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How to Build a Tech Team in Vietnam Without Setting Up a Company

Vietnam offers international technology businesses opportunities to expand development capacity, access technical talent, and explore the Southeast Asian market. For those considering a long-term presence, building a local team can be an important first step.

A European SaaS business, for example, may want to recruit software developers, a technical lead, and a quality assurance specialist in Vietnam. However, its leadership may prefer to evaluate local capabilities and operating costs before committing to a legal entity. Several models can support this approach, depending on the nature of the work, employment arrangements, and business objectives. Understanding these options helps foreign firms organise their Vietnam team setup while managing operational, legal, and tax risks.

Building a Vietnam Team Without a Local Legal Entity

Foreign technology businesses can engage Vietnamese professionals before incorporating locally. Available options include independent contractors, technology outsourcing, and certain employment arrangements involving local providers. The appropriate structure depends on the work being performed, the relationship with local personnel, and the business’s intended activities in Vietnam.

For example, a software firm headquartered in France may engage Vietnamese developers through independent contractor agreements or collaborate with an outsourcing provider. The parent organisation can continue managing its products, customers, and commercial strategy while the local team supports development activities. However, businesses need to clarify who signs contracts, directs daily work, handles payments, and assumes employment and tax obligations. A software development team delivering defined technical projects may require a different arrangement than a sales operation negotiating contracts with Vietnamese customers.

Choosing a manufacturing partner is only one part of building a business relationship in Vietnam. Foreign companies also need to understand the local business environment, assess potential risks and determine how to structure their activities in the market.

This video discuss common challenges foreign investors may encounter when entering Vietnam and what to consider before committing to the market.

Available Models for Vietnam Team Setup

Each operating model offers a different balance of flexibility, management control, cost, and administrative complexity. Foreign technology firms should assess these factors against their technical requirements and intended commitment to Vietnam.

Independent Contractors

Independent contractors can provide specialised expertise for clearly defined projects. A foreign firm may engage Vietnamese developers, UI/UX designers, or technical consultants under service agreements covering deliverables, milestones, payment terms, confidentiality, and intellectual property ownership. This approach offers flexibility for short-term assignments and specialist contributions without requiring a permanent internal team.

However, contractor arrangements require careful management. Under Article 13 of Vietnam’s Labour Code, an agreement may be considered an employment contract when the actual relationship involves paid work, wages, and management or supervision, regardless of its name.

A business treating contractors like regular employees through close supervision, fixed working arrangements, and ongoing managerial control should assess the risk of employment reclassification.

Technology Outsourcing

Technology outsourcing allows foreign firms to collaborate with established Vietnamese service providers for software development, product engineering, testing, and other technical activities. The client defines its requirements while the local partner organises resources and manages delivery according to the agreed scope. For example, a European SaaS business may assign part of its product roadmap to a Vietnamese development partner, covering backend development, application testing, or additional software features.

This model provides access to existing technical resources and reduces the immediate need for local management infrastructure. The main trade-off is reduced direct control over personnel allocation and internal delivery processes. Clear agreements covering technical standards, code ownership, security, reporting, and deliverables are therefore essential. Businesses should also evaluate the partner’s communication practices, project management capabilities, and ability to maintain consistent quality.

Employer of Record (EOR)

An Employer of Record is another arrangement international businesses may encounter when exploring Vietnam hiring options. EOR providers generally handle employment-related functions such as contracts, payroll, and statutory administration while the foreign client coordinates business activities. The model may appeal to organisations seeking access to local talent while relying on an external provider for employment administration.

However, the legal structure requires careful attention. Where an arrangement constitutes regulated labour subleasing, Vietnamese law imposes licensing requirements and restrictions on permitted occupations. Appendix II of Decree 145/2020/ND-CP lists 20 permitted job categories, including programming production machinery systems, while 

Businesses should verify the provider’s legal structure, intended positions, and actual working arrangements before proceeding.

Representative Office

A representative office provides a formal presence in Vietnam for certain non-commercial activities, including liaison, market research, and business promotion. It may suit a technology firm exploring partnerships or evaluating local opportunities before making a larger investment. However, its permitted scope restricts direct revenue-generating activities, and the office requires a formal licensing process.

Businesses planning software development or commercial delivery should assess whether their intended operations fit within those limits. A representative office also introduces ongoing administrative requirements, making it different from a purely contractual hiring or outsourcing arrangement.

Comparing Vietnam Team Setup Models

The following comparison summarises the practical differences between the four approaches. The timeframes and cost assessments are indicative planning estimates rather than guaranteed onboarding periods.

Model	Estimated setup time	Direct control	Relative cost	Main consideration
Independent contractors	1–3 weeks	Medium	Low initial overhead	Employment classification and IP
Technology outsourcing	2–4 weeks	Medium	Project or service fees	Delivery quality and code ownership
EOR	2–4 weeks	Potentially high	Salary plus provider fees	Legal structure and job eligibility
Representative office	1–2 months	High within permitted activities	Office and administration costs	Restricted business scope

Actual timelines depend on personnel availability, provider readiness, documentation, and regulatory requirements. No model guarantees lower overall costs or eliminates compliance obligations. Intellectual property protection also depends on contractual terms, access controls, and actual operating practices.

