Vietnam’s Growing Role in Automotive Software Outsourcing

As the global automotive industry embraces digital transformation, Vietnam is quickly emerging as a key player in automotive software outsourcing. With its growing pool of skilled developers, cost advantages, and increasing focus on advanced technologies, Vietnam is becoming a preferred destination for automakers seeking high-quality, efficient software solutions. Keep reading to explore the country’s rising influence and its potential for driving innovation in this fast-evolving market.

Vietnam’s Emergence as a Leading Hub for Automotive Software Outsourcing

The automotive industry is undergoing a profound transformation, driven by innovations such as electric vehicles (EVs), autonomous driving systems, and connected car solutions. These advancements have fueled a rising demand for specialized software development to power the next generation of smarter, safer, and more efficient vehicles. Research and Markets reported that by 2026, the global automotive software market is projected to reach $29.3 billion, growing at a compound annual growth rate (CAGR) of 15.2%. 

To keep pace with these evolving demands, many automotive companies are increasingly turning to software outsourcing as a strategic solution. Outsourcing allows companies to leverage global talent, reduce development costs, and accelerate time-to-market for new technologies. In this context, Vietnam is emerging as a key player in automotive software development outsourcing. Vietnam’s IT outsourcing sector has seen robust growth, expanding at an annual rate of 13.31% and projected to reach $881.90 million by 2027​, according to Kearny's Global Service Location Index. 

Vietnam’s transformation from an emerging IT outsourcing destination to a global hub for automotive software outsourcing is the result of its focus on technology education, strategic partnerships, growing domestic market, and supportive government policies. With its expertise in critical automotive software areas and partnerships with global automotive leaders, Vietnam is set to play a central role in the rapidly expanding $80 billion global automotive software market by 2030. This trajectory highlights Vietnam’s growing influence in shaping the future of automotive technology.

Advantages of Outsourcing Automotive Software to Vietnam

Software outsourcing in Vietnam provides global automotive companies with an ideal mix of expertise, reliability, and scalability. Below are the key advantages of outsourcing automotive software development to Vietnam.

Cost-Effectiveness

Vietnam has emerged as one of the most cost-effective options for software development outsourcing, offering competitive rates and high-quality services. According to Qubit-labs, the cost of offshore software development in Vietnam typically ranges from $10 to $350 per hour, which is significantly lower compared to Western Europe (with rates from $150 to $400 per hour) and North America (ranging from $100 to $450 per hour). Eastern European countries like Poland and Romania charge between $25 and $199 per hour, but Vietnam’s lower-end rates make it more accessible, especially for companies with limited budgets. 

Skilled Workforce

Vietnam’s IT industry is driven by a growing pool of highly skilled professionals, supported by a strong focus on STEM education and specialized training. Each year, around 40,000 IT graduates are produced, according to the Vietnam Software and IT Services Association (VINASA), contributing to the rapidly expanding tech talent workforce. Major universities like Hanoi University of Science and Technology and Ho Chi Minh City University of Technology offer rigorous programs in computer science, software engineering, and other IT fields, helping to shape this dynamic labor force.

A 2023 LinkedIn report highlighted Vietnam as one of the top countries in Southeast Asia for producing tech talent with expertise in AI, data science, and cybersecurity. Additionally, many Vietnamese IT professionals are earning international certifications, such as AWS and Microsoft Azure, equipping them with advanced skills to meet global tech demands.

These professionals are particularly well-versed in specialized areas like automotive software, embedded systems, and advanced driver assistance systems (ADAS), making them ideal for complex automotive software development.

Favorable Business Environment

Vietnam offers a favorable business environment for outsourcing automotive software development. The government has introduced various policies to attract foreign investment, such as tax incentives and free trade agreements, including the EU-Vietnam Free Trade Agreement (EVFTA). These initiatives, combined with the country’s political stability and strong economic growth, make Vietnam an ideal destination for companies seeking cost-effective and reliable automotive software development solutions​.

Proven Expertise

Vietnam is quickly becoming a hub for automotive software development, with its expanding pool of IT professionals well-versed in cutting-edge technologies like AI, IoT, and embedded systems. Several Vietnamese companies have a proven track record in delivering high-quality automotive software projects, and many have earned industry-recognized certifications such as ISO 26262, a global benchmark for functional safety in automotive electronics.

TMA Solutions is a leading example, having established itself as a key player in the automotive sector. Specializing in embedded systems, telematics, and vehicle control, TMA has partnered with leading automotive brands to provide innovative solutions. TMA adheres to ISO 26262, ensuring the safety and reliability of its software in safety-critical automotive applications.

Challenges and Areas for Improvement in Vietnam’s Automotive Software Outsourcing Industry

While Vietnam is rapidly emerging as a competitive player in the automotive software outsourcing sector, the country faces several challenges that need to be addressed to fully capitalize on this potential.

