While Sea could have handled the situation differently, layoffs and restructuring are corrective mechanisms for firms to cope with economic circumstances and strategic planning, and Sea is taking the right step by stopping the bleeding sooner rather than later, said Ms Ng.
“I think Sea has been growing really, really fast the last few years, they were going for growth versus efficiency. And as what we’ve seen in Chinese tech companies, (restructuring) is something that happens every year,” she noted.
“Sea is taking steps to make sure that they have enough buffer. If Sea had waited two or three more years, the restructuring would have been a lot more painful than now.”
The layoffs in the tech industry come following pandemic-fuelled growth in the sector.
Many tech companies expanded rapidly during the pandemic as consumer behaviour changed drastically with the lockdowns.
Consumers who could no longer shop in physical stores turned to e-commerce; movies at cinemas were replaced by streaming services; and companies en masse swapped boardrooms for video conferencing solutions.
“So there’s the whole tech boom that’s sort of unique to the pandemic. Tech companies had a ‘growth at all costs’ mindset which resulted in mass hiring and spending,” said Asst Prof Ng.
However, geopolitical tensions fuelling higher prices and consumers gradually returning to brick-and-mortar retailers following the easing of pandemic restrictions changed the environment to one that no longer supports the “growth at all cost” strategy, he said.
Companies now have to grow with profits, he said.
DEMAND IN TECH DESPITE UNCERTAINTIES
This era of economic uncertainty has led to tech companies becoming more cautious and rethinking their strategies, said Ms Ng.
With the escalating war in Ukraine and looming fears of a global recession, firms need to brace for a longer impact on drying funds, rising costs, and dwindling consumption power.
“I believe that companies like Grab and Sea, they still have quite a healthy runway – a few years more of cash burn to go. But I think now they are actually becoming more prudent. I think they are thinking, ‘Well, I have one or two years of runway, I don’t know what will happen, so let’s do something now’,” she said.
While volatility is expected to remain high in the tech sector, job seekers with relevant skills are highly sought after as demand for tech talents exceeds supply in Asia, according to consulting firm Mercer.
Hiring trends continue to be focused around technology, according to a report by recruitment agency Robert Walters. It showed that there is a high demand for talents in artificial intelligence (AI), machine learning, cyber security and e-commerce.
There is an increasing appetite for technology and innovation courses, and heightened interest for entrepreneurship among the young, especially in those whose specialisations are not in business, is encouraging, said Asst Prof Ng.
“Based on my observations, at NUS at least, the increasing demand for classes, courses, networking opportunities for entrepreneurship, cross-faculty collaborations … are increasing on a scale which we haven’t seen before,” he said.
“Interestingly enough, it’s the engineering students, science students who want to reach out beyond their hard skills, to dabble in something else. And I think that kind of inquisitiveness is great.”
However, Ms Ng said that while Singapore as a whole pushes the boundaries to innovate in the technology space, a key setback for some tech employees is an unwillingness to think outside the box.
“Mindset is really important,” she said, “Number one, push the boundaries. Number two, logical thinking. This is what we think we will learn in school, but until you try and use it daily, it’s something that I see missing in lots of people here,” she said.
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