ConnectOne’s 10 SEA Startup Talent Predictions for 2022
As recent times have taught us, the new year is bound to have a few surprises. Put your company in the best position to grow by staying on top of these trends
Unabated global digitalisation. Tech talent shortage. A burgeoning start-up ecosystem in Southeast Asia.
As we enter the third year of COVID-19 and look towards slowly easing out of the pandemic, what will the talent landscape look like for startups?
Read on for our 10 SEA startup talent trends forecast.
#1 The “War for Talent” Will Rage On
“Money can be made to move fast, but you can’t train people as fast,”
- Jeffrey Seah, partner of one of Asia’s top venture capitalist firms Quest Ventures
The talent crunch is set to be a major development bottleneck for start-ups, with the greatest shortfall being in tech.
From October 2020 to October 2021 alone, hiring across tech companies grew 85%, according to our study of close to 4,500 job openings. Management consultancy firm Korn Ferry estimates that the tech talent deficiency in the Asia-Pacific region will further increase to 47 million people by 2030.
In Southeast Asia, there are two big overlaying trends – the great amount of public and private investment flowing into the region, and the global marketplace converging here. This has created great opportunities for disruption, says Jeffrey Seah, partner of one of Asia’s top venture capitalist firms Quest Ventures. ”Almost every digital economy idea on paper is able to attract funding. With funding, the clock starts ticking to execute the idea and talent acquisition becomes the first salvo,” he adds.
“Money can be made to move fast, but you can’t train people as fast,” he notes. The confluence of tighter borders, ready capital and limited talent has resulted in a poaching spree, pushing salaries up. Chinese tech companies such as ByteDance and Ant Group are known to offer 50 percent pay increases for junior and mid-level roles, and 20 to 30 percent more for senior roles.
Beyond aligning monetary compensation to market rates, companies will need to have an exciting product, good business model, cool culture and a great management or founder team to attract talent in this hyper-competitive landscape, says Phi Nguyen, Founder and CEO of Hiip, one of SEA’s top influencer marketing technology platform.
#2 Employee Lifecycle Will Shorten
In a fast-changing post-pandemic world, start-up experience will gain greater currency not just among other start-ups, but with mature tech companies as well. Sector-wide, employers will place greater value not just on digital skills, but soft skills such as flexibility, grit and the entrepreneurship spirit believed to be part of the start-up experience.
With so many attractive opportunities, staying a couple of years or less at a company has been normalised, observes JJ Chai, founder of newly launched start-up eCommerce aggregator Rainforest. Exacerbated by The Great Resignation, tech companies will need to think beyond talent attraction and recruitment, to prioritise talent development and retention as well.
“With so many attractive opportunities, staying a couple of years or less at a company has been normalised”
- JJ Chai, founder of newly launched start-up eCommerce aggregator Rainforest.
#3 Talent Transition at Series C or D
Instead of moving on to Series C or D, many Series A and B founders and senior executives at unicorns and decacorns like Lazada, Rocket, Grab and Gojek have gone on to found new start-ups.
These include supply chain fintech AwanTunai, MSMEs fintech BukuWarung and insurtech company Igloo. Chai is a prime example. The former CCO of Carousell founded Rainforest because he wanted to “take more risks with [his] career and optimise learning”.
In such cases, experienced leaders without a start-up background usually plug the gap. The plus is that at Series C and D, systems and processes need to be institutionalised and the chaos of early-start-up days need to be better managed, so corporate experience can be valuable, says Chai. However, there may still be a mindset gap that non-start-up leaders have to grapple with when moving to start-ups.
Jeffrey challenges startups moving into Series C&D to evolve from the “Day 1” mindset.
“The delicate balance introducing corporate talent and adjusting established startup culture is not dissimilar to exiting teenagehood moment. Angst must transit to assurance.", he adds.
#4 Series A and B is Gaining Popularity with Early-career Talents
“Now, [start-ups] are definitely a strong path for ambitious, dynamic talents who want to fast-track [their career and benefit from] various learning opportunities and an open culture,”
- Phi Nguyen, Founder and CEO of Hiip, one of SEA’s top influencer marketing technology platform
Start-up alumni are not the only ones interested in early-stage start-ups. More fresh graduates are leaning towards Series A and B (20%) as compared to Series C and above (14%), based on our LinkedIn poll of over 600 young talents. The general consensus was that early stage start-ups would offer them broader responsibility and scope, and enable them to make a bigger impact.
