Engineering is still ranked as the most in-demand tech function across Singapore, Indonesia, and Vietnam.
According to the Southeast Asia Startup (SEA) Talent Report 2023, the tech talent compensation landscape first started destabilising at the beginning of 2022. With a wave of tech layoffs from tech giants completed and underway, the report expects the impact to continue reverberating throughout 2023 as tech startups search for ways to cut costs and extend their runway for another 12-36 months — particularly, as many investors and founders expect a more challenging fundraising environment this year.
As a whole, the report unveils insights into recruitment trends and the talent landscape in Southeast Asian markets, including Indonesia, Malaysia, Singapore, Vietnam, and the Philippines.
To start, the study identified eight themes driving 2023. [Note: All currencies are in US Dollars US$]
The tech talent crunch persists in Southeast Asia, with tech roles remaining high in demand, earning on average 38% more than non-tech roles.
Cash prevails over equity in the region. While 86% of companies surveyed offer an employee stock ownership plan, on average, ESOP is only made available to one-third of their talent.
Median CEO base salary grew 2.4x for those that raised $0-5mn in rounds compared to 2021. More CEOs are taking greater equity dilution, likely due to current headwinds. There was also 5% drop in equity for CEOs in the $5-10mn funding stage compared to 2021.
Engineering remains the most sought- after tech function, with the VP of Engineering making upwards of $235,200 annually. Specialised skills such as product and data are also highly attractive to employers. After engineering, talent in product and data are the highest-paid.
Product managers saw the biggest salary increase, making 27% more than in 2021.
Hybrid work is becoming the status quo, with 45% of startups offering hybrid work and 12% offering remote work options to employees across markets.
Singapore remains the most expensive market to hire tech talent, with engineers paid three times higher than in Indonesia and Vietnam. Product managers are also paid three times higher in Singapore than in Indonesia and Vietnam.
As companies focus on profitability and positive cash flow, the top three functions that companies prioritise hiring for in 2023 across markets are engineering, BD & sales, and marketing & PR.
Tech roles remain high in demand
CEO and CTO roles continue to be the two cornerstone roles at the founder level for most tech startups. In tandem, salaries for founders and C-suites have substantially increased from the previous report. For example, at $0-5mn funding level, the median salary for CEOs has grown by 2.4 times.
Overall, the median salaries for CTOs tend to be higher than CEOs at the early stage as CEOs take on more sweat equity. The report also found that non-founding CTOs are consistently paid higher than founding CTOs and CEOs. In the $6-10mn range, non-founding CTOs make over twice of founding CTOs. As the study suggests, non-founding CTOs, particularly at later-stage startups, are hired based on a higher level of experience and a proven track record of success. Conversely, founding CTOs have higher equity (8%-17%) than non-founding CTOs (0.5%-2%).
Going even deeper, geography has some impact on base compensation across the markets to cover the cost of living but little impact on how founders compensate themselves with equity.
As a whole, Singapore-based CEOs and CTOs have the highest base salaries, which is likely due to the higher cost of living. At the early stage, founders also typically wear two hats and take on another C-suite role, where they may pay themselves a lower salary for sweat equity.
While non-founding CTOs start with a higher salary than other C-suites, C-suite salaries begin to normalise as a startup matures after its first institutional check. At the early stage, CFO and CMO roles tend to function more as Head of Finance and Head of Marketing roles, respectively.
Zooming into another cut of the C-suite data, CEOs who are based outside of Singapore receive base salaries that are 30-50% lower than those of their Singapore-based counterparts. This suggests that base compensation is adjusted to reflect the cost of living of where the CEO is based.
This year, companies are anticipated to be more strategic and cautious about who they hire going forward. The report sees this trickle down to talent compensation — both founders and operators expect to have more reasonable salary increment conversations with potential hires. While there will still be increases to match inflation, it will likely be to a smaller extent.
Currently, there is an observed surplus of supply over demand for some tech roles, particularly at the junior level. While junior talent may have expected up to a 50% increase with each job hop, salaries are expected to stay flat or increase slightly, in contrast to the larger jumps noted in the past. In Indonesia, for example, an average increment of 20-35% is expected compared to the 40-70% increments in 2021.
In terms of employee benefits, startups were noted to be reducing fringe benefits to cut costs. However, a flexible or hybrid (almost commonplace across markets) work environment, performance bonuses, and AWS (13th month) bonuses are still essential.
As a whole, 86% of the founders will continue hiring in 2023, albeit more moderately.
Engineering remains the most sought- after tech function
Engineering is still ranked as the most in-demand function across Singapore, Indonesia, and Vietnam. Founders generally see these markets as having strong engineering talent.
As the same time, engineering roles continue to hold the top spot for the highest salaries across all tech roles. Namely, VPs and Heads of Engineering earn the highest salaries compared to other VPs and Heads, with annual salaries reaching up to $235,200.
Southeast Asia tech talent pool grows
The following three trends are observed in the talent landscape in the Southeast Asia region:
Return of the “SEA turtles”: A growing number of tech engineers trained in the United States are returning home and developing an engineering-centric culture in their home countries. These engineers, who have honed their skills in places like Silicon Valley, have acquired skills on how build systems at scale and have what it takes to build a product-led company. This trend is emerging in Vietnam, where talent is returning from other sectors in addition to banking and finance.
Salary expectations will stabilise across SEA:Salary expectations for talent could become more manageable in 2023 compared to previous years, where there was more competition for talent and higher salary inflation. The growth rate will be much lower than in previous years for tech salaries, from upwards of 30% to 10-20% per annum.
Potential arbitrage opportunities from emerging Southeast Asia markets: There are opportunities to source strong senior tech talent in Southeast Asia. For example, the report notes the quality of engineers in the Philippines, saying it can be "highly economical to hire and scale this talent". Engineering talent in markets like Indonesia and Vietnam can be three times lower than in more mature markets.