Foreign unicorns here juicing up market for high-tech skills

Thu, Jul 11, 2019

THE growing pool of foreign unicorns in Singapore is adding magic to the local market for highly-skilled jobs.

According to data compiled by BT, 24 foreign tech unicorns - venture-backed companies valued at over US$1 billion - have a presence in Singapore. Nine of them employ a total workforce of just over 1,000, most of them in highly-skilled and tech-centric jobs.

A check on business network LinkedIn showed another 817 persons who self-identified as working for the other unicorns.

While the data excludes local unicorns like Grab and listed tech companies like Google, Facebook and Uber, together this group would have added thousands more jobs that require high-tech skills.

The largest employer among the 24 foreign unicorns is Airbnb, which told BT it has about 300 employees here. Indonesian super-app Gojek is second; the firm now has more than 230 employees in Singapore. Gojek's hiring in Singapore this year is focused on product fraud, digital marketing and operations.

WeWork declined to share its Singapore headcount, but going by LinkedIn profiles, it has some 210 staff here. Food delivery player Deliveroo told BT it employs 124 in its office. Hong Kong-headquartered Klook Travel, which has 60 employees in Singapore, plans to grow this headcount to over 100 by end-2019. The startup is hiring for its strategy and marketing teams.

The numbers are set to grow with Singapore's emphasis on tech jobs. The newly-created Digital Industry Singapore (DISG) office aims to add 10,000 new private sector tech-related jobs over the next three years.

Still, it's not just a numbers game. Observers say what's more important are the skills involved as they boost the long-term resilience of the workforce.

Samir Bedi, partner for people advisory services at Ernst & Young Advisory, said foreign unicorns are adding high-tech jobs that "blur industry lines", especially in areas such as artificial intelligence and digital marketing.

Jason Seng, Singapore leader for Deloitte Human Capital Consulting, added: "More than just adding jobs, what is exciting... is that the type of jobs on offer require unique skill sets, or opportunities to develop them, in new-age or disruptive industries like fintech."

Equally important is the flow-through effect that such jobs have on the wider labour market and economy.

DBS senior economist Irvin Seah said that while startups are not substantial jobs creators compared to traditional companies, they have a "multiplier effect" on other businesses that benefits the overall economy.

"It's not about direct job creation; it's really (about) enhancing the overall ecosystem in Singapore, entrenching more of these cutting-edge technologies in Singapore, fostering more collaboration between local companies and these startups and then indirectly, you create a vibrant economy. Hence, job creation will be one result of that."

But it is difficult to calculate the "multiplier effect" that the entry of foreign unicorns has on Singapore, said associate professor Lawrence Loh of the National University of Singapore Business School. More research can be done in this area, he suggested.

UK-headquartered unicorn Deliveroo has attempted to quantify this impact. In April, it released a report by consultancy Capital Economics, indicating that the firm supports some 5,000 jobs in the broader Singapore economy. This includes jobs in partner restaurants, businesses in Deliveroo's supply chain, businesses in the supply chain of the restaurants and businesses where employees and riders spend their wages.

Unlike many other foreign companies that enter Singapore, however, unicorns play a riskier game. Many are not profitable and drive their global expansion through funding from venture capital.

The high-profile exit of Uber last year from South-east Asia as well as the collapse of Chinese bike-sharing unicorn Ofo illustrate how foreign startups can rapidly withdraw from overseas markets.

But the consequent impact on the local jobs market is seen as muted.

Assoc Prof Walter Theseira, of the Singapore University of Social Sciences, said: "Even during the massive dotcom bust, many firms which were affected were actually not startups, but were mature tech companies who catered to startups, such as the network equipment manufacturers. I don't think our startups generally pose such systemic risk." He cited the ride-hailing sector as a possible exception.

Selena Ling, head of treasury research and strategy at OCBC Bank, said that while some churn is expected since startups are more vulnerable to failure, "more diverse sources of job creation for the Singapore economy is to be welcomed, so the entry of foreign unicorns should be seen positively."

Startup failure is not an issue as long as the displaced labour is able to transition smoothly to other jobs, added Jamus Lim, associate professor of economics at ESSEC Business School Asia-Pacific.

Another possible risk if unicorns leave is that tax credits or subsidies "are provided with little payoff" and these investments are written off, said Assoc Prof Lim of ESSEC. "Some form of risk management, on the part of government credits and subsidies, can definitely be a bigger part of the equation," he said.

When asked about the opportunities and risks that tech unicorns pose to the economy, a spokesman for the Ministry of Trade and Industry told BT in a statement: "There are inherent risks in all businesses, and the challenges that come with growth are not unique to tech unicorns."

The spokesman added: "Employees who are willing to weather the risks working in a startup could potentially face big payoffs in the longer term, when the company goes through an initial public offering or a profitable exit from the market. This could lead to a virtuous cycle in the Singapore startup and innovation ecosystem, where employees transfer and share knowledge."