Radford Perspectives

Asia, Middle East & Africa

Discover the biggest global compensation trends, issues and challenges facing technology and life sciences companies in Asia, Middle East & Africa today.

 

Companies will benefit from revisiting their strategy for competing in the AMEA region as there are constant workforce changes in this high-growth market

The technology and life sciences sectors in Asia, the Middle East and Africa (AMEA) are growing rapidly, and companies that aren’t confident about their strategy for competing within (or against) businesses in these markets will be at a strategic disadvantage.

Where multinational companies once had their pick of skilled talent thanks largely to higher pay premiums, they now find themselves competing in a tight labor market where employees are often attracted to local companies for a variety of reasons. These include starting salaries that are now on par with multinationals, opportunities for rapid promotion and pay increases, a sense of national pride, management styles and benefits more closely tailored to the culture, career advancement and training opportunities.

The business success of technology and life sciences companies in AMEA has been remarkable. The local technology sector in giant markets like China and India continues to evolve from a primarily hardware and manufacturing business to focusing on software development, artificial intelligence (the highest valued AI startup is currently in China), machine learning and cloud computing. The Chinese government’s national mantra, “Everyone Venture, Everyone Innovate”, has coincided with (or perhaps partly driven) a robust startup environment— along with the emergence of venture capital firms in markets like Singapore, Hong Kong and India.

These technology tools are also being leveraged in the life sciences market to obtain operational efficiencies in research and development, patient-focused outcomes and innovative new treatment options. As a result of these developments, we’re also seeing an increase in the number of life sciences companies expanding globally at earlier stages.

Business growth has translated to positive workforce indicators across the region. Salary budgets for 2019 across Asia-Pacific are robust, particularly in the high-growth regions of China and India. Budgets are projected to increase for 2019 in three of eight life sciences markets and four of eight technology markets. Meanwhile, optimistic business growth has translated into high employee turnover. The percentage of voluntary turnover has risen in seven of eight life sciences regions over the past year and half of the technology regions we studied.

To find increasingly specialized talent and compete in a growing industry, HR leaders in AMEA must innovate as well. Many are turning to non-traditional job-seeking channels, including the social media platforms LinkedIn and WeChat, and expanding to new talent pools like the US and Europe. In a turn of events, multinational companies from the US and Europe are competing with AMEA-based companies on their own turf.
 

Figure A
Average Overall Salary Budgets (Undiluted)

   

 

Country 2018 Actual   2019 Planned
Australia 3.4%   3.3%
China 7.2%   7.8%
Hong Kong 4.2%   4.0%
India 10.4%   10.5%
Japan 2.8%   3.0%
Singapore 4.6%   4.6%
South Korea 4.6%   4.8%
Taiwan 4.0%   4.0%

Source: Radford Global Workforce Trends Report, Q3 2018

 

Figure B
Median Voluntary Employee Turnover

 

  •  Q3 2017
  •   Q3 2018

Source: Radford Global Workforce Trends Report, Q3 2018

Business Strategy Must Account for Local Practices

Multinational companies operating in AMEA often find regional nuances make it difficult to implement rewards and talent programs that are developed at company headquarters outside the region. The challenge for many HR professionals in Asia that work for multinational companies is helping their colleagues at headquarters understand the local practices and why they might deviate from home country practices.

When it comes to compensation planning, for example, Chinese local companies typically provide rapid advancement for new employees that are accompanied by high salary increases. The gap in pay between entry-level employees in China vs. mid-level career professionals is often much larger in China than the US because of higher salary progression. To illustrate this base salary progression, consider the following example in Figure C.

Figure C
Higher Pay Progression in China

Base Salary Gap Between Entry-level Professional and Mid-level Technical Jobs

Mid-level
Technical		 Mid-level
Technical
↑   ↑
260%   183%
|   |
Entry-level
Professional		 Entry-level
Professional
Chinese* Software   US-based Software

    *in tier 1 cities    |   Source: Radford Global Technology Survey

In India, we have found through our data analysis that pay differentials within the country are largely being driven by services vs. product companies as opposed local vs. multinational companies. In the US, on the other hand, there continues to be large pay differentials for similar jobs based on geographic location— with the San Francisco Bay Area setting the premium for technology companies.

Meanwhile, on the talent management side, many markets in Asia are still culturally centered on organizational hierarchy. In North America and parts of Western Europe there has been a greater focus on enabling individual contributors to make cross functional moves or lateral job changes that expand their skillset without employees feeling they must take on new management roles to grow in their career. This idea has not (yet) become widespread practice in much of Asia, although we do see some startups in the region experimenting with it.

Companies will benefit from revisiting their AMEA strategy in 2018 and beyond while taking into account fast-changing market dynamics in the region as well as local rewards and talent practices (which can vary widely within the region).

For additional insights into the Asia market, read some of our recent articles:

 
 

Meet Our Authors

Alexander Krasavin
Partner, Head of Asia Pacific, Middle East & Africa (AMEA)

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