Why Vietnam is a Good Destination for Netflix to outsource its Server Firm.

Why Vietnam is a Good Destination for Netflix to outsource its Server Firm.

This paper explores why Vietnam is the best country for Netflix to outsource its internet server firm. First and foremost, Vietnam offers a cheaper and steady supply of labour. The highest minimum wage in Vietnam is about “VND 2, 350, 000” while the modest wage in Vietnam is about “VND 1, 800, 000” per month which translates to about US$ 111 and US$ 85 a month, respectively (Wageindicator Foundation). These figures imply that the minimum US $7.25 an hour labour cost that workers in the United States earn is more than 10 times the Vietnamese minimum wage. The comparative analysis of the United States and Vietnamese labour costs also imply that even if Netflix will pay its local Vietnamese’s information technology specialists four times the highest minimum wage, the Vietnamese labour costs will still be cheaper compared to the United States’. Therefore, Vietnam is the best destination for Netflix’s project.

Secondly, Vietnam has a well developed telecommunication infrastructure. Telecommunication Companies like Cisco have already installed relevant infrastructure that will make. For example, Cisco’s latest DWDM (Wavelength-division multiplexing) technology to eases the traffic and enhances internet speed. At the same time, Cisco has thousands of IT-professionals who are also Vietnamese from which Netflix can acquire its staff to operate its server project. The Vietnamese government is also committed to improving information technology in the county (Boymala, Bill and Dieu 408-410). Owing the existing technological infrastructure and the government’s commitment to improve IT Vietnam would be the most appropriate destination for Netflix’s server project; that is, the existing infrastructure will sustain the project.

At the same time, Vietnam has expanded its energy-related infrastructure thereby making the country energy-sufficient. For example, Vietnam produces “11000MW” of power where 45% comes from hydroelectric projects, 25% from the burning of coal and 30% from gas (Maurer, Luiz, and Jennifer 59). Owing to such energy sufficiency, Vietnam is the best destination for Netflix’s server project so far.

In addition, Vietnam is politically stable. Vietnam has experienced relatively a politically stable government since 1980s. This is because the country is governed by the Communist Party which does not tolerate dissidence and civil unrests (Thayer 1-3). As such, the Communist Party government controls power thereby enhancing its political stability and peace throughout the country. Such peace is important for the Netflix’s server project.

Vietnam also borders China which is experiencing a growing economy. At the same time, it is close to countries such as Myanmar, Thailand, Indonesia, and Singapore which are experiencing rapid economic growth. The presence of such stable and promising economy implies that there is a steady improvement in the quality of life in countries bordering Vietnam; a situation that will created a good market for the Netflix’s services if it launches to Vietnam. In other words, Vietnam is strategically located thereby making it an ideal destination for Netflix’s server project.

In conclusion, Vietnam is the best country for the Netflix’s server project because of the presence of cheap and skilled labor, existing IT infrastructure, and stable electricity supply. In addition, Vietnam enjoys a stable political environment that would not only offer a conducive environment for economic growth, but also minimizes political risks to the server project itself. Additionally, Vietnamese government’s policies are conducive for Netflix’ server project. Overall, the country is strategically located in a region that is experiencing a rapid economic growth thereby making Netflix’s server project a worthwhile investment.

 

Works Cited

Boymala, Jonathan, Bill Martin and Dieu Lam. “The Political Economy of Internet Innovation Policy in Vietnam.” Technology in Society 29 (2007): 407–421.

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Maurer, Luiz, Luiz A. Barroso, and Jennifer M. Chang. Electricity Auctions: An Overview of Efficient Practices. Washington D.C: World Bank, 2011. Print. Bottom of Form

 

Thayer, A. Carlyle. “Vietnam and the Challenge of Political Civil Society.”  Contemporary Southeast Asia: A Journal of International and Strategic Affairs 31.1(2009):  1-27.

Wageindicator Foundation. “Vietnam Minimum Wage with effect from January 1, 2013.” Wageindicator.org. 1 Jan. 2013. Web. 25 Oct. 2013.Top of Form

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