Tech lay-off wave continues to bite at Vietnam’s heels

Entering 2023, Microsoft and Google announced global lay-offs of 10,000 and 12,000 employees, respectively. IBM laid off nearly 4,000 members, while Spotify cut about 6 per cent of staff. Since November last year, Meta, Amazon, and HP have also adjusted thousands of positions.

Tech lay-off wave continues to bite at Vietnam's heels, Illustration photo/ Source: freepik.com

In Southeast Asia, Shopee parent company Sea Group, Crypto.com, e-commerce platform JD.ID, and GoTo – a merger between ride-hailer Gojek and e-commerce platform Tokopedia – are among the companies that experienced a drastic staff cut in the past year. GoTo in November 2022 cut 1,300 jobs, equivalent to 12 per cent of the number of employees, while Sea Group let go of 7,000 employees in the past six months. Both companies cited a common cause being challenging macroeconomic conditions.

Industry insiders in Vietnam are generally wary of the effect this laid-off wave might have on the domestic market. Nguyen Khuong Tuan, CEO of Stech Company, assessed that the massive lay-off stemmed from the world's economic crisis and will certainly affect Vietnam.

"In some markets like the US, unicorn startups receive too much favour from investors. Accordingly, businesses have quickly recruited numerous human resources (HR), pushing up operating costs. Therefore, when the bubble burst, the common ground for companies was also pulled down," Tuan assessed. "In Vietnam, companies that provide technology as a service will be the hardest hit."

However, Tuan said that job opportunities in the industry are still very promising, as the demand for HR is still there. In particular, software outsourcing companies in Vietnam are still short of high-quality personnel.

Likewise, Ly Ngoc Tran, HR outsourcing director of Talentnet Corporation, believed that the domestic tech job landscape is not too gloomy.

"The massive lay-offs, while devastating, are understandable after nearly a decade of booming growth and then the pandemic," Tran said. "In Vietnam, the HR market will temporarily cool down at least in the first six months, in order to minimise the risk of market changes."

As for Vietnamese tech companies, Tran assessed that restructuring internal talents to optimise cost and maximise existing resources would pose a challenge, as businesses have to determine which positions are permanent and which can be shifted to part-time or project-based types.

"Agile business transformation model will take the throne, and HR outsourcing trends will rise as an optimal solution in this turbulent time," Tran noted.

Nguyen Huu Le, chairman of TMA Solutions, shared a more optimistic view of the impact on tech personnel in Vietnam as the outcome of the world's lay-off trend, as these global giants look for lower-cost HR.

"With recruiting personnel in Vietnam to work remotely, tech groups worldwide will be able to save significantly, as the average cost is only one-sixth to one-eighth compared to Silicon Valley. So tech professionals in Vietnam are not worried about these recent incidents," Le said. "However, domestic IT companies would then have to compete for recruitment with big corporations."

While tech professionals in Vietnam are expected to still be heavily recruited, experts agreed that there is currently a shortage of highly trained and well-oriented HR for the domestic industry. "The door of opportunities will still be open for Vietnamese tech personnel for at least another 10-20 years. The problem is that students in this major need to be well-equipped with the right knowledge to grasp these opportunities upon graduation," Le added.

Meanwhile, Tran of Talentnet emphasised that for vertical development, tech talents now need updated technical skills in AI and machine learning, while for more comprehensive roles, more soft skills are required, such as business acumen, and project management.

"To compete and adapt in the current situation, tech staff should upgrade themselves to be a business partner who not only excel in their job description but also contribute strategic views to the overall business development," Tran said.

Christopher Lee – Director of Management Consulting andWorkforce Transformation PwC Consulting Vietnam We are seeing similar themes in the local Vietnam market around employee lay-offs as organisations are scrambling to manage cost in the uncertain economic environment. Vietnamese companies are also laying off employees,but their focus is driving productivity through digitisation, hence digital/tech talents supporting transformation initiatives are in further demand. Amidst this chaos, the lay-off overseas provides a potential resource pool for local Vietnamese companies to tap into to further their digital transformation agenda. However, such opportunities can only be realised if the culture and communication divide can be bridged. Given that Vietnam is such a beautiful country to live in, this may attract more foreign talents to find opportunities here and, overall, it is a positive for an emerging country like ours. Technology workers have enjoyed one of the largest on-year pay increases, reflecting the dire need for technology/digital skills in the Vietnamese market. The lay-off of technology workers overseas have already begun to affect the sentiments in the local market. Given the uncertain environment, organisations are less likely to offer the large pay increases offered before and are more selective of the types of digital skills a worker brings. Much like how a market correction that happens when an economic bubble bursts, post this shake up, employers and recruiters are much more discerning when recruiting tech/digital talents. They are more often seeking more specialised skills and are only willing to give large pay increases where talents bring a combination of digital and business skills and/or work experiences tied directly to the strategic plans of the organisation. Beyond technology skills, employers are expecting talent to bring commercial acumen and the ability to transform the organisation.