Today there is currently a serious, global tech skills shortage– from software developers to data engineers and programmers. What was a looming issue pre-pandemic has now become a serious challenge to the digital evolution driven by the pandemic, and a pain point keenly felt across Southeast Asia.
In today's post we take a look at the Tech Talent Crunch; the causes, the sticking points and some potential solutions for a tech-led post pandemic world.
Well before the Covid19 pandemic arrived on all our doorsteps in 2020, analysts had identified a tech skills shortage in the global workforce. According to Code.org, a non-profit in computer science, there were more than 500,000 open computing jobs in 2017 in the US - in sectors as diverse as agriculture and banking - but only 50,000 computer science graduates coming through per year. Then the pandemic happened and, in the words of Scott Engler from Gartner:
“COVID-19…escalated digital initiatives into digital imperatives, creating urgent pressure on HR leaders to work with their CEO, CFO and CIO to rethink skills needs as business models change at light speed”
Now into 2022, and the push for technological and digital transformation has reached an unprecedented level. According the Engler, Covid-19 accelerated the adoption of digital skills by at least five years, with the majority of organisations now requiring these skills. And usually, companies need several people all at once, because you don’t just hire one data or software engineer unless your firm is very small.
Southeast Asia’s Talent Crunch
In Asia, the e-Conomy SEA report (released jointly by Google, Temasek and Bain & Co.) calculated that 70% of the region’s population is now online. With this large, and relatively sudden increase in digital consumption, businesses must engage innovative tech solutions to meet the demand.
However, 68% of hiring managers surveyed in Southeast Asia said it took more than three months to fill an open tech position on their team, while 70% stated that the shortage of tech talent had negatively affected the speed of their product development.
This was backed up by the Digital Talent Summit webinar organised by the ASEAN Foundation and Chinese telecom giant, Huawei, in late 2021. In the “2022 Digital Talent Insight report” released after the meeting, PwC gave details of their survey, revealing that more than 50% of Asia-Pacific chief executives found it difficult to hire digital talent with the right skills.
The report called for more investment into digital infrastructure, while highlighting three country clusters in Asia, grouped according to the Global Connectivity Index (CGI) - an index that compares digital readiness from a national and a business perspective between countries. The clusters were:
Front-runners: Singapore, South Korea and Japan
Adopters: China, Malaysia and Thailand
Starters: Indonesia, India, Vietnam, Philippines, Pakistan and Bangladesh
Thus, the report highlighted the diversity within the region for digital transformation readiness.
Singapore and Malaysia
Singapore was ranked the world’s second most digitally competitive country in the IMD World Digital Competitiveness Ranking 2020, just one spot behind the United States. The city state’s tech hub was becoming the Silicon Valley of Asia. Major tech companies such as Tencent Holdings, Bytedance and Zoom either made their way to Singapore or established their regional/global headquarters there in 2020.
However, the pandemic exacerbated the existing talent shortage issues – especially when closed borders made it almost impossible to hire highly sought-after candidates from abroad to meet local demand. As a result,
Singapore was the only East Asian country to lose some ground in in the IMD rankings for 2021, mainly due to drops in technology and knowledge - suffering a sharp decline in training and education.
According to e27.co (a media site for entrepreneurs and SMEs), job sites in Singapore see up to 500 new tech vacancies each week, while software engineers revealed that they receive up to three offers each day from recruiters. However, the country produces only 2,800 infocomm graduates yearly, creating a colossal shortfall in supply.
Meanwhile in Malaysia, the Malaysia Digital Economy Corporation’s (MDEC) Digital Talent Snapshot 2021 reported that more than half of the digital talent in Malaysia is currently found in Kuala Lumpur and Selangor region (also known as the Klang Valley), leaving little to no skilled-talent supply in other states.
According to Oliver Liu, Vice Chancellor of the Huawei ASEAN Academy – a learning centre dedicated to equipping talents with digital skills - the “12th Malaysia Plan” revealed in September 2021 sets out to boost the Gross Domestic Product (GDP) contribution of the digital sector from 22.6% to 25.5% by 2025. However, the proposed skilling-up process lags behind the accelerated digital transformation pace caused by the pandemic.
He notes that the Global Skills Report, released by Coursera last year, ranked Malaysia in the 46th spot in global skills – way behind the two higher-ranking ASEAN members, Singapore (10th) and Vietnam (20th).
Cause & Remedies
1. Training and accessibility
First and foremost, the lack of skills training within the region must be rapidly addressed. However, most school curriculums don’t deliver the technical sophistication that many tech jobs require. Rather than attempting to bring the national education institutions up to speed, it is likely that both Singapore and Malaysia will rely heavily on public-private joint ventures to drive skills training and adoption.
For example, The Huawei ASEAN Academy plans to train 50,000 digital talents in Malaysia from 2021 to 2025, averaging 10,000 new experts a year. Meanwhile, Google Cloud has teamed up with Singapore’s national artificial intelligence programme to build up the country’s talent pool in machine learning and AI.
With that said, it is also important for schools and universities to foster relationships with corporates – be that through course sponsorships, internships and working student programmes, or though the direct provision of on-site training. A more complete embracing of STEM subjects and occupational training needs to happen across the broad, which will make tech jobs more accessible to a broader range of students from different backgrounds.
For many, the idea of tech professionals conjures up nerdy white men sitting in front of computers all night.