Further, one in three graduates polled would choose to join a start-up rather than global companies or SMEs. Few would have made this choice years ago, notes Nguyen. “Now, [start-ups] are definitely a strong path for ambitious, dynamic talents who want to fast-track [their career and benefit from] various learning opportunities and an open culture,” he notes.
#5 Indonesia Will Continue to Face a Deep Talent Crunch
With investment in Indonesia almost equal to China on the basis of start-up deals funded as a percentage of GDP (as indicated by an Asia Partners’ 2022 Report), the demand for talent in Indonesia is projected to grow across all levels of tech companies.
However, given that Indonesia is a unique market with unique pain points, it requires either native talent or one who has spent a long time in the country to perform effectively. “If your market is local, geographical location plays a big role. In Southeast Asia, you need to be hyperlocal to win the game,” explains Nguyen. This constraint limits talent suitability.
#6 The Top Job Functions Will Be Tech, Sales and Operations
As the global marketplace digitalises rapidly, companies will race to build products, sell them, as well as optimise and retain customers. It is no wonder that our study found that product and technology roles make up 34% of job postings, sales and development roles 16%, and operations roles 12%. Some of the most in-demand skills are cloud computing, artificial intelligence, machine learning, DevOps, Cybersecurity and QA Engineering.
#7 Talent Migration to Frontier Tech
Job postings with terms like “Bitcoin,” “Ethereum,” “blockchain” and “cryptocurrency” grew 395% in the United States last year, according to LinkedIn. In Singapore and Southeast Asia, these are also the hottest new sectors of tomorrow, alongside Environmental, Social and Corporate Governance (ESG).
Drawn to the potential for growth, many talents are researching and learning while in their day jobs, while others have quit to focus on applying to these industries-of-the-future.
The gamble looks likely to pay off. “Just like in the past, everyone needed to understand data analytics, in future, by and large, every worker will need to have an understanding of ESG, blockchain, e-commerce and the crypto-world, and how these apply to their area of expertise,” says Seah.
“Just like in the past, everyone needed to understand data analytics, in future, by and large, every worker will need to have an understanding of ESG, blockchain, e-commerce and the crypto-world, and how these apply to their area of expertise,”
- Jeffrey Seah, partner of one of Asia’s top venture capitalist firms Quest Ventures
#8 Remote Working is Here to Stay
The pandemic has transformed the way we collaborate, with suitability and speed of onboarding being more important than location today. While compliance matters such as salaries, taxes and employment statuses are still being ironed out, start-up founders are going ahead to onboard talent, wherever they are. Rainforest for instance is remote-first, enabling employees to work from anywhere from St Petersburg or Bali, shares Chai.
It is a fantastic opportunity for employers to think global in their search for talent. More companies are now setting up to provide the infrastructure for remote-first e.g. Deel, Oyster either via contractor or employer-of-record arrangements.
#9 Salaries Will Harmonize Across Markets
Salaries for in-demand start-up talent will be less dependent on employees’ base countries of residence but more so by their scarcity, experience and skill. This is more so in an increasing remote-first world. For example, a CTO based in Indonesia and Singapore working for a start-up in the same stage will command a similar salary with a 10% to 20% variance. This compares to the median salary of the general workforce for both countries with a ratio of 1:4.
#10 ESOP Will Increase in Importance
With various exit options such as trade sales, secondary sales, employee share buy-back schemes and IPOs, start-up employee stock owner plans (ESOP) are gaining more traction.
Indeed, Singapore telco Circles Life announced a US$5 million buy-back of employees’ stocks in December 2021. “Some employees stand to earn up to six figures in cash from this exercise after working just a few years with us,” Rameez Ansar, co-founder of Circles Life told Tech in Asia.
While Nguyen cautions that ESOPs for pre-seed, seed and even series A start-ups are still risky, ESOP are attracting more talent to early-stage start-ups. Indeed, the gap here is the job seeker’s understanding of the mechanics and quantum in order to ensure a fair negotiation that matches his or her risk profile.