India is booming as a technology hub, but there are growing concerns about how tech layoffs in Singapore may affect that.
Facebook is downsizing, and as a result, 13% of their employees are getting laid off. The decision comes following up on initial results that show Facebook’s advertising revenue declining.
Although the Asia-Pacific headquarters was spared in the media, there are around 1000 employees here. Out of the estimated 1,000 employees, perhaps up to 100 were affected, many of which were tech workers.
In 2021, about a quarter of the 177,100 employment pass holders or around 45,000 are from India. Employment pass holders are the highest qualified foreign professionals that are allowed to work in Singapore and must earn at least SGD 5,000 (USD 3,700) per month. No doubt many of these people have been impacted by not only Meta’s layoffs but also other redundancies happening in the tech sector.
Technology companies around the world are having a difficult time because of sluggish demand, increased interest rates and inflation. In Singapore, major tech companies, like Google and Tesla, have frozen hiring or laid off workers.
Singapore-based Sea Limited, the publishing company of many popular gaming apps like League of Legends and Free Fire, has been making cuts since June. Their headcount has more than doubled in the past year.
The company’s second quarter earnings were weak (net loss of $931 million) thanks to mounting cost of borrowing and a slowing global economy. To increase profitability, the company has scaled back its overseas footprint and periphery businesses to focus more on its key markets and core products.
The company did not reveal the number of job cuts in Singapore or at its other offices, but it is estimated that the job losses are in the hundreds.
Jessica Huang Pouleur, a partner at venture capital firm Openspace, to CNBC in June, “Last year, a lot of what happened was a lot of cheap capital in the market flooded the market (which) allowed companies to grow really at any cost.” She continued: “What happened was people hired very rapidly. You have a problem; you just throw people at it. I think we’ll likely see more of it to come over the course of the next few months.”
After struggling with mounting cost of borrowing and slowing global economy, the company scaled back its overseas footprint and periphery businesses to help focus on profitability. They did this by consolidating their position in key markets and core products to focus on profitability.
The company did not release the exact number of job cuts but it’s likely that these job losses will take place at offices around the world, and in Singapore.
Southeast Asian companies are making significant cuts in their workforce. For example, Singapore-based StashAway laid off 14% of its employees, and Malaysian online shopping platform iPrice made more than 25% of its employees redundant.
In November, two major companies in Singapore – Stripe and Twitter – made cuts to their staff.
Stripe announced that it would cut 1,000 or 14% of its global workforce after the job cuts. After these reductions, Stripe will maintain 7,000 employees. Singapore-based jobs were impacted by the job cuts.
A day later, Twitter announced it would layoff around 3,700 of its employees. The Singapore office was not spared from the tech layoffs and Singapore’s Straits Times reported that the among those impacted were staff from its engineering, sales and marketing teams.
Funding levels for startups in this region have fallen by 7 per cent this year, according to Crunchbase. According to the report, funding fell to USD36.3 billion in the first quarter of 2022 compared to the same quarter last year.
When COVID hit, many tech companies ramped up in anticipation of the return to the ‘normal’ behaviour of citizens. Demand increased and they quickly grew to take advantage. Now, people are beginning to find a bit of balance after the lockdowns but some habits have changed. Inflation and rising interest rates have put pressure on these companies. Some say that recent share price decline for major tech firms is long overdue.
Although the tech industry could be impacted in the short term, it will continue to grow in the long-term. Market volatility is likely in the near future but this dynamic industry won’t stall long-term.
A recent article published by consulting and recruitment specialist Mercer shows that the demand for tech jobs and talent continues to outstrip supply in Asia. Mercer’s evidence includes the starting salaries for graduates with a computing degree. Comparing Mercer’s data from 2018 and factoring the time it generally takes for one cohort in most locations to complete an average degree course, there has been significant growth, driven primarily by massive hiring in emerging tech markets such as Vietnam (59 per cent increase). In addition, Mercer also identified lower-tier cities in China where there had been a 22 per cent increase since last year.
The internet economy in Southeast Asia is growing rapidly and will double by 2025. According to research from Google, Temasek Holdings, and Bain & Co., the internet economy in Southeast Asia is predicted to reach USD363 billion by 2025.
Dr Pang said that “periods of major adjustments and corrections” are unavoidable in the tech industry, citing the dotcom bubble from the 1990s to early 2000s.
“The last two years of the pandemic drove growth in our industry, but recent events have highlighted that changes and adjustments are needed,” she explained. “With the Singapore tech layoffs, it is safe to say that tech is in a period of adjustment.”
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