More ICT companies in Singapore are eyeing overseas growth opportunities in 2011, although manpower-related issues will continue to cast a shadow over business projections for the year. These are some of the findings of the Singapore Infocomm Technology Federation’s (SiTF) latest Business Outlook survey which was conducted in January 2011.
In all, 126 companies responded to the 2011 survey. Of these, 29% were multinational corporations (MNCs) and 71% were infocomm local enterprises (iLEs).
The recovery from the 2008/2009 economic downturn continued with more ICT companies returning to growth in 2010. However, profit growth lagged behind top-line performance, pointing to an increase in underlying costs such as the cost of manpower.
The mood of “cautious optimism” which characterised 2010 looks set to permeate 2011 as well. The 87% of respondents who say they expect their profits to grow in the next 12 months are an increase over last year’s 82%. However, the fact that over half of these do not expect the growth to exceed 10% is a reflection of the continuing uncertainty surrounding issues such as the Eurozone problems, inflation in China and the US monetary policy.
To address these concerns, respondents have expressed the hope that the government will provide more cost reduction/relief measures in Budget 2011. For example, the iLEs would like to see more tax incentives to boost SMEs in ICT.
The 87% of respondents who say they are likely to continue and/or to increase their efforts in developing overseas markets represent a significant increase over last year’s 71%.
Given the widespread recognition that it is important for ICT companies to grow their overseas markets, it is not surprising that government support for market creation/development ranks high on many respondents’ wish list for Budget 2011. The local ICT enterprises hope that Budget 2011 will help foster an environment that is conducive to internationalisation. They have also expressed keen interest to be able to participate in more government contracts.
The ICT companies have also called on the government to provide greater support for research and development (R&D). Suggestions include creating a technology innovation hub in the mould of Silicon Valley, providing more R&D grants and funding for local companies while simplifying and expediting the grant application process, and enhancing incentives to increase R&D. The respondents have also called on the government to invest in more innovative ICT projects even if the technology is untested.
Manpower-related issues which dominated the list of business concerns in 2010 will continue to present key challenges in 2011. In fact, a third of respondents (33%) felt that the manpower situation has worsened. Based on anecdotal feedback, the prevailing sentiment seems to be that the issue has been compounded by the tightening of supply in foreign talent.The jobs vacancies that respondents expect to have most difficulty filling are: solutioning and architecting (41%); sales and marketing (31%) and project management (30%). These are followed closely by CIOs, CTOs and IT Managers (28%), software development (27%) and R&D (24%).
Manpower issues also have ramifications beyond talent recruitment. About 59% of respondents - the highest proportion of those polled - cited the lack of local talent/high cost of labour as a key impediment to productivity.
The survey also revealed some differences in the way manpower-related issues affect MNCs and iLEs. While the ability to recruit the right talent remains a major challenge for iLEs with 88% citing this as a key business concern, MNCs appear to have fewer problems on this front. It is ranked a distant seventh with 19% of respondents citing it as a business concern.
However, MNCs and iLEs are aligned in their concerns over manpower costs and the ability to retain talent. Manpower costs and talent retention ranked first and second respectively in the list of concerns facing MNCs, and second and third for iLEs.
Given these issues, ICT companies, especially the iLEs, have expressed the hope that Budget 2011 will include schemes to help them address the issue of talent shortage. There have also been requests for schemes to attract more students into the ICT sector. SiTF will be working closely with the government to address the concerns expressed.
Top 5 Technology Picks for 2011
Cloud Computing strengthened its position on the technology watch list, with 92% of respondents including it in their technology picks for 2011 (compared with 29% for 2010). Also poised to gain traction this year are mobile applications and media tablets (74%, compared with 50% in 2010); Green IT (47%, compared with 38% in 2010) and virtualisation (47%, compared with 38% in 2010).
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