No wage issue as workforce stays competitive

IT professionals in Singapore have not lost their competitiveness, despite commanding higher salaries than some of their peers in neighboring countries.
Written by Isabelle Chan, Contributor on
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Singapore's IT workforce may not have the numbers to match neighbors like India and China, but its quality talent more than makes up for it.

Industry observers also say Singapore's IT talent, which rank among the highest paid in Asia, will not lose their competitiveness in the wake of rising salaries.

Tan Yen Yen, managing director of Hewlett-Packard Singapore, calls the island-state "a high value-add destination".

"Companies realize this and turn to the republic not for cheap labor, but for innovative skill-sets that are hard to replicate elsewhere in the region. For example, research and innovation here are top notch, and so it management expertise," Tan noted.

Developed markets like Singapore offer world-class IT talent, she added. "From a broader perspective, these IT professionals generally provide good value for the salaries they command. Besides being highly qualified, the Singapore IT workforce is reputed to possess broad industry knowledge and relevant skill sets.

"Companies turn to the republic not for cheap labor, but for innovative skill-sets that are hard to replicate elsewhere in the region."
-- Tan Yen Yen, Hewlett-Packard

"Being stationed in a regional IT hub also means that many of them have hands-on exposure to the latest technologies from around the world. Singapore workers have proven to be adept at incorporating such new-found knowledge in their everyday work," Tan added.

HP, which employs over 6,000 people in Singapore, is "willing to pay a premium for Singapore workers' hardworking disposition, positive attitude, dedication to the task at hand, and in the case of foreign talents, their diverse experience", she said.

Weighing in on wages
According to Hudson's fourth-quarter report on employment trends, hiring expectations across industries, including IT and telecommunications, remain steady. In its survey of 723 respondents in Singapore, 54 percent forecast increased headcount, the same percentage as the previous quarter.

In terms of recruitment expectations for the IT and telecommunications sector, 51 percent said they plan to increase their headcount, which is slightly lower than the previous quarter's 54 percent. One reason for this is that companies have been recruiting heavily to staff new global and regional IT hubs in Singapore and are now starting to consolidate, the Hudson report noted.

Low average employee tenure is a major issue for employers in the current candidate-scarce market. Across all sectors, 36 percent--or more than one-third of employees--have an average tenure of two years or less, while just 19 percent of staff stay with their company for more than four years.

Hudson's survey found that across sectors, many companies are using counter offers to retain staff: 71 percent of respondents said they employed such tactics.

Singapore also has a higher proportion of respondents who "often" or "very often" receive demands for higher salaries than their companies are willing to pay, compared to any other market surveyed in Asia. There is a big gap in salary expectations: 57 percent say candidates are asking for more than 10 percent above the salaries they are offering.

Although rising wages is a concern for businesses, Arcol Desai Narasimhalu, a council member of Singapore Computer Society, said it should not be discussed in isolation.

"The experiences and discussions with employers indicate that the Singapore workforce is highly productive and well trained," Desai explained. "While absolute wages might be lower in other countries, Singapore is still competitive if one takes into account normalized wages."

Sharing a recent discussion he had with the CIO of a large investment bank that has operations in neighboring countries, he said: "He mentioned that he finds Singapore-based ICT professionals to be very competitive and productive in comparison with elsewhere."

Indeed, quality work is what employers are assured of, said Singapore's Infocomm Development Authority (IDA).

An IDA spokesperson told ZDNet Asia: "While cost of labor is an important investment decision, it is, however, not the only consideration. Singapore's infocomm manpower is competitive in terms of its pool of highly-educated infocomm professionals who are also more experienced.

"For instance, in 2006, more than 83 percent of Singapore's 119,700 talent pool received tertiary education. Close to 50 percent of this talent pool is in the age group of 30 to 39 years old, indicating that more infocomm manpower is staying in the profession, and gaining greater experience," she added.

According to Desai, it is not the absolute rise in salaries that should be of concern to Singapore employers. "The key concern would be whether the ICT professionals in Singapore have been retooling themselves to keep abreast of market demands," he said.

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In Singapore, more recruiters are looking not only at a candidate's technical skills. "Their ability to understand how ICT can be used to create business value appears to be much more important than the number of programming languages they know," Desai noted. "So it is important to look at the salaries from the value created by Singapore-based ICT professionals, and not compare them with the wages in neighboring countries."

"It is important to look at the salaries from the value created by Singapore-based ICT professionals, and not compare them with the wages in neighboring countries."
-- Arcol Desai Narasimhalu, Singapore Computer Society

One thing Singapore IT professionals can bank on is the quality education they receive, Desai added. "It is clear that ICT companies in neighboring countries have to set up finishing schools to retrain graduates to be employable. Singapore-trained ICT professionals do not face this requirement," he said. "Further, the large ICT companies in some neighboring countries are already offshoring and outsourcing their work to third-world countries, given the wage inflation in their own countries without corresponding increase in productivity."

Employers should look beyond wages and consider a person's skills, productivity and ability to relearn emerging skills when it comes to hiring decisions. "Attitude to work in different situations is an important factor, too," Desai said.

On the issue of escalating salaries, Andrew Sansom, director of DP Search, said: "Salaries are now spiraling upward [and have been] since March 2007, as demand also grows at a huge pace. Is it sustainable? In the short term, very much so.

"There is a point at which the balance will tip, however, and companies may look at relocation of certain categories of staff to lower cost areas or an escalation in outsourcing," Sansom said. "Singapore has the advantage of massive value-add, in that the workforce here--local hires and expatriates--is way above average for the region, in terms of skill and language ability. That, combined with Singapore's position as a safe haven--in all senses--puts it top of most foreign companies' list as a regional base."

"We are still seeing companies coming here and choosing Singapore as the preferred location. The office and residential rental prices are actually more of a worry than salaries right now. While salaries may go up by 10 percent, rents have tripled," he added.

What advice does the industry practitioner have for businesses and recruiters worried about the talent shortage and escalating salaries?

Sansom said: "The laws of supply and demand operate in the Singapore job market like anywhere else. Salaries are increasing as demand increases. Which would we prefer: A stagnant economy with no growth and steady salaries?

"The short-term solution is to import more IT staff not just from India and China, but from Australia, Europe and the United States. Salaries here, and the low tax, make it very attractive now. Gradually, supply and demand will balance out, and Singapore can remain competitive," he said, pointing out that countries like India are now facing staff shortages, too, and salaries there have gone up with demand.

Still, one business owner believes manpower costs in Singapore should be closely monitored.

Industry veteran Thomas Choong, director of Singapore-based software company Elipva--and who also runs an F&B business--said Singapore cannot afford to let spiraling manpower costs go unchecked.

Choong noted: "The current situation is also influenced by numerous factors: the buoyant stock and property markets, government announcements of significant pay increase for civil servants, inflation, and the economic outlook.

"Not forgetting that the positive outlook could be sectorial, but expectations from employees on salaries are unfortunately not," he said. "Overall, there is, and continues to be, an imbalance in the market and if left unchecked, it would not be healthy as the population greys."

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