Vietnam has taken top spot in the Business Process Outsourcing (BPO) and Shared Service Location Index of Cushman & Wakefield.

Vietnam ranks first in the company’s Where in the World? Business Process Outsourcing and Shared Service Location Index, followed by the Philippines, Bulgaria, Romania, Peru and Malaysia. Vietnam was fifth last year.

The report said with wages lower than some other Southeast Asian countries, Vietnam has established an offshore destination that offers the best quality to cost ratios for foreign companies.

With around 1,000 software companies employing more than 80,000 employees, Vietnam is one of the world's largest software exporters and the second largest software outsourcer for Japanese firms.

According to Cushman & Wakefield, though Vietnam cannot offer the lowest software outsourcing cost, it has a competitive edge in comparison with other regional countries, especially when costs in India and China tend to rise.

Other advantages of Vietnam are that the country has a strong supply of available labor and 1-1.5 million people enter the labor market a year.

Josh Lieberman, president of KMS Technology, an IT services provider with offices in Atlanta and HCMC, earlier said on TechCrunch that it is no surprise when Vietnam has emerged as an alternative destination in the face of rising costs and attrition rates in popular offshore destinations like China and India.

According to Lieberman, Vietnam is an attractive destination for offshore services due to its modern IT skills and low attrition rates.

Vietnam is having big opportunities in the global IT offshore market, according to Vietnamese software companies. Japanese companies are shifting IT outsourcing to Southeast Asia.

The IT research company Gartner put global spending on IT services at US$980 billion this year.

According to Gartner, 67% of manpower for the IT industry will come from Asian countries and Vietnam will be one of the five new outsourcing destinations in this region.

Many Vietnamese companies have readied to cash in on big chances of IT offshoring and FPT is one of them. FPT targets revenue of US$1 billion in overseas markets and is training 10,000 engineers for the Japanese market as part of a strategy to reach the goal.