The Association of Southeast Asian Nations (ASEAN) is experiencing a worrying spate of mass layoffs and a continued tech talent crunch that threatens its businesses. While the talent shortages were always there due to the region’s rapid digitisation and other factors, the layoffs are borne out of the current regional and global economic downturns and related issues.
One of the main reasons that plagued and still affects economies worldwide has been the spread of COVID-19 and its variants, which led to lockdowns, trade restrictions, and prohibitive movement measures.
As a result, businesses had to limit their commercial activities, reaping significant losses while attempting to shift operations from manual to digital. The tech talent scene Southeast Asia was struggling to keep up with the demand for technological expertise in various sectors. Many employees needed to be reskilled, while others did not have the requisite experience to take on these vital positions in the workplace.
Why tech talent is still in high demand in Southeast Asia despite the tech winter
Many companies have had to adapt, with employees now working remotely or in a hybrid capacity, which is a combination of in-office and at-home work. However, many employees found these new working models to be overwhelming, distracting, and technologically challenging, which caused some employees to struggle.
Regional mass layoffs
According to CNBC, at least six Southeast Asian tech companies have laid off their staff in the last few months due to the global economic slowdown. Many tech startups are reeling from reduced investments from venture capital (VC) firms and are reorganising their businesses to cope with inadequate cash flow. The trend of hiring many employees because there was a lot of capital available last year has shifted to maintaining a leaner team in the workplace since the funding is no longer sufficient.
Companies like Sea Limited, the owner of Singapore-based e-commerce site Shopee, announced that it was cutting jobs for its teams in various countries. CNBC reported that Sea Ltd. cited economic uncertainty and a need to streamline its business for operational efficiency as its reason for laying off its employees. Furthermore, Shopee rescinded job offers for recruits as it faced losses and needed to focus on its resources.
Indonesian edtech company Zenius let go of more than 200 employees, while JD.ID, the Indonesian arm of Chinese e-commerce site JD.com, also cut jobs. LinkAja, a digital payments provider, was not left behind either, as it laid off dozens of its employees. Over in Malaysia, online shopping platform iPrice, which had 250 employees before the layoff, retrenched one-fifth of its workforce in June.
Other factors that have played a part in regional layoffs include rising operational expenses due to high-interest rates and increasing energy costs. Moreover, legal and regulatory challenges, for example, in China, have seen a clampdown on tech businesses, thereby hampering investments in Asia-Pacific (APAC). These issues, plus the uncertainty in the market, mean that VC firms are holding off on making significant investments until there is a positive economic outlook.
Novel COVID-19 variants and the continued spread of the virus in APAC (especially in China) ensure that there will be limits on movement across borders, which makes it difficult for companies to hire qualified tech talent. They have to resort to working with remote tech teams.
The outlook for tech talent in Southeast Asia
Tech job portal Nodeflair co-founder Ethan Ang told CNBC that startups would be cautious about scaling their teams because the future is uncertain. James Tan, the managing partner of VC firm Quest Ventures, added that it would be odd if startups failed to lay off some workers in response to the current market status.
Despite these layoffs, the region still lacks good tech talent. Thus, governments will need to support companies in recruiting talent from overseas or using remote teams by updating some of the current laws and regulations. Government agencies tasked with development can nurture ecosystems and guide startups on what they can do to attract local and foreign investment.
There must be a more significant push for upskilling of employees to address the tech talent crunch affecting many nations worldwide. For example, global shopping tech giant Amazon committed to spending over USD 1.2 billion by 2025 to upskill its employees. ASEAN companies must invest in their workforces, too, if they wish to remain afloat. In addition, stakeholders should organise foreign training partnerships to equip workers with the tools to support the region’s digitisation efforts.
The tech talent scene Southeast Asia needs to create should be one with an abundance of qualified candidates in the market. These potential recruits can either be those who have graduated with a tech qualification or those who have lost their jobs as part of the mass layoffs currently plaguing the region. Companies must focus on attracting and recruiting the best talent for each position rather than having large teams with limited knowledge, which affects the quality of their products and services.