Jobs Flight? Worry about Industry Flight Instead

Singapore doesn't need to worry about workers leaving, but whole businesses. With a maturing economy based largely on IT, finance, and trade, Singapore no longer attracts budding entrepreneurs looking for the next big thing. And the current outsourcing debacle suggests that no oasis lies on the horizon. To stay competitive, Singapore needs to encourage younger firms to wade into multinational waters, especially with regional partners. But Singapore already has an advantage in its international citizenry comfortable with in a multicultural workforce. As Asian countries benefit more and more from outsourcing and growth in high-skilled industries, by providing the best port for business, Singapore will stay competitive. – YaleGlobal

Jobs Flight? Worry about Industry Flight Instead

Alvin Pang
Thursday, February 12, 2004

IT'S not about keeping the jobs, it's about following the industry, wherever it may go.

While hunting for second-hand furniture recently, I came across a young entrepreneur - an Indian national - disposing of an entire home office's worth of equipment. He was shutting down his Singapore-based firm after just over a year in operation. Another victim of the economic slump, no doubt?

It turned out that the firm had been profitable despite the downturn, but he was relocating to India nevertheless, because 'that's where everything is happening', he asserted. Given the Indian economic explosion, it simply made more sense for him to go home, where his family ties and native status afforded him a wealth of opportunities to develop his business.

But didn't his time in Singapore mean a chance to pick up advanced management skills and a fatter pay cheque and to enjoy more comfortable living conditions? Yes, but it did not make up for the loss of time as a player in the field back home. As a savvy entrepreneur, it made sense to establish a presence in the new market as quickly as possible, rather than stay and be content with modest growth in a safe and steady but small and maturing market like Singapore.

Not too long ago, Singaporeans might have been griping about losing jobs to foreign talent. The reality could be more startling: Singapore itself runs the risk of being downsized as the go-to place in Asia to do business.

This phenomenon has little to do with losing jobs to our Asian counterparts with dramatically lower wages. Our economy, geared for years now towards knowledge-based activities, has not been pinned on low-wage labour-intensive activities for quite some time. The concern at hand is that we may also be losing much of our sheen as a land of opportunity and a place for talented individuals from less developed economies to aspire to.

This means we stand to attract fewer new players from an emergent Asian talent pool. It means promising young professionals and entrepreneurs from emerging markets may no longer look up to Singapore as a place to start off, hone their skills and make contacts. They may increasingly choose to stay at home and work where it counts in order to make their fortunes, even in sectors where we have traditionally done well as a launch-pad or support base - in IT, finance, trade and other services. For a country whose economic fortunes lie in being the best possible middleman, it means we run a risk of getting cut out of the value chain in time to come.

Singapore isn't the only developed economy under threat from such a disruption. The once-mighty Silicon Valley in the United States is also reeling from unemployment, as the IT industry outsources more and more of its critical operations to India for a fraction of US costs. By well-regarded estimates, millions more jobs and entire industry sectors will be lost to outsourcing in the next 10 years and beyond. Cost-consciousness in the current economic climate will only accelerate the process.

Nor is it a simple matter of skills retraining and upgrading. Unlike the decline of the steel and car industries in decades past, it's not blue-collar workers who are being left in the lurch. If research agencies such as Giga and Forester and organisations such as the Washington Alliance of Technology Workers are any indication, it's high-flying, highly-educated and high-priced IT professionals, including programmers and engineers, who have been most prominently hit, with tens of thousands of jobs lost in the past year.

Recent figures suggesting job growth in the US belie the trend: Many of those retrenched, often top graduates of world-class institutions such as the Massachusetts Institute of Technology and Stanford University, are having to turn to 'McJobs' - subsistence-level, low-wage employment well below their commensurate skills.

Superpower it may still be, but the US is losing its draw as the mecca of new global IT talent. The issue is not just white-collar jobs flight; it's industry flight. Entire industries and their associated buzz - not just individual jobs or job-types - are shifting to new centres of gravity.

No one - least of all those countries which are its greatest proponents - can be shielded from the brutal logic of global commerce in the long term. In the coming decades, as the sheer size and deep cultures of Asian nations assert themselves, many will find their economic fates dependent on countries they might once have viewed with disdain.

Can Singapore still remain a place (if not the place) to do business? We cannot sit and wait to find out.

Taking wage cuts quietly is not going to be enough. Singaporeans will have to develop a native sense of aggression and ambition. This includes scouring further field to earn our keep.

Anecdotal evidence suggests ever smaller firms are latching onto the global bandwagon, embarking on projects that span several territories. More assistance could be given to young companies keen to test the waters abroad, particularly with projects that involve regional partners.

If the next generation of global MNCs are going to come from small starters in Asian giants or even regional tigers like Thailand, then we'd better learn to ride their hunger today, before they outgrow our ability to enter the fray. A certain humility may be required in this new frontier.

Singapore has the advantage, at least, of being familiar with an international talent pool. IT firms here think nothing of working with programmers from India, Malaysian and Filipino graphic designers, or translators from China. This heterogeneity is a subtle strength we should not take for granted. It is unrealistic to expect all the talent (or jobs) to stay. But as long as the world still finds Singapore a good place to stop over and Singaporeans good people to deal with, we may have a chance.

Alvin Pang is a freelance writer working in the IT industry.

Copyright @ 2004 Singapore Press Holdings. All rights reserved.