Could Vietnam soon rival the likes of India in the ever-popular world of outsourcing? The Socialist Republic of Vietnam has emerged on the scene as a lower-cost alternative to their Indian Counterpart.

According to Hewitt and Associates’ annual salary increase survey Indian professionals enjoyed the highest average pay increases in Asia-Pacific, with the Information Technology sector raking in the biggest share of that increase. You may not see anything wrong with this scenario. In fact, if you work in IT in India this is probably great. But highly skilled labour at low cost has been the main attraction for foreign and Indian companies alike, hoping to take advantage of Business Process Outsourcing (BPO). For countries like Vietnam this is a golden opportunity to become as synonymous with BPO as India has become.

Many expect great things in 2005 for Vietnam. The International Data Group (IDG) predicted the country could rank fifth in IT market growth behind Argentina, Turkey, Russia, and of course, India. The south-east Asian nation’s potential hasn’t gone unnoticed. In February Microsoft Vietnam announced they would donate $37,000 US and $63,000 US worth of software to help the northern Thai Binh province implement an IT development project.

The money, which in Vietnamese currency amounts to over 584,000,000 VND and more than 995,000,000 VND respectively, will provide elementary computer training courses for youth from disadvantaged families. The project is expected to train about 1,250 young people over the next three years. Considering the population of Vietnam is over 80 million, this initiative may not seem like it could make much of a difference. However, it’s a sign that the country and companies like Microsoft Vietnam are recognizing that highly skilled young people are the key to a prosperous future.

Vietnam has big plans for growth and recently signed a free-trade agreement with India. Both countries hope that bilateral trade will reach $1 billion US by next year. A representative of the Vietnamese embassy in India said through the agreement the two nations could promote bilateral trade in industries like information technology.

Time will tell if Vietnam will eventually eclipse its new free-trade partner in BPO. Even with an average increase in pay for IT professionals in India, along with the rising value of the Rupee, many still think India will remain a mecca for BPO. In the meantime, Vietnam is definitely considered a contender.