The Changing Shape of SE Asia' s IT Industry
Often eclipsed by China and India's overwhelming growth and Japan and Korea's high-tech expertise, the potential of the Southeast Asian IT industry has been somewhat overlooked, until now. With a population of over 600 million and a rapidly rising middle class with a mounting desire for mobile devices and online services, the opportunities for tech companies in the region are huge.
Indeed, there has been a rising tide of start-up technology companies in Southeast Asia in recent years, while numerous foreign enterprises are looking to the area for expansion. Steven Goh, chief executive of the social entertainment platform mig33, believes that now is an "exciting" time to be a technology entrepreneur in Southeast Asia. "This feels like China in 2003 to 2005," he told the Reuters news agency. "Wouldn't you just love to have been investing in that region at the time?"
Figures released by market research firm GfK in December showed that sales of smartphones in Southeast Asia grew by 61 per cent during the first nine months of 2013. Collectively, consumers in Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the Philippines purchased almost 41.5 million handsets, spending a total of $10.8 billion.
It is the proliferation of mobile devices in Southeast Asia that is altering the region's technology landscape, bringing internet access to more and more citizens and opening up new opportunities for tech firms, both regional and foreign, in areas ranging from e-commerce to mobile payment.
As a result of rising smartphone ownership, social media usage has soared in Southeast Asia in recent years, and it is this trend that is causing IT companies and professionals around the world to sit up and take notice. Looking purely at rates of fixed-line internet in the region, one would assume that levels of internet penetration are relatively low. However, this is the age of mobile, so fixed-line statistics are no longer an accurate measure of opportunity for internet businesses.
Facebook is by far the most widely used social network in Southeast Asia, with Indonesia leading the way. However, YouTube, Twitter, LinkedIn and Tumblr are also gaining in popularity, and there is growing use of smaller social networks as well. New players are entering the social media sphere all the time and they would be foolish not to see Southeast Asia as a target market.
Opportunities vary from country to country
Southeast Asia is a vast region and while some countries are advancing very quickly, others are only just starting to build up their ICT infrastructure. Singapore, for example, is in a class of its own when it comes to superfast internet, with average speeds of 61Mbps according to recent data from ASEAN DNA. Other Southeast Asian nations are struggling to get above 6Mbps.
Of course this means that the opportunities for ICT businesses and professionals in the region are vast and varied. In Burma, for example, the industry is still in its infancy, with internet penetration at around one per cent, while in Singapore tech-savvy consumers and fast growing businesses are leasing demand for the latest mobile apps, cloud computing services and big data analytics.
It is clear that there are some huge growth areas open for exploitation in the Southeast Asian IT industry, but businesses do face a number of challenges in their quest for regional and global dominance, one of the biggest being a shortage of skilled workers. Tech companies in the region are struggling to fill vacancies locally so are turning to the international talent pool instead.
There are a number of reasons behind Southeast Asia's IT skills shortage. Firstly, the region's economy has grown so quickly and technology has advanced at such a pace that education has struggled to keep up and local candidates lack the necessary knowledge and expertise. Secondly, where start-ups are concerned, there is a need to alter mindsets, with the majority of the local population preferring to work for large multinational companies offering stable career paths.
These skills shortages could be exacerbated by new policies being introduced by the Singaporean government, which are designed to curb the hiring of skilled foreigners and create more opportunities for local people.
The Ministry of Manpower (MOM) has announced that from August 1st this year, all companies making applications to employ foreign workers must advertise their vacancies on a new National Jobs Bank being administered by the Singapore Workforce Development Agency for at least two weeks.
Sufficient evidence will have to be provided to the MOM to prove that either local people did not apply for the position, or that they did not possess the necessary skills and experience required. Only then will they be able to take on foreign professionals.
The restrictions could affect a number of industries, but IT is expected to be hit particularly badly because of the very high demand for overseas talent as businesses look to create the kind of products and services that will showcase Southeast Asia as a global IT powerhouse.