Southeast Asia is home to a variety of quickly growing economies with a diverse range of innovative industries. Owing to this growth, there is an increasing demand for effective and efficient human resources management departments within large organisations, assisted by modern HR tech. This, in turn, has inspired innovation in HR tech startups in Southeast Asia.
The global importance of the Southeast Asian economies featured in a recent report by McKinsey and Company, highlighting the growing attention that ASEAN receives internationally. The block’s combined GDP is likely to rank as the fourth-largest economy in the world by 2050. The report cites several factors responsible for this incredible growth, focussing primarily on productivity improvements and labour force expansions. To maintain this growth—fueled by an expanding labour force—the region will need tech-savvy HR staff, conversant with the state of the art innovations.
As companies compete to attract and retain talent, HR departments face new challenges. A People Matters report concisely describes the situation: “HR today is facing fierce challenges in helping organizations become top destinations for talent, building the workforce of the future, managing an agile organization and retaining top employees, all while providing strategic insight to key decision-makers”.
Singapore’s Arclab discusses the evolving workforce in the region.
The report goes on to describe how the industry is leveraging tech innovations – in the past, many companies used technology to automate routine administrative processes (attendance, payroll, etc.), but today the sector is embracing more advanced methods, utilising smart tech within workforce management, career planning, talent acquisition, learning and development, employee engagement, and business intelligence. Technology has moved from being a helpful aid to an essential core of many jobs. Over the last three years, HR tech adoption has risen to double digits, and small organisations are now the fastest-growing segment among all new adopters.
In response to complex and rising demands, many of those working in HR are turning to innovative technology, funded by robust investments from their companies. Facing diverse challenges, the economies of Southeast Asia are all reacting differently, with some investing more heavily in HR. Singapore alone has around 200 HR tech vendors, even though 99% of companies in the country are small to medium-sized enterprises (SMEs).
Singapore’s DBS Bank deployed Jim, an anthropomorphised assistant, hailed as Southeast Asia’s first ‘virtual bank recruiter, to help them hire 40% more wealth planning managers in 2018. Jim works by automating the pre-screening process of candidates, inspired by the fact that recruiters were spending 20% of their time collecting information and responding to emails before they ever met candidates.
Fresh-faced HR tech startups have also been emerging. Swingvy, a cloud-based human resource platform for small and mid-sized businesses, raised an impressive $7 million USD (around RM30 million) in April 2019 and now have offices in Kuala Lumpur, Singapore, Taipei, and Seoul. StaffAny, a Singaporean workforce management platform, raised $1 million SGD in seed funding last August from FreakOut Holdings and other angel investors to continue its development. Meanwhile, HReasily, with prestigious clients such as Prudential, UOB and CitiBank, received $5 million USD in September 2019, bringing its valuation up to over $100 million USD.
Most HR tech firms operate as software-as-a-service (SaaS) providers, a distribution method in which a third party hosts applications and allows customers to access them online. This means that the service vendors need more customers as they strive to achieve economies of scale.
HR and COVID-19
The HR tech industry in Southeast Asia has been growing for years, but the impact of COVID-19 has placed even more significant demands on HR departments. The Singaporean government weighed in on this increasingly important sector last year, by forming the HR Industry Transformation Advisory Panel (HRTAP). The panel intends to aid the industry in transforming businesses and the continued development of the sector. The government also supports the adoption of HR in other ways, such as through the Smart Nation initiative and agency grants.
The panel highlights several short and long term challenges but has recently focussed on COVID-19 as the central issue of this time. The virus has disrupted economies and businesses, and HR will play a focal role in the management of the economic fallout of the virus and resulting lockdowns. It will also be on the frontline in the slow recovery in the years to come. As such, the HRTAP calls attention to HR’s role in managing disruptions to the workplace; employees’ engagement while safeguarding their mental well-being; and the implementation of cost-saving measures fairly and responsibly.
Longer-term, HR tech needs to support business transformation, preparing companies for the post-pandemic economy by redesigning jobs to complement increased tech adoption. They also need to help with reskilling the workforce with emerging and critical skills and ensure diversity and equity in hiring, to build workforce resilience. With so much at stake for the region’s economies as they try to recover from the pandemic, HR tech startups in Southeast Asia will undoubtedly see a surge in demand for their services.