Competition from Other Outsourcing Destinations

Vietnam is emerging as a competitive automotive software outsourcing destination, directly challenging established hubs like India and Eastern Europe. India boasts a large pool of experienced engineers and cost-effective solutions, while Eastern Europe, particularly Poland and Ukraine, offers strong technical expertise and proximity to European automotive manufacturers.

Vietnam stands out by focusing on niche areas like Advanced Driver Assistance Systems (ADAS), autonomous driving, and connected car technologies. The Vietnamese government plays a crucial role by offering incentives such as import duty exemptions, land rent reductions, and R&D support. These measures lower costs for foreign-invested companies in high-tech sectors and encourage innovation.

Additionally, Vietnam provides incentives for human resource development, with tax deductions for companies investing in worker training. This government-backed framework enables Vietnamese firms to offer competitive, high-quality solutions at lower costs, enhancing their appeal in the global automotive software market.

Infrastructure Development

One challenge for Vietnam’s automotive software outsourcing market is the need to further develop its technological infrastructure. To compete globally, Vietnam must enhance internet connectivity, establish data centers, and create technology parks to support complex automotive software projects.

Significant progress has already been made with tech hubs like Saigon Hi-Tech Park and Da Nang IT Park, which provide necessary infrastructure for software development and foster innovation. Investments in data centers and high-speed internet are helping Vietnam meet the demands of large-scale projects typical in the automotive software industry.

The government has been promoting investment in technology infrastructure, offering tax incentives to attract high-tech firms. This strengthens local companies and positions Vietnam as a competitive alternative to established outsourcing hubs like India.

Vietnam’s Future in Automotive Software: Poised for Global Growth

Vietnam’s automotive software outsourcing market is set for significant growth over the next decade, driven by rising global demand for advanced automotive technologies. 

According to MarketsandMarkets’s report “Automotive Software Market – Global Forecast to 2030”, the global automotive software market is expected to reach $80 billion by 2030, with a compound annual growth rate (CAGR) of over 9%, positioning Vietnam to capture a substantial share. The country’s expertise in key areas like infotainment systems, telematics, and advanced driver assistance systems (ADAS) is growing.

Vietnam’s domestic market is also expanding, with around 1.8 million vehicles projected to be added annually between 2025 and 2030, according to an Automechanika Ho Chi Minh City report. The increasing demand for electric vehicle (EV) and autonomous vehicle software, particularly in areas such as battery management, charging infrastructure, and ADAS, is a key growth driver. The ADAS segment, with features like lane departure warnings and adaptive cruise control, is expected to be a major focus.

Vietnam’s focus on smart connectivity, in-car infotainment, and green technologies further strengthens its position. Local manufacturers like VinFast are advancing electrification and eco-friendly transport. Investments in AI-driven software for energy-efficient EVs and government initiatives to increase the digital economy’s share of GDP to 30% by 2030 highlight the country’s commitment to innovation in automotive software. With supportive policies, a growing talent pool, and cutting-edge technology investments, Vietnam is poised to become a leader in automotive software development.

Case Study: TMA Solutions' Success in Delivering Automotive Software

TMA Solutions, a leading software outsourcing company, has developed expertise across several key areas of automotive technology, including navigation, telematics, Advanced Driver Assistance Systems (ADAS), embedded software, traffic management system, AI annotation and AI applications for automotive use. These capabilities are integral to advancing connected and autonomous vehicle technologies and urban traffic analytics.

As demonstrated in Automotive Case Study, TMA Solutions has successfully delivered complex software solutions for the automotive industry. Their work emcompasses critical functionalities such as level 3 automatic driving, automatic parking, surround view camera, cross traffic monitoring, and traffic sign/light detection. TMA also bring proven expertise in ECU function development, embedded software development on AGL and AAOS, especially in module programming for automotive ECUs, cameras, LIDAR, and sensors.

On the software side, TMA Solutions has contributed extensively to the development of embedded systems for infotainment, HVAC, media players, alongside AI-driven technologies like image recognition, analytics and 3D mathematical algorithms. These projects highlight their ability to handle sophisticated automotive software challenges, reinforcing Vietnam’s reputation as a reliable outsourcing destination for the automotive sector.

With its robust capabilities in hardware, software and AI development, TMA Solutions exemplifies how Vietnamese companies are helping shape the future of automotive technology, positioning Vietnam a key player in the global automotive software outsourcing landscape.

Conclusion

Vietnam is strategically positioned to become a global leader in automotive software outsourcing. With its skilled workforce, cost-effectiveness, and proven expertise demonstrated by companies like TMA Solutions, Vietnam is increasingly recognized as a reliable destination for high-quality software development. As global demand for advanced automotive technologies like EVs and ADAS grows, Vietnam’s focus on innovation and strong international partnerships will be key drivers in shaping its future in the global automotive software market.