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Singapore Budget 2018: Cost, talent crunch forcing firms to outsource abroad
HOMEGROWN e-marketplace service provider Shopmatic ran into a major hurdle in the early days of its regional expansion efforts.
Like many fast-growing tech firms, the start-up struggled to hire a sufficiently large team of programmers and developers to support its growth.
The company eventually turned to offshoring - it now has a team of 15 programmers in Taiwan, while retaining its Singapore headquarters.
"It's tough to be able to build a large enough team especially for a small company or startup. Talent is not readily available here, and it's also expensive," said chief executive and co-founder Anurag Avula.
While this skills shortage has long been a bugbear in the tech industry, it is becoming increasingly felt as companies across sectors ramp up their digital transformation efforts.
In the run-up to Budget 2018, segments of the business community are renewing calls to loosen manpower curbs - specifically with the aim of bringing in highly-skilled tech talent to fill roles in data analytics, artificial intelligence and cybersecurity.
A 2016 survey by the Infocomm Media Development Authority (IMDA) found demand for infocomm professionals is expected to rise by more than 42,000 from 2017 to 2019.
Technical IT specialists - in areas such as data analytics and cybersecurity - were most in demand, with jobs expected to grow by about 33,400 over the period.
"Many of the hottest jobs in tech now did not even exist 10 years ago," said Saw Ken Wye, chairman of SGTECH (formerly the Singapore infocomm Technology Federation). "The competition for talent is not limited only to Singapore - it's worldwide."
Rina Lee, the director of digital and data recruitment at 33Talent, said demand for tech talent is picking up across sectors.
"There is a lot of demand especially from companies in more traditional industries which want to revamp their business model and transform," she noted.
Demand is strongest for junior to mid-level tech roles, but "there aren't enough candidates who have the necessary experience in Singapore because many of these fields are still new", added Ms Lee.
Mr Avula said more flexible foreign manpower policies for tech-related roles will help companies here grow more quickly.
In addition to its Singapore headquarters, the company has a presence in India and Hong Kong. It plans to expand into the Philippines, Thailand and Indonesia, as well as the Middle East and Africa.
Another company which has opted to hire a tech team overseas is budget accommodation platform RedDoorz.
The company has a team of 15 developers and engineers in India but maintains its "nerve centre" in Singapore.
"The thought of hiring engineers here is extremely daunting, partly because of the cost, as well as the fact that great talent is in short supply," said founder Amit Saberwal.
"The government has done a fantastic job creating an ecosystem for startups here, but for the ecosystem to flourish it should be easier to hire. It would be great if more talent could come in."
But offshoring and tweaks to Singapore's foreign manpower rules are only short-term fixes, others say.
John Kim, managing partner of Amasia, a cross-border venture capital firm based in Singapore, said: "Outsourcing is a less desirable solution because it only levels the playing field, other countries can outsource overseas as well."
While tech manpower might be more plentiful in markets like Vietnam and India, 33Talent's Ms Lee said "you have to go through a lot of volume to find that one good developer".
In addition, such top talent does not come cheap.
"These people are highly sought after and they would have no problem getting jobs outside Singapore, they can even go to Silicon Valley."
This means longer-term solutions - including teaching tech skills in schools - are also needed.
"This starts with proficiency in engineering, but other best practices from the tech world such as user-centred design and the lean startup methodology are just as important to inculcate in Singaporean youth," Mr Kim said.
Efforts are already underway to lift the skill level and quality of Singapore's tech workforce. IMDA's 2016 survey found that 69 per cent of infocomm media professionals are Singaporean citizens and permanent residents.
The TechSkills Accelerator programme - launched in 2016 to train infocomm technology (ICT) professionals - has benefited 21,000 so far. The government has also drawn up guides for 119 job roles and more than 80 skills in the ICT sector, across industry domains such as retail, logistics, finance and healthcare.
The key lies in making sure the workforce is equipped with skills that match industry needs, said Damien Wong, general manager for Southeast Asia, Taiwan and Hong Kong at multinational software company Red Hat.
"We have seen many great examples of how the government provides specific training and certifications to help close the talent gap; however, some courses may no longer be relevant to the needs of enterprises today."
In addition to government efforts, companies can also work directly with institutes of higher learning to build a talent pipeline, Mr Wong added.
For more stories on Budget 2018, click here.