Low-skilled Vietnamese laborers at risk of losing jobs to automation: report

Vietnam has been named the sixth most attractive outsourcing haven in the world by the latest Global Service Location Index, but the future of its low-skilled labor force remains in doubt in the face of automation.

The index, compiled by consulting firm A.T. Kearney, ranked 55 economies for outsourcing based on metrics in three categories: financial attractiveness, people skills and availability, and business environment.

Vietnam has jumped five spots from the previous year and is back in the top 10 for the first time since 2013, marking the best result the country has ever achieved.

India, China and Malaysia were the top-ranked offshoring destinations.

"This growth of Vietnam is, in part, due to the low cost of its labor, which is half of that in India and China’s tier 1 cities,” the report noted.  

However, it also pointed out that quality, availability and language capabilities in Vietnam all lagged behind most of its peers in the top 10.

Language skills among Vietnamese laborers have significantly improved over the past years, according to the report; however, it is still not enough for the country to make a breakthrough.

The coming decade is expected to usher in a new era of automation, which may elbow out low cost and low-skilled labor, A.T. Kearney warned.

"It is important for Vietnam to ensure that its workforce continues to pick up new skills to survive in the new world," it said.

"While automation is expected to replace some jobs, it will also create new ones that are required to manage more sophisticated technologies, bringing higher salaries to workers." 

Vietnam has seen a growing popularity for the business process outsourcing industry in recent year. The sector has increased at a rate of between 20 and 25 percent annually over the past decade.

Japan remains the Vietnam's primary client, so continued growth of the sector will depend, in part, on the health of the Japanese economy.

New Zealand is fast-becoming a top client as well. Since 2016, Augen Software Group has opened a technology development center to service enterprise clients in Vietnam and other Southeast Asian countries.

Kiwi Technology Center, described as a hub for New Zealand tech companies, has also invested in Vietnam and Southeast Asia.