Gobi-Core Philippine Fund Releases State of Talent in Tech 2022 Report
November 23, 2022
The Gobi-Core State of Talent in Tech 2022 report reveals the landscape of talent in the Philippine tech ecosystem, the challenges and opportunities present, and expert insights from tech founders, leaders and ecosystem veterans.
With digital consumption persisting and venture funding continuing to flow, it is crucial to highlight the key driver of the ecosystem’s growth: the people. Entrepreneurs and their teams are the lifeblood of every startup ecosystem.
The Philippine tech ecosystem remains resilient amid global economic headwinds:
As today’s macroeconomic environment shows signs of a slowdown, venture capital continues to play a key role in advancing the Philippine tech economy. Beyond financing the growth operations of startups, venture funding also helps attract talent into these high-potential companies, build talent pipelines for the tech ecosystem, and create new jobs for the overall economy. In the grand scheme of things, to create a thriving tech ecosystem with an abundant availability of startups and capital, it is paramount to raise the supply of local talent in the Philippines.
Talent is the lifeblood of tech ecosystems that enables the birth of new startups:
Building and nurturing a local tech talent pool demands tapping into spaces never seen before. Outside the formidable ”Iron Triangle” industries of FinTech, E-Commerce, and Logistics, we foresee growing funding potential in startups operating in emerging industries like Media, Gaming, and Entertainment, as well as Blockchain, Crypto, and Web3. Through building and investing in high-potential startups operating in these newer industries, ecosystem players will be able to diversify and grow the number—and capabilities—of talent in tech.
As more startups emerge, it is key that the supply of talent meets demand:
As demand for talent in tech continues to grow, propelled by the emergence of new startups and sectors never seen before, headcount costs will continue to rise and younger, less-funded startups will be squeezed out of the market. However, the local tech talent pool has the potential to grow. With the ongoing entry of digitally native Gen Z individuals into the workforce, we recommend adopting long- term yet cost-efficient talent acquisition strategies such as coding bootcamps, internship programs, and university competitions.
Ultimately, it takes an ecosystem to build a successful startup. As talent in tech continues to flow in from new industries and age groups, the time to build a local talent pool is now.
A RESILIENT EMERGING TECH ECOSYSTEM
Even as pre-pandemic mobility and routines have returned in the Philippines, digital habits are proving themselves a secular trend that’s here to stay.
Total electronic banking transaction value is on track to exceed $1.3 trillion for FY2022—10x pre-pandemic levels.
2022 has seen the continued emergence of entrepreneur-led startups, an encouraging sign of the long-term viability of the Philippine startup ecosystem.
As of October 2022, the country has seen six Series B and two Series C rounds closed by entrepreneur-led startups. Total funds raised by these entrepreneur-led startups has now exceeded US$500 M, close to double the total amount raised in 2021.
TALENT: THE LIFEBLOOD OF TECH ECOSYSTEMS
Startup Ecosystem Growth Flywheel: Startups, talent, and capital within the ecosystem are all interconnected; their presence reinforces each other, kicking off a virtuous growth cycle
With digital consumption persisting and venture funding continuing to flow, it is crucial to highlight the key driver of the ecosystem’s growth: the people. Entrepreneurs and their teams are the lifeblood of every startup ecosystem.
Experience is valuable in building startups, with the experience gained today laying the groundwork for the founders of tomorrow.
Most founders are experienced professionals.
Relevant past experiences are a common thread across venture-backed founders.
THE STATE OF TALENT IN PHILIPPINE TECH
For ecosystem and job growth to continue, it is crucial that talent demand is met. As venture funding flows into companies, these companies need to find and hire enough qualified people and build sound successful businesses.
With more entrepreneurs building tech and tech-enabled businesses, tech talent has become increasingly sought-after. As capital continues to flow into these companies, demand gets further amplified by more aggressive hiring—hiring fueled by venture dollars in the pursuit of rapid growth.
However, the supply of tech and engineering graduates in the Philippines has not grown in proportion to demand.
Between 2016-19, the combined number of tech and engineering graduates in the Philippines has remained stagnant – around 150 to 180 thousand.
By our estimates, 2020 and 2021 yielded even fewer graduates due to consistent enforcement of national lockdowns and the shift to online classes during the height of the COVID-19 pandemic.
Jobs in Computer / IT currently have the highest median monthly salaries among all industries—commanding salaries that are 73% above average at the Junior level, 113% above average at the Supervisor level, and 55% above average at the Manager level.
If demand for tech talent continues to grow while remaining unmet from the supply side, headcount costs will rise and younger,
less-funded startups will be squeezed out of the market.
SEEING THE PAST & LOOKING TO THE FUTURE
On the demand side, tech companies in FinTech and E-Commerce are still the main drivers of job growth,but other sectors have begun emerging.
With more than US$2 B injected into the ecosystem over the last five years, we foresee the forthcoming generation of startups creating thousands of jobs.
On the supply side, the entry of Gen Z—the true digitally native generation—into the workforce can fuel the future growth of talent in the tech ecosystem.
Gen Z, who are aged 10-25 and grew up with the internet and mobile phones from childhood, are beginning to enter the workforce. Making up 30% of the population and 40% of new members in the labor force in 2019-2021, having them equipped with the right skills will help fill the country’s tech talent supply gap, as they are more receptive to jobs in tech.
