Overview
Singapore a destination of choice for tech companies, due to advanced technological development and innovative business environment
Singapore, a city-state, is described as a ‘miniature Silicon Valley’, because of the presence of around 80 of the world’s top 100 technology firms. This can be attributed to a combination of factors including modern, physical and digital infrastructure, a strong digital talent base, and robust intellectual property (IP) regulations.
Moreover, Singapore was ranked second of 63 countries (after the United States) globally, in the IMD World Digital Competitiveness Ranking as of 2020. Recent research by Google and Temasek found that Singapore’s internet economy was worth USD 9 billion in 2020, and is expected to grow at 19% annually, to reach USD 22 billion by 2025.
Singapore is seen as a centre of tech development in the region, as companies in the city-state range from those simply selling tech to actually building it. Singapore’s primary goal is to focus on stimulating the country’s growth in the technology and communications sector, and granting support to the digital economy strategy.
Directors and CEOs of many leading multinational corporations identify the main advantages of setting up their businesses in Singapore to include an innovative ecosystem that is made up of advanced infrastructure, an attractive and growing network of startups, diversified world-class talent with strong technical backgrounds, and government grants and smooth regulations to welcome new businesses into the country.
While the economy benefits from the technical and management talent brought in by these foreign companies, and the high-value business roles they create, foreign firms get a better understanding of what businesses in Singapore need, and have access to a greater pool of clients. High-tech companies like Google, Facebook, Amazon, Stripe, Salesforce and Grab have their regional hubs in Singapore. The country is likely to experience increasing synergies with Silicon Valley, with cross-border investments and significant technological advancements.
High-tech startups supported by various government initiatives
Singapore has a long history of a strong and stable government, with a merit-based education system, racial harmony and diversity, international trading and travel hubs, and an advanced banking system. The country is fast becoming a hub for software, enterprise and e-commerce business startups, particularly in deep tech, and a base for semiconductor, disk drive and hardware manufacturing, packaging, testing, assembly and logistics.
In 2023, Singapore encouraged small and medium-sized enterprises (SMEs) and startups by providing government facilities such as business funding, infrastructure support and talent. Furthermore, global investors are being attracted to the country, which helps the growth of the economy and business environment.
The latest report of Access Partnership’s Economics Strategy team, commissioned by Google, examines the statistical significance and economic effect of digital technologies in Singapore, especially in non-technological sectors. The study finds that if leveraged fully by 2023, digital technologies could create up to SGD 65 billion (USD 47.4 billion) in economic value, which is equivalent to about 13% of the country’s GDP in 2020.
Low adoption of the Internet of Things (IoT) and lack of specialised digital talent the main barriers to digital transformation
One of the main hindrances to achieving full digital transformation is Singapore’s low rate of adopting IoT, despite most companies having access to the internet and an online presence. In particular, SMEs face greater challenges in adopting such technologies.
Another barrier is the lack of specific digital talent and skills that have increasing demand, particularly with the COVID-19 pandemic. For example, a survey in 2020 found that although 94% of employers were using data to make business decisions more often than a year ago, nearly all of them felt that their staff lacked adequate data skills.
To fully capitalise on digitalisation, Singapore would have to address the following three areas:
- Facilitate digital adoption, particularly for SMEs
- Digitally upskill the nation in emerging technologies
- Set up the country as a regional hub for digital trade
A range of initiatives have already been introduced to accelerate digital transformation, such as the Emerging Technologies programme and National Digital Literacy Programme. However, there is scope for Singapore to further develop these efforts.
Key Trends
Tech-enabled entities among fastest growing companies in Singapore
Recent research by Statista and The Straits Times shows that traditional firms that use technology to boost their product or service offerings indicate faster growth and have higher potential to generate future revenue as well.
Carro, a tech-driven automobile marketplace, was ranked at the top of the fastest growing companies list in Singapore in 2019, achieving compound annual revenue growth of 422% from 2016 to 2019. Similarly, other firms in industries such as logistics, transport, finance and leisure that use technology including chatbots and other forms of production automation are able to deliver superior customer service and increase productivity.
Technological advancement in the country increases demand for high-tech talent
The country foresees the tech industry adopting a more cautious outlook on hiring, as companies exercise greater prudence in their expansion plans, while demand for tech talent in Singapore is likely to grow.
In early 2022, many tech companies in the country paid attention to the growth and hiring of workers, which may have resulted in lower profitability. Nevertheless, growth sectors such as banking and financial services, biotech and fintech are expected to be hiring actively to fill tech job vacancies.
A heavy demand for developers including software engineers, full stack developers and mobile app developers is expected in 2023, as digitalisation of technologies and transformation continue to reshape industries. Technological roles like that of product managers, user interface (UI) developers, cybersecurity experts and cloud architects will also continue to be highly sought after.
Recruitment of foreign tech talent on the rise
In 2022, the then minister in charge of the government's Smart Nation initiative highlighted that the demand for ICT workers would amount to 60,000 by 2023. However, the education system of the country produces only 2,800 ICT graduates per year, indicating that the majority of these jobs would have to be filled by foreigners. The Singapore government has introduced several new initiatives to nurture local talent by creating a career development journey for local staff.
Meanwhile, since 2021, established foreign tech entrepreneurs, leaders and experts have been allowed to work in Singapore with the newly introduced Tech.Pass. A 5-year work permit - the Overseas Networks & Expertise (ONE) Pass - was also implemented in January 2023, as one of several policy initiatives to strengthen Singapore’s position as a talent hub.
The way consumers use technology has also changed rapidly over the years, with huge developments in areas such as AI. Singapore’s development as a tech hub mainly relies upon the workers who are willing to adapt to these shifts in technology.
Key Statistics
- Singapore would require an additional 1.2 million digital workers by 2025.