While the industry has made great strides in racial diversity over the last decade (with white professionals no longer in the majority in the US, in fact), the industry does remain predominantly male.
According to Techwire Asia, women account for only 32% of Southeast Asia’s tech space. However, this figure is even lower at the global level with an average of 28%.
As BCG’s most recent research on the subject states:
“… the region is starting from a relatively strong baseline of gender diversity. In fact, the participation of women in technology across Southeast Asia is slightly higher than global averages, in terms of both the number of college graduates with technology degrees and the overall tech workforce. Notably, the region leads several mature Western markets in female inclusion, including the US and UK.”
According to a 2022 ComputerWeekly survey, diversity remains a work-in-progress at many ASEAN firms, with just a third of those surveyed addressing age and ethnicity-related issues. About half are tackling gender equality, while just a third of respondents said their organisations are paying women and men with similar qualifications equally. This seems absurd when it comes to core tech skills, which you either have or you don’t.
Of course, diversity goes well beyond gender into racial diversity, ability diversity etc. Efforts to make tech roles both more appealing and more accessible, and indeed more inclusive, to a diverse talent pool must start from the ground up, including more inclusive language in job advertising to diversity policies within companies’ codes of conduct.
Another trend in Southeast Asia is the penchant for companies to have their workforce on-site, working full time. This excludes a vast talent pool (predominantly female – as discussed in previous blogs) of those who need to stay at home and can’t work a full-time week.
More than 70% of ComputerWeekly’s survey respondents in ASEAN noted that their life priorities (such as children) and work-life balance have become more important than pre-pandemic, but only 40% reported having the freedom to choose where and when they work. Just 25% have the flexibility to adapt their working hours according to their work-life balance.
With the move to remote working during the pandemic, and the very nature of many tech roles, such as coding, which can be carried out remotely, it is time that the region recognised the need to grant access to part-time, remote working individuals, as well as allowing flexibility to existing employees.
4. Nurturing hires
As we’ve said, there is now a hiring war on between companies competing for the same talent in their domestic markets. Instead of smaller firms trying to out-compete the bigger companies, businesses should be focusing on their own ability to nurture the next generation of world-class tech professionals.
Employers need to work on internal training and development programmes that simultaneously develop the skills they have a high demand for, while also offering the candidates a bigger incentive for joining their firm – improving their career potential with upskilling. This is an area where many firms fail when it comes to attracting talent in a job market with very high levels of turnover and mobility.
In fact, Glassdoor, via research with Brandon Hall Group analysts, reports that effective employee onboarding, with adequate training and mentoring that extends beyond the first week, increases staff retention by 82% year on year. Businesses need to invest in hires properly to see a longer term return on that investment.
5. Nurturing the domestic market
Natalia Mila, Chief Technology Officer at Upstream, writes in Forbes.com that:
“When companies struggle to find talent in highly competitive domestic markets, their attention often turns to other markets that are talent-rich but also have high churn rates. For instance, when the U.K. and Singapore, both leading fintech markets, need more talent through the door, they turn to places like Lithuania. More than 80% of Ukraine's prospective web developers learn how to speak English in anticipation of working for U.K.- or U.S.-based firms.”
Mila notes that "talent suck" makes it difficult for less developed target regions to progress with their own digital transformation, while businesses that poach their talent from other geographies can create a skills vacuum in their own region that will come back to bite them – exactly the situation we see in Singapore today.
This also extends to re-skilling programmes. For example, Singapore has made headway in helping workers who lost employment during the pandemic develop skills for FinTech jobs, but a report by Accenture and the Singapore FinTech Association said companies are underinvesting in training their existing employees, with 69% spending less than SGD $1,000 per year per worker, lower than the global average.
This is, again, a Clarion call to businesses to engage with talent development programmes, such as through internships and mentoring programmes domestically, to build out a talent pool that will be more likely to stay within its own country, as well as to develop more transferable skills within their own workforces. After all, many digital transformation jobs are not technical, instead requiring project management skills that can be transferred from other disciplines.
6. Financial Reward
Chonladet Khemarattana, President of the Thai Fintech Association, estimates that a computer science graduate from the Thailand’s top university could receive a starting salary of 50,000 to 60,000 THB (USD $1,480 to $1,780) per month – twice the average wage for other Thai professionals.
Likewise, "A lot of our talent has gone to Singapore, where the pay is three times more than in Malaysia," said Karen Puah, president of the Fintech Association of Malaysia.
Less than a third of IT professionals in Southeast Asia plan to stay in their current jobs this year, reports ComputerWeekly, with 60% open to new opportunities. Across the region, 53% received a salary increase and 45% received a bonus in 2021. About 70% expect an increase in remuneration next year, but it is unclear if higher compensation is sufficient to retain them in his highly mobile market.
Clearly, it is a candidate-led market at the moment, and many will take that opportunity to drastically increase earnings – that is to be expected. But what is clear from this is that salaries can easily escalate out of control. With so many workers having reported that their priorities have switched to better work-life balance, and with Gen-Z’s focus on ethics, diversity and inclusivity, it makes it very clear that companies will make little progress simply by offering higher salaries.
Rather, it is now up to employers in the region to adept their own perspective sand outlooks, and to re-invest in the local talent pools to ensure a pipeline for skills for the future, or risk being swept aside by the tide of technological change.