietnam outsourcing 

The Philippines has earned its position as a major outsourcing destination through scale, English capability, and an established BPO ecosystem. 

Vietnam brings a different profile: a growing technology workforce, expanding digital economy, increasing investment in specialized technical talent, and a strong position in global services rankings. 

For businesses looking beyond traditional BPO and building dedicated teams across technology, engineering, data, finance, design, and digital services, Vietnam deserves to be part of the shortlist. 

Compare Philippines vs. Vietnam for your next offshore team 

If the Philippines has traditionally been the first market that comes to mind, Vietnam is worth putting alongside it.  

Compare the two markets across talent, retention, cost, English capability, time zones, and team structure – then explore what a Vietnam-based offshore team could look like for your business.