Tech talent compensation has shifted dramatically in Southeast Asia: Monk’s Hill Ventures

• There is a regional tech crunch, with US and China big tech attracting talent
• Cash is still king in compensation; technical roles are still in high demand

THE SOUTHEAST Asia Tech Talent Compensation report, published by regional venture capital firm, Monk’s Hill Ventures, and talent platform Glints, states that the reality of tech talent compensation “has shifted dramatically within the region”.

How dramatically? Base salary has at least doubled since 2016 for most roles, the report found. And, despite the Covid-19 pandemic, there are now more homegrown startups than ever moving into late-stage.

At the same time, US and China tech companies are encroaching onto the scene, offering high compensation packages to attract a limited and more affordable (in their eyes) pool of talent.

The report, which interviewed 20 founders primarily in Singapore, Indonesia, and Vietnam, and Thailand; on top of C-suite compensation data survey with over 20 startup tech founders, sought to shed light on trends and insights relevant for founders and startups across the region.

The region’s tech industry has been fast-moving in the past 12 months – the report notes that, by the time of publication, the salary data provided will have likely trended upwards particularly in engineering, product, and data science.

This, the report continued, is partly due to big tech companies’ growth in the region, and due to more homegrown companies moving into later stages. This growth in the SEA startup ecosystem meant that many founders and hiring managers are now grappling to, especially, find strong technical talent.

Key findings

The report highlights that there is a tech crunch regionally, particularly in Singapore, for engineering and product manager roles. Compounding the talent squeeze is the entry of US and China tech companies into the region. These companies include the likes of TikTok, Tencent, Alibaba and Zoom, all who are more likely to pay above-market rates for tech talent, or even write blank cheques for high performers (in some cases).  

The report also found that cash is king when it comes to compensation, though that is changing. Equity, while a more common component of compensations for CEOs, CTOs and other executive level hires, is still not the preferred choice among junior and mid-range hires.

Fewer than 32% of tech talent surveyed in the report are being compensated in equity, with cash being preferred particularly among junior-mid level hires. Things are shifting however – founders interviewed are spending more time educating their teams on the benefits on equity. While it is observed that executives with work experience in more mature startup ecosystems such as Singapore tend to value equity options more, other founders believe that the ecosystem still needs time to mature and see more exits before mid and junior-range talent start to value equity.

Technical roles are still the most in-demand and highly remunerated across the region. Controlling for level of seniority and geography, the report found that technical (product, data science, and engineering) roles earned 54% more than nontechnical roles (marketing, operations, sales, finance). Skewing the renumeration gap further, founders and tech talent have shared anecdotally that big tech companies even offer open contracts to strong candidates; this is where the candidate can practically name their price.

Additionally, the differences in base salary between product and data science roles and nontechnical roles were even higher (1-2x) than for engineering. This suggests that while engineering skills are becoming more common across the region, specialised product and data science skills remain hard to come by.

Interestingly, as the report noted, the base salary differences between engineering roles and non-technical roles were the smallest in Indonesia, less than in both Vietnam and Singapore. At the same time, salary differences for senior roles relative to junior roles were the highest in Vietnam for both tech and non-tech talent compared to Singapore and Indonesia.

This is suggesting strong upward potential for salary growth within the Vietnamese tech sector.

The winning strategy

Besides big tech companies, some startups are offering annual wage supplements (AWS), bonuses, restricted stock units (RSU) or employee stock ownership plans (ESOP). The report observes more startups offering ESOP based on how long the tech talent has stayed in the company.

In Indonesia, it is mandatory to offer a one-month festive bonus and in Vietnam, there is a standard one-month Tết bonus.

Remote work is also here to stay. Most founders the report spoke to have adjusted to the new normal, implementing staggered work schedules in the office or 100% work from home policies. One founder has even shut their physical officer in favour of remote work.

Moreover, the report observes the emergence of founders building completely remote teams and being more flexible on where to source the best talent, particularly given the current talent crunch in Singapore.

What is a winning strategy here? According to the report, a regionally distributed talent strategy would be one. Their analysis of salary data across the region points to an additional benefit of the shift towards remote work; the ability to tap on regional talent.

Given the wide range of salaries across the region, many startups are shifting towards a strategy of regionally distributed teams, to take advantage of the diversity of skill sets and compensation benchmarks across the region. Accordingly, to create a robust work culture, startups need a team-oriented approach.

The most in-demand roles

Monk’s Hill’s report noted that engineering was ranked as the most in-demand role across Singapore, Indonesia, and Vietnam. Engineering salaries are also among the highest when it comes to tech startup roles.

Full-stack developers have the widest pay range due to the multiple skill sets they possess. Anecdotally, finding talent with competencies in frontend and backend skills is hard to come by in the market. In most cases, developers would have gained expertise in either frontend or backend and complemented their tech stack through exposure managing horizontal projects.

The range for junior developer salaries also varies widely. Due to an oversupply of fresh graduate junior engineers in markets such as Indonesia and Vietnam, starting salaries can be low. However, they quickly grow with a few years of experience.

For example, while starting salaries for the most junior engineers can be low in Vietnam, they quickly grow to the range of US$700 - US$1,200 with 1-2 years of experience, Median salaries for junior frontend, backend, and full-stack engineers are 2.5x higher in Vietnam than in Indonesia. Unsurprisingly, Singapore engineers are paid the highest across all markets.

For founders, VP of Engineering is one of the most critical hires. Singapore-based startups at Series B onwards paid a base monthly salary ranging from US$7,500 - US$10,000, with equity compensation ranging from 0.3% - 1.2%.

In Indonesia, VP or Head of Engineering roles ranged from US$2,800 - US$7,100 depending on the stage of company. In Vietnam, early stage companies paid on average US$1,000 - US$5,000 for this role, US$5,000 - US$6,000 for post Series A, and US$8,000 - US$10,000 for Series B and above.

Similar to engineering talent, product tech talent is one of the most sought after in Southeast Asia. In Indonesia in particular, 20% of the report’s survey respondents mentioned product as the most in-demand role.

Controlling for market and seniority, product roles in Indonesia were paid double non-tech roles, and 23% more than engineering roles, reinforcing the scarcity of tech talent. Product manager positions with fewer technical skill requirements tend to earn less than those that deal with larger engineering complexities.

Data science, the study found, is the third most in-demand role after engineering and product across Singapore, Indonesia, and Vietnam. Singapore in particular continues serving as a hub for data scientist talent, with its larger talent pool and high-tech infrastructure. For example, Indonesian ride-hailing company Gojek currently houses its data science team in Singapore.