Overcoming IT Recruitment Challenges in Southeast Asia: Solutions for Tech Companies

Even though big companies like Huawei are pouring money into Southeast Asia (SEA)’s booming startup scene, finding enough skilled IT workers is still a major challenge. This article explores the ways companies expanding into this market are tackling this issue, from hiring people remotely to making sure they find the perfect fit for each role. 

Huawei, a leading tech giant, is investing USD 100 million over the next three years to bolster the startup scene in Asia with the goal of improving its stake in the domain of cloud computing. The funding will target eight countries in Asia-Pacific:

• Vietnam
• Thailand
• Malaysia
• Singapore
• Indonesia
• Sri Lanka
• Hong Kong
• Philippines

The investment will aid budding startups by providing cloud resources and partnering with VCs (Venture Capitalists) and incubators.

Huawei’s investment also includes a cloud development program aimed at training 10,000 programmers in cloud technologies through hackathons and university programs. The company is one of the few that aims to tackle a key challenge in recruiting Southeast Asia’s tech talent. 

However, despite the investments being made in Southeast Asia, the IT recruitment landscape in the region remains challenging, with the main obstacles being inadequate resources, high competition, salary expectations, cultural and diversity mismatches, and labor regulations.

Talent Shortage

A recent report by Glints, a prominent Southeast Asian job platform, suggests that the tech talent shortage in SEA may not be as critical as initially perceived. Despite the recent layoff, the demand for tech talent remains steady due to SEA’s position as a regional hub for international businesses and its thriving startup ecosystem.

Oswald Yeo, Glints’ CEO and co-founder, believes that the recent downturn in the tech industry is a necessary correction after a period of fast growth caused by the recent influx of capital. He also highlights that companies in SEA are among the most agile in adapting to the changing macroeconomic climate, responding promptly to industry trends.

The report also reveals that certain management functions, such as operations, finance, human resources, sales, and marketing, have been impacted more than others. 

Solutions

Due to the pandemic, many companies have turned to remote hiring in search of top tech talent. Vietnam and Indonesia have become popular destinations, as there have been fewer layoffs in these countries, making them attractive options for companies. The trend of remote hiring is expected to continue, saving on human and financial capital.

Glints has seen a tenfold increase in remote job opportunities over the past year. Companies are taking cost-saving measures and capitalizing on the benefits of remote hiring, for example, by turning to fixed-term contracts of around one year to manage their financial outlook.

High competition for talent

Below is a table detailing the approximate number of startups in SEA’s key countries.

Country	Year	Number of startups
Singapore	Q3 2021	4,000+
Indonesia	2022	2,300+
Malaysia	Q3 2021	-3,000
Vietnam	Q2 2022	3,800
The Philippines	Q3 2021	~700

According to data from the third quarter of 2021, Singapore boasts a thriving startup scene, with more than 4,000 startups and over USD 4.13 billion in equity funding. Over the last decade, Singapore has transformed into a significant startup hub, with the number of startups receiving over one million dollars in funding more than tripling between 2015 and 2022.

Indonesia has secured the fifth spot globally for having the highest number of startups, with a current tally of 2,341. Malaysia, on the other hand, has an estimated 3,000 startups, while Vietnam’s startup ecosystem is expanding rapidly, with over 3,800 startups bringing in billions of dollars worth of investment into the country. Lastly, the Philippines has approximately 700 startups as of October 2021.

Solutions

To succeed in a competitive business environment, it is crucial to focus on survival. According to SaaS Academy, most businesses fail within their first five years, making it critical to focus on longevity. It’s important to understand that even large companies can face challenges and may need to pivot to survive.

Making efficient decisions and avoiding major roadblocks that could potentially lead to fatal mistakes is recommended. Rather than copying your competitors, you should focus on gathering customer feedback and insights to improve your products or services.

Moreover, focus on hiring the right talent. The first 12 employees you hire are particularly important in determining the success of your business, so take the time to hire the right people for the right roles.

By prioritizing your customers, team, and the survival of your business, you can increase your chances of success. Worrying about your competitors is counterproductive since you cannot control their actions. Instead, focus on what you can do to improve your business and stand out in the market.

