One of the hottest topics in the tech sector relates to talent and automation. Some jobs are already being automated and evidence of this can be found in India where well known ITeS firms have laid off thousands of employees since the start of the year. But the story is different in the US where the war for tech talent has created challenging conditions for US tech firms. Many are now considering new locations, both in the US and abroad. The Asia Pacific office sector stands to benefit.
External and domestic forces to drive growth
For a number of years there has been a tech skills gap in the US as the industry has continued to expand and the situation continues. Routinely poaching experienced talent and paying high salaries to code camp graduates seem to be the new norm. Anecdotal evidence indicates that to address this problem some tech firms in the US are now looking at expanding overseas in Canada and Asia. A forthcoming report from Harvey Nash and KPMG states that CIOs remain interested in outsourcing IT operations overseas—good news for the occupier markets in the Philippines and India.
Source: KPMG Enterprise Venture Pulse Q1 2017
2016 was a banner year for venture capital investment in Asia and while volumes were down year-over-year in the first quarter of 2017, they remained at healthy levels. A large share of this money is invested into tech companies—half of the ten largest 1Q17 Asia investments were in software developers, mainly in India and China. As the markets where these tech companies operate grow, we expect to see headcounts grow too and tech companies will expand their real estate footprints contributing to demand for office and business park space.
Tech drives AP office occupier demand, albeit unevenly
Tech demand for office space will likely be uneven across the region. Some Asia Pacific markets are already facing a talent shortage of their own while others lag the region in terms of language and technical skills. And even in tech savvy markets not all landlords will benefit as tech occupiers tend to cluster in specific areas and have specific building requirements.
But the message is clear, both external and domestic factors are driving the growth of tech demand in Asia. The tech sector is set to continue driving office demand and landlords who want to tap into tech demand need to pay attention to where these firms are going and what they want from their buildings. You can read more about the real estate implications of tech demand in our forthcoming Asia Pacific tech report.
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