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As the world entered one of the most significant economic downturns in history amidst a global pandemic, a fast growth, disruptive American tech company announced its expansion to Southeast Asia, hiring its first Singapore-based employee.
Snap, the company behind the popular app Snapchat, recently announced a new company director for Southeast Asia market development. But Snap is not the only company looking to do business in the region; Southeast Asia, also known as the Association of Southeast Asian Nations (ASEAN), is red hot right now. Why are so many tech companies and high growth startups looking to this region as their next big play?
First Things First: Which Countries Comprise Southeast Asia?
For millennia, societies have recognized the relevance of this region as a passage for traders on their way to the Spice Islands, the vast Chinese market, and the Maritime Silk Road. Nowadays, the term Southeast Asia refers to the mass of land and archipelagos that are covered by the states of Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Big Markets and Connected Consumers
Giants such as Facebook, Google, Microsoft, and Amazon already have a presence in Southeast Asia, following in the footsteps of foundational tech titans like HP, IBM, NCR and Intel. As the markets quickly evolve, other players have established offices in Singapore in recent months, and the trend is set to accelerate.
ByteDance, the owner of the popular video streaming app TikTok, opened an office in Singapore’s central business district this year, and they are considering moving their global headquarters there. Just this May, the Chinese e-commerce giant Alibaba bought half of a $1.2 billion skyscraper in the neighborhood as well. The road to this market entry has been paved with many successful mergers and acquisitions, and a massive influx of private equity, venture capital, and start-up friendly policies and infrastructure… the environment and demographics have never been riper for tech firms to harvest opportunity.
It’s easy to understand why so many global tech companies are jumping into Southeast Asia. The market is enormous: more than 650 million inhabitants live in the whole region, but six countries make up for 95%+ of the overall Southeast Asia GDP: Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam.
According to the e-Conomy SEA 2019 report by Google, Temasek (a state-owned company that manages an investment fund on behalf of the Government of Singapore), and Bain & Company, Southeast Asia’s digital economy may reach U.S. $300 billion by 2025. The region added more than 100 million internet users between 2015 and 2019. Just a decade ago, four in five Southeast Asians had no internet connectivity; now, 90% of Internet users in the region connect to the Internet using their mobile phones primarily. ASEAN is a mobile-first market and has leapfrogged over a lot of technology waves, now embracing the most cutting-edge open source software and application development stacks available.
What’s more, over half of the population of Southeast Asia is under 30 years of age. For example, while a location like Singapore is ideal for international tech companies due to its positioning in the region and the fact that English is the official language, there’s also a significant consumer base that offers new windows of growth surrounding it. Singapore offers a favorable environment to set up a business, and it’s also right next door to some of the most promising emerging markets in the world, like the Philippines, Thailand, and Vietnam, where supply chains are shifting, and the population demographics make them incredibly attractive as consumer markets as well as manufacturing centers.
A Growing Hub of Talent
Beyond market size, the youthful population of Southeast Asia also offers a deep talent pool for your business. There are more than 6,500 higher education institutions and 12 million students in the 10 nations representing ASEAN.
Consider a few examples of the many mind-blowing statistics: the Philippines produces over 130,000 information technology and engineering graduates a year, and Vietnam is producing around 80,000. Educational investments over the past decade in economies like Vietnam are showing huge results, with the likes of IBM and Oracle building development bases in-region to power tech advancement projects.
Technology shapes not only the way youth in the region live and work, but even their mindset: young people in Southeast Asia are looking for organizations that give meaning and purpose to their work, that value their freedom, provide stability, and encourage their constant thirst for knowledge. This bodes well for innovative companies looking for hotbeds of switched on talent, and moreover, it’s a perfect market environment reflecting the reality of the times for global operations. This is a region where the learning curve is not too steep, and the time to value is FAST.
What Does This Mean for Your Company?
It’s hard to know exactly when to move your products and services into a new market, and the competitive nature of international business provides no guarantees. But if your company has been waiting for a window of opportunity, it’s here. The time is now, and the place is Southeast Asia. Emerging economic strength, a blossoming talent pool, and a tech-savvy consumer market with considerable buying power – the foundation for success is in place.
Maximize Speed to Value with an Employer of Record
With the global business community collectively discovering the high potential in Southeast Asia, time is of the essence, and that’s why Globalization Partners’ Employer of Record (EOR) model exists.
Here’s what entering the Southeast Asian market looks like with Globalization Partners:
- Identify the candidate you wish to hire.
- Generate a compliant employment contract and competitive local benefits package almost instantly.
- Onboard the new team member in hours.
You no longer are required to set up an entity or become an expert in international employment law to grow a global team. You don’t even have to worry about risk – all tax, compliance and HR matters are lifted off your shoulders. Get to market faster, find value sooner, and watch the impact it can have on your business.