02 Mar 2023
Tech Practice Outlook: Overcast with some Bright Spots & Profits vs Prophets
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The current climate of hiring in technology companies is rapidly changing and evolving.
With the high demand for skilled technology professionals on the rise, companies are increasingly turning to innovative hiring strategies and technologies to attract top talent. Our team in Asia Pacific weighs in on the current trends they’ve observed in their local markets in India, Singapore, Australia, and Japan.
Strong Demand for Technology Talent in India Drives Growth
The mood in the India Technology industry continues to be upbeat. While we’ve seen a trend of layoffs in product companies that may have over-hired in the past few years, this may just be a small bump in the overall technology talent market. The surge in demand is mainly driven by the acceleration of outsourcing to India. As a result, IT services companies and global software engineering centres are experiencing a significant increase in business.
Emerging technologies such as AI, Robotics, IoT, Cloud, Blockchain, Cybersecurity, and Big Data are driving the demand for specific skill sets. This has created a highly competitive market for talent, with candidates being in the driver's seat. To attract top candidates, hybrid work arrangements have become a necessary condition. For instance, a candidate based in Bangalore recently shared that they are willing to go to the office twice a week, provided that the commute is not more than 30 minutes.
In the current job market, one of the primary challenges is to ensure that candidates follow through and join the organisation after accepting an offer. To address this, we actively engage with candidates during their notice periods. Our successful track record, with a 100% closure rate and zero dropouts, is a testament to our strong candidate relationships and effective assessment of their motivation.
Current State of Southeast Asia's Market: Challenges and Opportunities
To turn to more substantive matters, the word "profitability" is making a comeback in the current market, which is a positive development. Regarding recent developments in the Asian market, there have been reports of layoffs, regional restructuring, downsizing, and withdrawal by some companies. However, amidst these challenges, are there any areas of growth and opportunities worth exploring?
What’s been happening around Southeast Asia these last few months?
The industry is aware of the recent layoffs, the realigning of APAC responsibilities into EMEA to create an "International" presence for some companies, and the withdrawal or downsizing by others. Considering these challenges, are there any bright spots on the horizon?
Tough times do inevitably create opportunities. There will undoubtedly be a 'refresh' in certain areas as companies look to bring in new thinking and a different lens for the next round of growth and investment in the region. The days of 'hiring for market share' and the 'it will come' strategy from a monetisation perspective won't come back any day soon. The forward-thinking companies will already be identifying and lining up the kind of talent that they will need when the time is right, as we have seen by an increased level of interest in very thorough, detailed market mapping projects.
For individuals that have been impacted by recent market forces. I am optimistic that Asia Pacific will be one of the first regions to bounce back this time, as it was post-GFC. We should have a good read on the situation by mid-year.
Job Cuts Highlight Return to Solid Business Principles in Australia’s Tech Sector
While the recent news of McKinsey cutting 2,000 jobs may have grabbed attention, it only presents part of the picture. It's important to also consider the context of the 17,000 individuals who were hired by the company in the preceding year. With the tech industry experiencing rapid expansion and enthusiasm in recent times, some adjustments to workforce size were expected.
However, rather than being solely about cost-cutting, these recent changes reflect a return to solid business principles of P&L management. Companies are accepting the reality of where they would be if the pandemic hadn't happened and focusing on effectively managing up the line and running a predictable business.
While some early-stage companies in Australia have pulled out or had country leaders axed, for the most part, people are just getting on with things. Admittedly, the number of new appointments is currently less than in recent times, but if you're managing up the line effectively and running a predictable business, there isn't a big axe hanging over your head.
Despite changes in investment patterns, significant enterprises are continuing to allocate resources towards technology and digital transformation. Consequently, if your product market fits appropriately, there remains potential for expansion. While funding may not be as accessible as it previously was, we may observe the exit of some industry leaders who will be substituted, as this is a common occurrence in the tech sector.
Overall, while there may be some short-term bumps in the road, the tech sector remains a vibrant and dynamic industry. Companies that stay focused on solid business principles and continue to innovate will be well-positioned for success in the long run.
IT Spending Growth and Active Leadership Talent Market in Japan
Like other markets, non-Japanese technology companies are proceeding with caution when it comes to expanding their operations in Japan. While there have been some limited job cuts, mainly affecting non-revenue generating positions, overall hiring has experienced a slowdown.
However, it is expected that this trend will reverse as IT spending within Japanese companies is projected to continue growing at a healthy pace. Typically, for this time of the year, we are seeing some of the usual changes in country leadership roles for Western Tech vendors. Most companies have seen growth, but annual revenue goals have often not been fully met; were targets set unrealistically high, or have local Japan-based leaders not been weathered enough to sell in tougher times?
Japanese corporations are increasingly adapting their business strategies, organisational structures, and cultures to address uncertainty and disruption. There is a growing interest in transforming the business model, diversifying talent, and fostering a new company culture and mindset.
In fact, there was an overwhelming response to a Diversity and Inclusion event Odgers Berndtson Japan co-hosted with the British Embassy in February. More than 11 incumbent CEOs of Prime Market listed companies and over 70 executives attended the event, which sparked an enthusiastic and vibrant discussion on how to transform their culture and organisation.
To accelerate these new initiatives, Japanese companies have been recruiting senior leaders externally for their headquarters. We anticipate this trend will continue to gain momentum in the coming years, which will significantly impact the overall leadership talent market.
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Get in touch with our APJ technology practice team: Gaurav Seth, Karan Jerath, Andie Rees, Shirley SieTho, Sean Garvey, Olivia Vas, Johan Uittenbogaard, Mako Kosuge