Does SEA Tech Segment Really Have A Place Next To The American IT Sector?

Picture of Editor - CyberMedia Research

Editor - CyberMedia Research

The tech sector in Southeast Asian countries has experienced significant turbulence amid the global economic landscape. Prominent companies in the region, including Sea and GoTo, have been compelled to undertake job cuts, although other sectors have maintained consistent economic growth.

Considering this situation, it raises an important question: how will the future of the IT segment in Southeast Asia fare amidst the prevailing economic downturn in the United States?

For companies like Sea, the leading tech firm in Singapore and the parent company of subsidiaries like Shopee and Garena, the job cuts have affected nearly 10% of their workforce. Consequently, their shares have declined, and numerous investors have diverted their attention elsewhere. Similarly, GoTo in Singapore is also facing similar challenges.

Comparing SEA Tech Giants to American Ones

One of the key factors that have enabled the American tech market to withstand the economic depression is its detachment from the real economy. For instance, companies like Uber prioritize other strategies over generating profits. They allocate a substantial portion of their earnings to advertising and share buybacks, ensuring short-term security.

Conversely, companies like Grab, the equivalent of Uber in Southeast Asia, rely primarily on profits. Consequently, when the economy and funding undergo turmoil, their only recourse is to implement job cuts. This leads to a decline in shareholder value, unlike Uber, which maintains a relatively secure immediate future.

Ultimately, the existence of Southeast Asian tech giants is intertwined with their ability to prove themselves to American investors while simultaneously contributing to the growth of the regional IT economy. If they begin to falter on both fronts, the future of the Southeast Asian tech economy becomes uncertain.

The straightforward answer is that new players will invariably emerge in the region. Moreover, once the economic downturn subsides, both Sea and GoTo will likely regain their previous stature. However, in either scenario, they will not be direct competitors to American entities like Uber, nor will they hold a similar position even within their own markets.

The encouraging news is that these companies have recognized the need to adapt and are transforming into multifaceted entities. By venturing into sectors such as electric vehicle production and digital finance, they are preparing for a future where the direct IT sector may not maintain its current prominence.