Working in tech continues to appeal to jobseekers all over Asia. A quick look at LinkedIn’s top 15 employers in Singapore in April revealed one in three are from the tech sector. Governments in Asia are also increasingly digitalizing their economies with e-commerce at the forefront, and countries such as the Philippines, Malaysia, India and Korea rank amongst the top 10 in the world for e-retail growth. While working in tech offers jobseekers the opportunities for growth and upward mobility they crave, recent developments in the technology space have provided much food for thought.
Tech share prices and layoffs from tech start-ups are at a level not seen since the dawn of the COVID pandemic, as investment sentiment turn bearish. Does this portend the end of the tech industry’s heydays? Will tech jobs in Asia lose their shine?
According to Mercer’s 2022 Total Remuneration Database (TRD) survey, meant for High Tech companies across the Asia Pacific region, voluntary attrition rates in the high-tech industry are on an upward trajectory compared to pre-pandemic levels, layoffs notwithstanding. Across Asia, China (20%) and India (17.6%) reported the largest number of people moving on, often to competitors. The events of the past couple of months represent at most a “pause” in, rather than a “reset” to, the general direction of travel.
Voluntary Attrition is a concern
*Source: Mercer High Tech Survey- 1st Edition 2022. Note: Average Figures
This is consistent with the growing number of layoffs from start-ups that have made the news across Asia. Crypto.com, a cryptocurrency exchange company based in Singapore, cut 5% of their headcount “to ensure continued and sustainable growth for the long term by making targeted reductions.” Shopee, a multinational technology company focusing mainly on e-commerce, is laying off some employees in its food delivery and online payment teams in Southeast Asia.
Even though start-ups are just a sub-sector of the overall tech ecosystem, it underscores how much tech companies depend on funding to stay afloat in these difficult times. With the specter of a global recession looming due to the crisis in Ukraine and continued supply-chain snarl-ups, investors now require start-ups to have a clearer pathway to profitability before injecting further funding. This is especially the case for start-ups in the “frontier” or “web3” tech space, where investors practice greater conservatism and prudence in financing investment opportunities they are less familiar with. Therefore, in the short term, there will be a “Darwinian” struggle to attract and retain talent as firms seek to defend their turf but only the best-funded start-ups will remain standing.
The recent fall in share prices of big tech companies also raised some eyebrows, with some calling it an overdue correction. Many of these companies expanded very quickly during the pandemic as the ensuing lockdowns significantly altered consumer behaviour. The adoption of remote working practices accelerated while consumer spending habits shifted from travel to goods, particularly via e-commerce. Demand for anything that entertained people at home spiked and Netflix is a great example of how explosive growth can lead to unmet expectations today. The streaming platform rivalled traditional media companies and rapidly expanded its subscriber base during the pandemic. However, its success led to greater competition which subsequently resulted in ‘underperformance’ as Netflix lost subscribers for 2 consecutive quarters in 2022 (Q1 and Q2).
As lives and economies return to normalcy, the expectation is that revenue growth for many of these tech giants including Netflix will slow. Consolidation ahead of an expected recession as the Fed and major central banks look to rein in soaring inflation by tightening monetary policy also added to stock market jitters. For employees – prospective and existing -- of many of these high-tech companies which rely heavily on long-term incentives such as stock options to attract and retain talent, the lower share prices would mean smaller compensation packages.
While market volatility is likely to remain high in the near future, our view is that the longer term impact on big tech will not be terminal.
The demand for tech jobs and talent continues to outstrip supply in Asia. This is evident in the starting salaries for graduates with a computing degree. Comparing Mercer’s data from 2018 and factoring the time it generally takes for one cohort in most locations to complete an average degree course; there has been significant growth, primarily driven by massive hiring in emerging tech markets such as Vietnam (59% increase) as well as lower-tier cities in China (22% increase).
2022 vs 2018
*Source: Mercer High Tech Survey- 1st Edition 2022
^ Annual Base Salary (USD) - Median
Economies across Asia are also becoming more digital. According to research from Google, Temasek Holdings and Bain & Co., the internet economy in South East Asia is projected to double to US$363 billion by 2025, surpassing the previous forecast of US$300 billion. This blistering pace will open up more growth opportunities and put the pressure on non-tech industries to mirror developments in tech such as taking a software as a service (SaaS) approach to enhance product and service offerings.
In conclusion, the fundamentals of the tech sector remain sound. Digitalization is pushing Asia’s continued growth and while this means that organizations have had to transform and change in the way they work, technology is at the heart of that seismic shift and jobseekers looking for a tech role should keep calm and carry on.