The talent shortage is not a new problem. In 2001, Mckinsey researchers predicted that to have a winning shot at the war for talent, companies must possess the make-or-break ability to “attract, develop, and retain talent.” Exactly two decades later, corporations worldwide are still struggling to find solutions, and it’s only projected to worsen.
According to Korn Ferry, demand for skilled workers will outpace supply, creating a global talent shortage of 85.2 million people and a financial impact of US$8.452 trillion in unrealized annual revenue by 2030. That’s the equivalent combined GDP of both Germany and Japan.
Asia Pacific’s talent shortage
In Asia Pacific, talent shortage woes are even more pronounced. In Singapore, for example, the highly skilled talent gap will hit 1.1 million by 2030 – an amount equivalent to 61.3 percent of its projected 2030 workforce for highly skilled labor.
While it’s impressive that many tech juggernauts like ByteDance, Alibaba, Zoom, Stripe, Tencent, and Huawei have opened offices and headquarters in Singapore, it also means that the hunt for quality talent is critical. Furthermore, Covid-19 related border restrictions and stringent international worker labor policies are further inflaming the tech talent deficit.
Down under in Australia, the situation isn’t any better. By 2030, the country is expected to lose US$587.56 billion due to talent shortages and could fail to grow by more than 25 percent.
In a recent speech, Prime Minister Scott Morrison declared building in-demand skills as “key to delivering a stronger economy.” Australia’s impacted talent market, shrinking population – a first since 1916 – and upskilling needs means companies must develop better talent sourcing strategies moving forward.
To address the skills shortage, Singapore set up Tech.Pass. The visa, which the Singapore Economic Development Board administers, grants international tech entrepreneurs, leaders, or experts entry to the city-state.
Similarly, Australia set up the Global Business and Talent Attraction Taskforce to attract “high-value, marquee businesses and exceptionally talented individuals to Australia along with their ideas, networks, and capital.”
But is it enough?
Houston calling: ready for take-off
So how can Asia Pacific companies flip the script? Expand your search outside local cities and narrow in on emerging technological hubs that are quickly gaining a cult status where quality talent is concerned.
One such hub is Houston, Texas.
According to Axios, Houston is the second-fastest growing tech hub amidst the pandemic. Ranked against 14 other major U.S. labor markets, Houston – the fourth most populous U.S. city – has invited a healthy influx of software and IT professionals from March 2020 to February 2021.
While Microsoft and Amazon – the latter announced plans to expand its Houston tech hub and create more than 150 jobs –already have a sizeable presence in Houston, others like Bill.com, Nuro, and Hewlett Packard Enterprises are also planning to either relocate or expand into the city.
The 2021 Houston Tech Report stated that the Houston tech ecosystem has already contributed US$28 billion in GDP, generated 235,800 tech jobs, and has over 700 VC-backed tech startups with a combined total venture capital of US$753 million, up by 250 percent since just four years ago.
With such impressive figures, the central question on many minds is: Can Houston become the next, younger, more vibrant Silicon Valley?
To Sylvester Turner, the mayor of Houston, the answer is a resounding yes. When Google announced plans in 2020 to create a hub for its regional cloud enterprise sales team in Houston, Turner said, “Houston is a hub for innovation and technology and the digital universe. Google’s decision to establish an office here provides further momentum as we build the Silicon Bayou.”
Houston, the next Silicon Bayou?
Primed as the hottest place for young professionals to kick-start a career in tech, Houston is now home to the many tech professionals who were previously concentrated in a few cities. The pandemic played a large part in redistributing talent more evenly across the United States, helping to spur employment opportunities and create technological hubs.
[bctt tweet=”Primed as the hottest place for young professionals to kick-start a career in tech, Houston is now home to the many tech professionals who were previously concentrated in a few cities.” username=”globalpeo”]
Apart from its considerable tech talent, particularly in software and web developers, systems and cybersecurity analysts, support specialists, and network architects, the city also acts as a conduit for unparalleled tech success.
Its recent third placement in the overall fDi Tier 2 Cities of the Future report lies testament to that. The reputable talent hub also prides education above all else, housing five global universities, over 30 international baccalaureate schools, nationally ranked graduate schools, and community colleges.
The report also ranked Houston at sixth place in the Business Friendliness category. Unsurprisingly, the Lone Star State of Texas boasts zero personal and corporate income tax – ideal for companies ready to expand and hire cost-efficient talent.
While Houston was the third-highest city, after New York and San Francisco, to file for H-1B visas, the average H-1B salary was significantly lower than many prominent tech hubs. At an average salary of US$88,442, Houston workers expected compensation over 18 percent less than workers based in New York.
With its low cost of living, a highly educated workforce, colossal amounts of tech talent, and diversity (1 in 4 Houstonians is foreign-born), labeling the city as the next Silicon Valley of the American South might not be a reach.
What does this mean for Asia Pacific?
As the war for professional talent heats up, tech hubs countries used to target are unlikely to have any talent to spare and are most likely waging their own battles to retain the professionals they do have.
A 2019 survey by Robert Walters found that among the nearly 400 technology professionals and hiring managers across Southeast Asia, 68 percent of tech hiring managers said it took three months or more to fill an open tech position on their team.
While adapting a remote-first mindset for their workforces is a good step, companies must know where to look for the talent that will build their team of the future.
Houston could be target number one for Asia Pacific countries that wish to gain a competitive advantage. Right now, the Texan city is reaching an inflection point in its emergence as a glorified tech hub and is, most certainly, the prime destination of choice for a growing number of companies moving out of California.
Using an Employer of Record (EOR) model
Globalization Partners is a global Employer of Record (EOR) with an active presence in 187 countries worldwide. Our full stack global employment platform makes it simple and easy to hire a remote team – in just a few clicks. And our local teams include HR professionals who understand the nuances of Houston’s local laws and customs.
When you work with Globalization Partners, all you need to do is find top talent to join your organization, and our team will handle onboarding employees, payroll, and providing compliant and competitive employment terms.
Our legally compliant SaaS Employer of Record platform and world-class customer support team can help you move quicker than your competition. Learn more about our EOR solution to determine whether this is the right fit for your expansion strategy.