Growing demand for remote tech talent in Vietnam, Indonesia

Singapore

THE hunt for tech talent is not just raging within Singapore, but also intensifying in the remote hiring market in South-east Asia, as recruiters see more demand from companies to build offshore teams.

The talent market has especially heated up in Vietnam, which has long been a popular destination to hire remote engineers due to lower costs. But it isn't just about cost arbitrage anymore, as companies also turn to the market for specialised talent like blockchain developers.

In the past 2 years, demand for Vietnam-based developers has been "far outstripping supply", said Frank Lee, managing director of Tech JDI, which helps companies with tech-related hiring, software development and business expansion in Vietnam.

Tech JDI's clients have included Singapore cybersecurity startup V-Key, fintechs Gigacover and Aspire Capital, edtech Geniebook and telemedicine platform Doctor World.

"The bottleneck is really because of the lack of supply, not demand. We have an overwhelming demand for people, sometimes we just cannot fulfil it," said Lee, who also runs a seed-stage fund, TNF Ventures. "And there are many customers asking: 'Can you give us an update? We need more people.' That's the situation we're facing and we don't see demand going down anytime soon."

Oswald Yeo, chief executive of recruitment specialist Glints, estimates that tech salaries in Vietnam have risen by about 15 to 20 per cent over the past 3 years.

This is due to fast-growing demand not just from tech players, but also from traditional corporations that are digitalising.

At the same time, Vietnam itself now has several tech unicorns of its own, further adding to demand.

"Naturally, competition has become stiffer than ever, with attractive compensation and benefits packages as the main tools used to attract talent," Yeo said, adding that corporate culture and growth opportunities are other factors.

He sees a similar trend over in Indonesia, where Glints also helps companies build tech teams. There, base tech salaries have surged since last year. Compensation varies across industries, but there is tight competition for mid-to-senior level talent. The pool of graduates each year is also lower than what companies require.

"Organisations go through about 40 to 50 applicants per job posting, and employers mentioned that on average it takes them 3 months to acquire the right candidate," said Yeo.

Cost savings have been one of the key reasons that more companies turned to remote hiring, especially at the start of the pandemic. According to a report by Glints and Monk's Hill Ventures last year, the base salary for a junior software engineer in Indonesia can be less than half that of a Singapore counterpart (see chart).

The cost difference may continue to weigh on Singapore companies now. As The Business Times previously reported, Singapore's recently-announced salary bump to Employment Pass (EP) qualifying salaries could add to wage cost inflation for tech roles here.

But Yeo of Glints believes that even without the changes to EP requirements, offshore hiring would still rise at a steady rate. With regional economies recovering, companies are resuming local hiring, while also tapping offshore markets for even more headcount.

In a sign of how competitive the market is, Tech JDI is even receiving requests from Indonesian unicorns to hire remote talent in Vietnam.

"That was a surprise for us, because Indonesia itself is also a developer hub," said Lee.

The fact that Vietnam talent is more expensive than Indonesian talent also highlights that cost-savings isn't necessarily the end-all factor when companies are building remote teams these days.

Charles Ferguson, Asia-Pacific general manager at Globalization Partners, reckons that offshoring is also a way for companies to expand the depth and variety of talent.

"You can find incredible pools of talent, that frankly, it's no longer about low-cost labour arbitrage, it's now about talent arbitrage," he said, noting how talent in emerging markets like Vietnam and Indonesia tend to be well-versed in open-source technologies.

Coupled with a growing recognition that information workers can do their job "literally anywhere", it makes sense for companies to set up remote teams.

"If you separate out some of the fundamentals of your flow and value chain of how you do your work, you could find all kinds of pockets of really great talent," added Ferguson.

Lee of Tech JDI in fact sees that some clients who do offshore hiring in Vietnam eventually consider expanding their business to the country.

While there are many draws for companies to hire remote tech talent, the execution is in fact not that easy.

Jupe Tan, Asia-Pacific managing partner at startup accelerator Plug and Play, notes that young talent often have many career options and retention can be challenging. With those based offshore, building a sense of belonging can be even harder.

"It's very important to integrate them into your core team, not to see the offshore engineering team as just that," he said.

Amerson Lin, chief executive of insurtech startup Gigacover, echoes the importance of building a sense of belonging. Gigacover has a tech team of 12 in Vietnam and Lin ensures that they are included in company initiatives and eligible for employee stock options (ESOPs). "For them, ESOP is a very new concept, I wouldn't say they value it very much over cash, but it changes the relationship, like now you're family," he said.

Garage is BT's startup vertical.

Read more news, analyses and opinions at bt.sg/garage

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