A $25 billion market with a Compound Annual Growth Rate (CAGR) of 6%, the Southeast Asian tech segment is now a tangible possibility. What was once considered a far-fetched aspiration merely a decade ago has transformed into a post-pandemic IT market in the global south that exhibits relentless growth.
The region’s remarkable digitization drive has played a pivotal role in this unprecedented expansion. Moreover, the influx of foreign investment by prominent tech companies into countries like Singapore and Vietnam has reached an all-time high. Renowned IT organizations from the United States and China, recognizing the region’s robust infrastructure and abundant tech talent, are establishing their presence through branch offices, leveraging these advantages to expand their businesses.
Singapore, Vietnam, and other Southeast Asian countries demonstrate a high level of receptiveness to foreign players, viewing their involvement as a direct catalyst for domestic market growth. Governments throughout the region have observed the surge in tech consumers and recognized that the presence of high-end tech companies can serve their economic interests.
Nevertheless, despite these promising developments, there remains a significant impediment preventing the Southeast Asian region from evolving into the next Silicon Valley.
The Growth of Tech-based Education Will Be The Key Factor
In the fourth quarter of 2021, Singapore’s IT industry experienced an unprecedented growth rate of 3.3% in hiring, marking a significant milestone in the country’s history. Industry experts predict that the number of tech jobs in Singapore will surge by 20% by the conclusion of 2024. This surge can be attributed not only to the recruitment efforts of various tech companies but also to the governments of Southeast Asian (SEA) countries prioritizing investments in tech education for their youth.
The shortage of tech talent remains the primary obstacle preventing countries like Singapore from reaching the level of technological advancement seen in China or the USA. While the youth of Southeast Asia is still in the process of exploring and familiarizing themselves with segments such as cybersecurity, AI, robotics, data science, and others, leading companies in these sectors require immediate access to highly skilled and experienced professionals.
This shortage of tech talent is not unique to Singapore but is also observed in countries like Malaysia and Vietnam. In comparison to Western nations like Denmark or Finland, where 50-60% of the workforce possesses tech skills, the corresponding percentage in SEA countries remains at a modest 20-25%.
Addressing this shortage of tech talent will be crucial for the Southeast Asian region to fully realize its potential in the global tech industry. Efforts are needed to bridge the skills gap by fostering a comprehensive and robust tech education ecosystem that can equip the youth of SEA countries with the necessary expertise and knowledge to meet the demands of the rapidly evolving tech landscape.
The Promise of Growth Still Holds
Although the employee infrastructure may not be fully developed in these countries at present, there is a promising outlook for substantial wealth creation in the future. The companies expected to drive the surge in hiring are prepared to offer lucrative salaries, providing a strong incentive for the youth currently pursuing tech courses to anticipate a prosperous career ahead.
While the phenomenon of the “great resignation” has become a primary concern for employees worldwide, it is unlikely to significantly impact the tech segment in Southeast Asia if the local tech talent can meet the demands of tech companies. With a pool of skilled professionals who possess the required expertise, the region can remain resilient in the face of this global trend.
Google’s recent analysis even indicates the potential for the Southeast Asian tech segment to reach the trillion-dollar milestone by 2030. However, the pivotal question that remains unanswered is whether the local talent in these regions can fulfil the promises and capitalize on this immense opportunity for growth.