Technology in Asia is developing rapidly and tech companies themselves, their workforces, facilities, location and investment strategies need to keep pace, according to the “Tech Trends” report, a new study from Colliers International.
To chart the changes and identify actionable strategic insights for technology occupiers, Colliers International has interviewed 12 major tech companies in depth since summer 2017, from Asia-founded to Western MNCs operating in Asia and including hardware, software, social media and tech service enterprises. Colliers International has combined the findings from the interviews with the conclusions of its own research under four headings: Talent, Artificial Intelligence, “Chindia” (i.e. China and India), and CBD.
Acquisition of talent is the single greatest challenge facing technology occupiers, ranking far ahead of other constraints. This was cited as the key challenge in 40% of responses to a question on the subject, ranking well ahead of competition, regulation or any other issue. The enterprises in the study have particular respect for the technology education and technology ecosystem in China, with Beijing and North China, Shanghai and East China, and India (notably Bangalore) seen as key sources of talent.
Talent is getting younger, with millennials the top or joint top employee age group for two-thirds of the tech companies in the study. Companies may need to locate in CBDs or within the fringes of CBDs to access the best talent pool. This is where internet and IT experts are located, and they form the group predicted to be in highest demand in the future, followed by hardware experts.
The tech sector has greater potential than almost any other to harness artificial intelligence (AI) to enhance productivity in high-value human roles, leading to “assisted intelligence”. The convergence of AI, the Interne t of Things and alternative workplace solutions – with agile working the best design for many technology groups – looks set to transform the office, making it more collaborative, greener and healthier. This will help in acquiring and retaining human talent, and should therefore boost revenue growth and value creation.
Technology companies were asked in the study which markets offer the greatest growth potential on a 10- year view. India accounted for 32% of positive responses, followed by China (24%) and surprisingly, Japan (20%) despite its maturity as a market. Not only are China and India the markets with the highest growth potential, but they are also key sources of talent. Furthermore, exposure to China looks increasingly like a strategic necessity.
Mr. Andrew Haskins, Executive Director for Research, Asia at Colliers International, says, “China and India – Chindia for short – are the markets with the brightest prospects in the medium term. In our view, it is important for technology groups to have exposure to China in particular to understand developments in a dynamic market that now leads Asia in e-commerce, mobile internet and emerging fields such as artificial intelligence.”
Mr. Michael Bowens, Executive Director of Occupier Services, Singapore at Colliers International, says, “In China, we advise technology groups to continue to consider locating in Shanghai or Beijing for the best access to talent or, on a medium-term view, Chengdu which is starting to emerge as a hub for the tech sector. In India, Bangalore continues to dominate the technology market although Hyderabad is emerging as a strong alternative with tech giants Apple and Google developing large campuses there.”
In Colliers International’s view, tech groups need to move towards the CBD or CBD fringe to find and retain talent in R&D, software and IT, and sales & marketing (all roles which should increase in importance in proportion to the integration of AI); and this is expected to further strengthen the attraction of the CBD and CBD fringe over time. Business parks on city edges are an option for smaller or start -up groups. Different economic criteria apply to manufacturing units, for which location outside cities makes sense. However, tech occupiers attempting to concentrate all their operations in out -of-town campus sites look unlikely to attract all the high-skilled staff needed for the key roles of the future.
Mr Haskins adds, “It is conceivable that some companies may be forced to move towards the CBD or the CBD fringe to be near to the talent pool afforded by large urban centres. A prime office location may also help firms gain competitive edge in attracting and retaining talent, since the workforce is increasingly dominated by millennial employees who desire easy access to amenities such as bars and restaurants, as well as public transport.”
Looking forward, Mr Bowens adds, “The workplace strategy for technology occupiers will be mainly determined by factors such as the changing demographic profile of the workforce, considerations of staff well-being and uncertainty over future headcount needs amid the proliferation of AI and automation. In addition, workplace design - whether activity-based or agile working – will not only define space usage but also impact talent retention.”