High salary expectations

Over the past few years, the tech industry has seen a considerable rise in average wages. Management-level roles are typically paid the highest salaries, while web developers and Salesforce Developers have experienced some of the most significant increases.

However, there are still notable disparities between the salaries of men and women in certain tech positions. For instance, in roles such as app developer, Salesforce developer, product designer, UX designer, and database administrator, men earn an average of at least USD 8500 more than women. It is also worth noting that larger companies with 501-1000 employees generally offer higher pay for most tech roles.

Solutions

In today’s highly competitive job market, job seekers have the luxury of choosing employers who meet their salary expectations. That’s why employers should provide fair and transparent salary policies that cater to the needs of their workforce.

Offering competitive and equitable practices is what employees expect and deserve and helps businesses meet and exceed their recruitment and retention goals. Providing a healthy work environment that includes fair compensation practices is crucial for promoting the well-being of both the company and its employees.

Cultural fit

HR professionals in Southeast Asia face the long-standing challenge of managing a diverse workforce with different cultures, languages, and workplace norms. Despite some similarities, some of them are unique and vastly different. Therefore, HR professionals must overcome language and cultural barriers to achieve successful cross-cultural communication and collaboration.

Not all SEA countries speak English widely, so HR professionals should consider using translators to bridge the language gap. In addition, they must conduct thorough research on each country’s cultural and workplace norms to avoid conflicts arising from differences.

A diverse workforce brings a range of perspectives, thoughts, and ideas to the table. However, to maximize the potential of diversity, HR professionals must ensure that cultural and language barriers are well-researched and bridged. They are responsible for promoting inclusivity and equal treatment for all employees to ensure a healthy work environment.

Solutions

Tomas Svoboda from the Entrepreneurs’ Organization shared his biggest challenge of adjusting to cultural differences when expanding his business from his home country, the Czech Republic, to Vietnam. “Everything differed greatly — from the work environment to the communication style,” he said. He further emphasized the need for businesses to adapt to market conditions and traditions when expanding into Southeast Asia:

• Invest in great people with specialized skills to drive your business forward. “I consider myself fortunate to have recruited the best people for the job, individuals who excel in their respective fields, surpassing my own abilities”, he added.

• Learn about the culture through the target market before starting a business there. You can also prepare your mindset by enrolling in courses or attending seminars.
  
• Adapt at every turn by being resourceful, optimistic, and flexible while expanding a business in Southeast Asia. Businesses should leave no stone unturned and always expects the unexpected.

Lack of diversity

Despite progress in promoting diversity in ASEAN firms, many still face challenges related to age, ethnicity, and gender equality. A recent survey found that only a third of companies have addressed age and ethnicity-related issues, while around half are making efforts to tackle gender inequality. Additionally, only a third of organizations surveyed reported equal pay between men and women with similar qualifications.

Moreover, the survey revealed that the attitudes towards women in the IT industry need improvement, as only 21% of respondents believe that men should play a more active role in helping women integrate into IT departments. Furthermore, only 20% of those surveyed think that hiring more women can help alleviate the skills shortage.

Solutions

Developing a recruitment strategy for diversity involves recruiting candidates free from any preference towards or against individuals or groups of candidates. Hence, it is imperative to prioritize merit-based hiring and provide fair opportunities to all applicants, irrespective of their background. The benefits of this approach are significant, including:

• 21% higher chance of increased profitability
• 17% higher chance of becoming innovation leaders
• 90% of candidates prefer to work for a diverse company.
• Diverse organizations are 35% more likely to outperform competitors financially.

A strong recruitment strategy for diversity can improve team performance and promote innovation in any industry.

Restrictive labor policies

Although Southeast Asia’s growing middle class is increasingly entrepreneurial, its progress in becoming a global tech hub is hampered by the lack of labor market mobility within the region, according to Vietnam Investment Review.

This lack of mobility results from restrictive labor policies in some countries and a lack of political and public initiatives for increased labor mobility. There is a concern among many that workers will migrate to richer countries, leading to increased competition and instability, while poorer countries face a brain-drain situation where their most educated workers leave.

With no effective labor mobility programs, Southeast Asian countries must establish regional standards regulating various industries. By instituting common guidelines across ASEAN, regional businesses and industries could thrive, a larger and more skilled workforce could be developed, and interconnectivity could be achieved.