Permanent Establishment Risk: A Critical Tax Consideration

One of the most important considerations for a foreign business operating without a Vietnamese entity is Permanent Establishment (PE) risk. A PE is a taxable business presence that may arise when a foreign enterprise conducts business through certain activities or arrangements in another jurisdiction. Vietnam has a broad domestic definition covering fixed places of business, certain service activities, and representatives performing specified functions. Applicable double taxation agreements may modify the assessment.

For technology businesses, the concern is whether local activities create a taxable presence for the foreign parent. Maintaining an office used for core business functions, authorising personnel to regularly conclude contracts, or providing services locally through personnel over an extended period may increase PE exposure. Consider a European software firm engaging five developers in Ho Chi Minh City. A genuine outsourcing arrangement may receive a different tax assessment than an operation where the foreign parent directly runs a local office and conducts its own business through that location.

Direct supervision alone does not automatically create a PE. The overall arrangement, personnel authority, location, duration, business activities, and applicable tax treaty must be assessed together. If a foreign enterprise is considered to have a PE in Vietnam, Vietnamese corporate income tax may apply to income within the relevant taxable scope, alongside additional reporting and compliance requirements.

Businesses should therefore seek professional tax advice before deploying a local team, particularly where personnel will perform core business functions, manage customers, or represent the foreign parent commercially. Clear documentation helps explain the intended operating structure, although the actual activities remain central to the tax assessment.

Paying Vietnamese Contractors and Outsourcing Partners

Cross-border payments are another practical consideration when a foreign business has no local bank account or Vietnamese entity. The payment process depends on the recipient’s legal status, contractual arrangement, and applicable tax obligations.

A foreign client may pay a Vietnamese independent contractor through an international bank transfer or an appropriate cross-border payment service. The parties should agree on payment currency, bank charges, supporting documents, and the contractor’s tax obligations. When working with a registered Vietnamese outsourcing provider, the foreign client generally pays the contracted service fees according to the supplier’s invoice and agreed payment schedule. Contracts should specify milestones, currency, payment terms, and the documents required to support each transaction.

Foreign Contractor Tax (FCT) also requires clarification. Vietnam’s FCT framework generally concerns qualifying income earned by foreign contractors, including situations where Vietnamese businesses pay overseas service providers. It does not automatically apply simply because a foreign client transfers money to a Vietnamese contractor or outsourcing partner.

Businesses should assess the recipient’s legal status and applicable Vietnamese taxes separately while maintaining clear contracts, payment records, and appropriate invoices.

Key Considerations Before Setting Up a Vietnam Team

Choosing an operating model is one part of the process. Foreign technology firms also need to determine how their local workforce will function within the wider organisation. This includes defining technical requirements, reporting lines, decision-making authority, and procedures for coordinating with headquarters. Regular project reviews, shared development tools, and documented approval processes can help maintain consistency across distributed teams.

Intellectual property and data security require particular attention. Agreements should clearly address source code ownership, confidentiality, third-party components, and access to internal systems. Where personal data is processed, relevant obligations under Vietnam’s Personal Data Protection Law No. 91/2025/QH15 and Decree No. 356/2025/ND-CP, both effective January 1, 2026, should also be considered.

Employment classification, tax exposure, and payment requirements should be reviewed alongside these operational matters before local activities begin.

A Practical Roadmap for Vietnam Team Setup

Foreign technology businesses can approach their initial operations as a structured project, using an early operating phase to evaluate local capabilities before making a larger investment.

The process begins by defining the team’s purpose, technical requirements, budget, and expected deliverables. These objectives help determine whether the business needs temporary project support, an outsourced development team, or a dedicated long-term operation. Once the appropriate model has been selected, the next stage involves choosing suitable partners or personnel, finalising agreements, and introducing reporting and project management procedures.

Performance should then be assessed against the original objectives, including deliverable quality, project timelines, communication, operating costs, and access to additional expertise. The results provide a basis for reviewing whether the existing structure can support further growth or whether the business requires a dedicated Vietnamese entity.

Transitioning to a Local Legal Entity

As operations develop, incorporation may become relevant to a technology firm’s long-term strategy. A business initially working with an outsourced development team may eventually decide to create a dedicated engineering centre, while another may expand into local sales, customer support, or regional management.

Growing headcount, direct employment needs, commercial activities, and investment plans can influence this decision. Incorporation also introduces additional administrative, financial, and compliance requirements that should be evaluated against the intended scale of operations. An initial Vietnam team can provide useful information about local capabilities, management requirements, and operating costs before a larger commitment.

Local support can be valuable during this process. MoveToAsia provides market entry consulting and local business support, while FVSource focuses on outsourcing, market entry, and operational support. Acclime offers incorporation, accounting, payroll, and corporate compliance services. Technology businesses developing hardware or physical products may also consider Sourcing Agent Vietnam for manufacturer identification and production-related assistance. The appropriate support will depend on the organisation’s objectives and intended activities in Vietnam.

Conclusion

Building a tech team in Vietnam before incorporation can help international businesses evaluate local capabilities and prepare for expansion. Independent contractors, technology outsourcing, and other operating arrangements offer different levels of flexibility and control, each requiring careful consideration of employment, intellectual property, payment, and tax obligations.

A clear operating structure, effective management, and professional advice on potential PE exposure can help foreign businesses make informed decisions about their initial activities and long-term presence in Vietnam.