Saturday, May 30, 2020

Riding the Tech Wave

Riding the Tech Wave

Why Southeast Asia is the next global hub of technology talents

Southeast Asia (SEA) is starting to enjoy the fruits of its massive demographic dividend. The region’s 650 million-strong population is now at a median age of 25 (Statista 2017). With a booming middle class, falling dependency ratios, and tech-savvy and mobile-first consumers, 3.8 million users are signing up to the internet for the first time at any given month (Techcrunch). These are all signs for an ecosystem ripe for tech disruption and adoption.

It is therefore unsurprising that the region has received a massive influx of venture capital to go after explosive growth opportunities, which has already created eight unicorns to date (and many more in the coming year). Some examples include Tokopedia, Grab, and Traveloka. What is lesser known, however, is the rapid formation of the talent pool supporting these tech-driven solutions.


The push factor for SEA tech talents

In 2018, Alipay rolled out the Tech for Inclusion project to nurture 1,000 tech talents per year in ecommerce, fintech, and cloud technologies over the next ten years in emerging economies, with Indonesia announced as its first destination.

The Indonesian government has also been working on an initiative to embrace the tech revolution; as early as 2016, a nationwide effort was started by president Joko Widodo to create 1,000 startups before 2020. This effort was coupled by many hackathons, workshops, and bootcamps across the country to lure high caliber talents into the digital economy.

In the private sector, multinationals such as AIA, FWD, and Gameloft are paying attention to the rising number of tech talents in Indonesia, and have set up development centers and large offshore IT teams in the country to tap the local talent pools.

Vietnam, another fast-growing economy in SEA, has seen the number of engineers double over the last three years (500 Startups). It now has 250,000 tech talents, and the number of tech job openings has skyrocketed by threefolds over the last few years. Unbeknownst to many, Vietnam has a very high-quality STEM curriculum that lays the foundation to produce strong developers and ranks highly in global coding challenges. Given the rising costs of traditional tech hubs in China and India, many have already chosen Vietnam as an alternative destination for IT outsourcing jobs, which in turn provided more practical, on-the-job training to upgrade the tech talents in the country.


The pull factor

The returning SEA diasporas have been powering the booming digital economies in the region. For instance, Bukalapak, an SME-focused Indonesian unicorn and rival of Tokopedia, scaled its 1,100 strong tech team without any research and development (R&D) centers outside of the country. They did so successfully by filling the leadership ranks with returning engineering talents from abroad to disseminate the best engineering practices from Silicon Valley to its junior engineers. As more and more diasporas are drawn back to the burgeoning SEA economies, they will continue to equip the homegrown software engineers, app developers, and other crucial tech talents with fundamental know-how to build successful startups.

Bukalapak is not the only unicorn building up their tech talent base in SEA. Grab, for instance, based three of their R&D centers in the region: Ho Chi Minh City, Jakarta, and most recently Kuala Lumpur. Lazada’s development hubs are located in Singapore and Ho Chi Minh City. Tokopedia, the Indonesian answer to Alibaba, uses local tech talent.

Labor cost in parts of SEA, where the tech talent pools are the strongest, are still relatively affordable. Take Indonesia as an example: a junior tech person will typically demand a monthly salary starting at 4 million Indonesian Rupiah (US$300), which is significantly lower than traditional IT hub like India and China, or at least 40% more cost effective.


The challenge

There is still a long way to go for SEA to become the next global talent pool for tech. For one, English remains to be a barrier in Vietnam, Thailand and–to a lesser extent–Indonesia (with the Philippines and Singapore as the most likely exceptions). The many obstacles to setting up local entities in some SEA countries have also made it difficult for many global companies trying to get their share in the SEA talent pool. Companies will also need to know where to find the best domain experts in different countries across SEA. One may need to find ecommerce or app development talent in Cambodia, web developers in Thailand, experienced digital marketers in Indonesia, and so on.

For now, it will still require a very nuanced understanding of companies and individuals to fully enjoy the technology talent potential in the region, which is one of the reasons why SEA is not the technology talent hub of the world yet. However, with the young population, growing tech scene and the right policies for technology seemingly in place across the region, there are many reasons to be optimistic about its rapid path towards being the global talent hub for tech.


About the Author

Frederick Ng is currently a Market Launcher at Glints, the leading cross border tech recruitment solution in Asia. Before that, he was an Investor at Click Ventures, a HK based early stage VC investing in US and Asia technology startups, and was a Fellow at Fresco Capital, a global seed fund investing in Healthcare, Edtech and Future of Work related startups.


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