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Thanh Pham · · 6 min readWhy ‘cheaper’ no longer wins dev deals for Vietnam
I’m going to say something that will probably annoy some people: Vietnam’s “we’re cheaper” software pitch is running out of road.
I started thinking seriously about this a few months ago, while I was listening to a company pitch for a software development contract. The firm opened with the hourly rate before telling me about the team, its engineering capability, or what it could actually deliver.
Image credit: Ulla
As someone who’s spent 18 years running an outsourcing business (my company, Saigon Technology, now has more than 350 engineers), I’ve sat through a lot of these pitches. But this one stuck with me.
The rate was roughly US$20 to US$25 an hour for a junior developer. That would have sounded perfectly reasonable 10 years ago, and maybe it still is to some today.
In an era when AI can spit out code practically for free, however, it’s not.
Vietnam didn’t suddenly become expensive, and its engineers didn’t become less capable out of the blue. It’s just that the thing we spent the last decade selling – cheap engineering labor – is becoming less differentiated, and AI is accelerating that change.
The old math is breaking down
Software outsourcing has traditionally been a fairly simple calculation.
If a developer in the US costs US$100 an hour and a developer in Vietnam costs US$25, the client saves 75%. Multiply that across a team and a year, and the business case is obvious.
Vietnam has built a very successful industry around this model. Now the math is being rewritten.
A Microsoft Research field experiment involving 4,867 developers across Microsoft, Accenture, and a Fortune 100 company found that developers using an AI coding assistant complete 26.08% more tasks on average.
Image credit: Arsal Ysfin
This isn’t happening at the edge of the industry. Stack Overflow’s 2025 Developer Survey found that 84% of developers use or plan to use AI tools, while 51% of professional developers turn to them daily.
Being cheap isn’t the point
What AI can’t do
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Rates are converging across every offshore market. A CEO explains why Vietnam’s engineers – not its prices – are now the real pitch.
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