It seems every day is filled with announcements about fresh funding, joint ventures and market expansion in Southeast Asia’s digital economy.
Money, it seems, is not an issue for these internet companies.
There is instead an even bigger problem – a lack of a company’s most valuable resource: talent.
Every tech company I have interviewed operating in Indonesia, Thailand, Malaysia, Singapore, Vietnam, etc. has cited difficulty finding, recruiting and retaining top talent when asked about major challenges.
In a region abundant with people – 650 million – and rich resources, what in the world is going on?
Companies can’t find good talent
Through a short community survey last week, executives from companies such as Colgate, Grab, Facebook, Blibli, DHL and Abbott, shared the top traits they look for in a successful candidate and their thoughts on hiring in the region.
Over 80% of respondents believe there is a talent challenge for some specified reasons below:
“Yes, there is certainly a talent challenge in Southeast Asia. Reasons being absence of educational institutions of global level that churn out quality graduates. Focus on localization than globalization and limited exposure.” – Reliv Pharma, Vietnam
“Yes, the young generation lacks persistence and cuts corners.” – Self-employed, Thailand
“Yes, there is a lack of ‘soft’ skills or qualities required to be successful in a technology business. These include problem solving, creativity, self-starters, willingness to take initiative and ownership. Due to the large amount of tech companies headquartered in the region, there is also a job-hopping mentality meaning that younger talent does not stay in one place long enough to learn critical foundation skills.” – Cresco Data, Singapore
“Yes, lack of ability to understand the world of digital is not binary and you need to recognise shoppers are omni-channel more and more so.” – Abbott, Singapore
“It’s apparent that there is a talent challenge when large companies like Central Group (Thailand), MAP (Indonesia) and SSI Group (Philippines) are often having to “import” expats into management or even senior management positions because they couldn’t source a candidate locally. More to the point, the ecommerce market is in its infancy in Southeast Asia, enforcing the point that talent from maturer markets is a viable option.” – aCommerce, Thailand
“There should be a proper place to develop these talents.” – AmorePacific, Malaysia
“Cultural difference and attitude.” – Grab, Thailand
The other 20% were either on the fence and believed the struggle to hire was due to other reasons:
“No, there’s a pool of strong candidates but it’s quite tough to find someone who shares the same values and goals as the company.” – Clickasia, Malaysia
“Not really, a lot of great candidates out there. The thing is, sometimes the recruitment process and the interview questions are ridiculous and those are eliminating the great candidates from the recruiter.” – Facebook, Indonesia
A quick overview of the feedback reveals companies are experiencing the same problems such as inflated salaries, job hopping, and lack of ownership and strategic thinking.
There are a few explanations for this:
First, ecommerce in Southeast Asia is young. The concept of digital only arose six or seven years ago around the time Lazada was born. There was no demand for online jobs, why should students study computer science and digital marketing over finance and science?
Given the novelty of digital, not enough time has passed for any individual to become an expert in the local market and therefore, narrowing the pool of talent with on-the-ground experience. This also means companies tend to hire foreigners to fill senior roles but are usually on short contracts and don’t intend to stay for 5+ years in a developing country.
Second, education in Southeast Asia lags behind the developed world as observed by the World Bank,
“Much of what South Asian students are taught is “procedural” or rote based. Students are poorly prepared in practical competencies such as measurement, problem-solving, and writing of meaningful and grammatically-correct sentences. One quarter to one third of those who graduate from primary school lack basic numeracy and literacy skills that would enable them to further their education.”
Whereas youth in North America are expected to hold part-time jobs, complete internships and have work experience before they even start university, young people in Southeast Asia are deterred from work to focus on studying until graduation.
This means fresh graduates tend to lack basic skills entering their first job – ownership, professional communications, stress management, etc. – and are often overwhelmed at fast-paced companies with heavy KPIs i.e. digital startups.
The top three skills companies believe are crucial for successful candidates are problem solving, strategic thinking and willingness to learn. The first two are also the hardest to find in the region.
Third, companies are still applying traditional recruitment practices that won’t work here unlike in the West. Simple supply and demand.
Unless you are a Google or Amazon, recruiters cannot expect candidates here to undergo lengthy interview processes because quality talent will get snatched up. As a senior manager once told me, “the interview works both ways, I’m also checking to see whether I like the culture fit”.
Recruiters also cannot solely rely on education as a benchmark for future success or neglect candidates without Ivy League Masters.
For many individuals fortunate and wealthy enough to be sent abroad for higher education, minimum ‘white collar’ wage in Southeast Asia is seen as pocket money. These young professionals aren’t incentivised to push themselves at work when they have family businesses to fall back on. This is not to generalise an entire generation as lacking ambition but to highlight how important it is to understand their backgrounds and aspirations.
It is often individuals with operational experience in APAC and industry knowledge that tend to perform better than MBA graduates. An employee at Alibaba Group sums up her experience with hopeful graduates looking for new jobs:
We have established there exists a talent challenge in one of the world’s fastest developing regions, but so what? Can’t companies slowly develop and build their teams when education and experience catch up? What’s the big hurry?
Three small numbers: 996.
The Chinese are coming (here)
996 = 9AM to 9PM, six days a week.
This is the working mentality of employees in Chinese companies. As detailed during an episode of Economist Radio, a venture capitalist from China shared his surprise seeing empty parking lots at 5PM during a visit to Silicon Valley.
“Even in large corporations like Tencent in China, you will see taxis lined up at 2AM taking hard working engineers home when they totally run out of steam working 12 hour days.” – Kai-Fu Lee, CEO of Sinovation Ventures
The digital landscape in Southeast Asia is already saturated thanks to the influx of Chinese players and large sums of investment, but in order to win, it’s not about capital when everyone has millions in the bank, it’s about human capital.
Alibaba’s crackdown on Lazada has already started; Maximilian Bittner out, Lucy Peng in. And after three years in Indonesia, JD.com also plans to expand to Thailand sometime this year through a joint venture with Central Group.
Given the speed of the market’s competitive playing field, there is a huge opportunity cost when critical roles are left unfilled. The fear that someone else is building something better, smarter and faster.
How can companies navigate the talent challenge?
In Southeast Asia, soft skills should trump hard skills every. single. time.
Companies can teach someone to navigate SQL, manage time and set up Adwords, but they will struggle to teach conflict resolution, self-motivation and problem solving.
Like all business strategies, recruitment efforts need to be adapted to the local market in order to be successful, whether through an in-house team or third party platform. These were hiring best practices shared with me:
- A resume is not a 360° review of an individual, experiences and results count more
- Fancy education doesn’t guarantee strategic thinking or grit, less experienced but hungrier candidates will go further
- Update old application systems that require 10 steps to upload a CV
- Tap into your C-levels to scout for talent as they are your biggest network of eager candidates
- Rethink unrealistic qualifications (ex. 10+ years in digital, 7 years in ecommerce, etc.) or you will never find someone
- Continue training your people and have an internal culture accommodating to the locals
Companies in developing markets like Southeast Asia often focus on high growth and cash burn to grab market share, but forget to build a strong, positive company culture so the top talent actually want to stay.
Understand the three crucial skills required to be successful in the role and how the individual demonstrated this through his/her past experience and forget about all the other bells and whistles.
At the end of the day, how defensible is your team?