Digital innovation is now the engine of economic growth, creating opportunities for cities and nations across the world. As a leading global business hub, Singapore is striving to unlock the greatest value from its own innovation-driven transition. Successfully achieving that status as an attractive technology talent destination will offer a pathway to attract cutting-edge companies, innovative R&D investments and inspiring start-ups which can catalyse widespread economic benefits.
Winning in a competitive digital landscape
Management consultant firm Korn Ferry forecasts that the global shortage of technology workers will reach 4.3 million by 2030, a figure likely amplified by the impacts of the Covid-19 pandemic. Policy makers must focus on a clear vision of their own hub’s strengths, key industrial sectors for development, and workforce needed to succeed in this competitive landscape.
In order to understand the path to success, Boston Consulting Group (BCG) studied 11 technology hubs around the world — Amsterdam, Bangalore, Berlin, Dubai, Dublin, London, São Paulo, Seattle, Shanghai, Singapore and Tel Aviv. The findings reveal how dynamic technology hubs with supportive policies and attractiveness to digital technology talent and companies can create vibrant global hubs of international business. Attracting and retaining ambitious, globally mobile talent is critical to this journey. Nearly three-quarters of responding technology talent had switched locations at least once before, and just one in twenty intended to stay permanently where they currently live. Pay was the most significant driver in every digital hub studied, with 68% of respondents in Singapore citing this as their primary concern.
Common features of technology hubs
Technology hubs are diverse, from the bustling cities of Bangalore and Shanghai which act as technology centres for national economies, to the dynamic global hubs of Singapore and London.
These cities are unified by an ability to attract talent from beyond their borders. In London, 54% of tech industry employees — and half of its founders of tech start-ups — are immigrants. Singapore is itself a global talent destination, with the Monetary Authority of Singapore (MAS) estimating that 65% of technology jobs are currently filled by foreign workers.
Successful hubs are united by the confident use of policy tools designed to increase the local supply of digital talent, and through attracting key technology companies to act as talent magnets. BCG identified 11 levers across short-, medium-, and long-term time frames.
Short-term levers include marketing and brand enhancement initiatives, a competitive tax system for individuals, and regulations that support individuals in targeted sectors. The Economic Development Board’s (EDB) Tech.Pass — a visa that allows established tech entrepreneurs, leaders or technical experts from around the world to come to Singapore to perform frontier and disruptive innovations — is a great example of such an incentive. Medium-term incentives include corporate tax incentives, attracting large multinationals that act as technology anchor companies, government initiatives to boost demand for local goods and services, public funding for R&D, training or incubating start-ups. Government master plans such as the National AI Strategy — Singapore’s national plan to harness artificial intelligence (AI) technologies for social and economic benefits — and the various fintech initiatives offer a positive strategic outlook in the city-state.
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Long-term incentives include regulations that support communities in target industries, lifestyle improvement initiatives such as better schools or leisure activities, promotion of key ecosystems to act as hub cornerstones, and investment in higher education and R&D institutions. Bangalore, for example, worked to attract large anchor companies into attractive “export zones” with economic incentives in the 1980s, and is now home to 48% of India’s R&D workforce.
Lessons from success
Singapore is a leading global hub driven by a strong commitment to innovation investment. It is ranked eighth in the 2021 Global Innovation Index — the top ranking in Southeast Asia, and behind only Korea, in the wider Asia Pacific region. It is positioned first in measures of innovation input and investment, both critical to the development of a successful technology hub.
Lesson 1: Develop and execute a strategic plan. Singapore is a leader in its strategic hub management, reaping the rewards of a decade of high-level strategic planning. It ranks highest in INSEAD’s 2020 Global Talent Competitiveness Index for its ability to attract talent. This success is catalysed by anchor hubs such as the life sciences and biopharma cluster of One-North, and the pioneering tech startup ecosystem Block 71 at Ayer Rajah Crescent.
Lesson 2: Build on existing strengths. Successful hubs build on established strengths such as strong educational institutions, globally competitive industries, world-class hospitals or positive lifestyle draws.
Israel, for example, is building on the strength of its defence industry to emerge as a digital hub in cybersecurity, with the government boosting supply for technology talent through financial incentives and public investment in key industries. Funding availability and government-driven demand are two of Israel’s strongest areas.
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Singapore is an attractive destination, with established roots as a global business hub. Initiatives such as the Technology in Finance Immersion Programme (TFIP) build on this foundation, providing key technology education for financial services workers in areas such as data, cloud computing, cybersecurity and more.
Lesson 3: Leverage anchor companies to build broader hubs. Large, stable companies offer a key attraction for digital talent, with almost half (45%) of respondents noting they relocated to London, for example, to pursue a job at a specific company.
The US hub of Seattle has seen its population of technology workers grow by 23% over the past five years, largely driven by the presence of significant anchor companies such as Boeing, Microsoft and Amazon. These anchor hubs bring talent and knowledge that are further amplified by local incubator hubs, leading to the launch of ambitious new start-ups. This is why Seattle scores extremely highly in the area of super-corporate cornerstone.
Singapore performs well in this area, with global giants such as Meta, Alphabet and Apple located in the country, and major regional players such as SEA and Grab offering an equally attractive proposition.
Lesson 4: Combine short- and long-term levers. Successful technology hubs grow fast, but must sustain that growth with future-looking development. The United Arab Emirates embraced a pioneering strategy through attractive corporate incentives, talent initiatives, and long-term educational investment. Now it is a leading technology hub, with immigrants making up 96% of its technology workforce and a strong pipeline of future talent.
Singapore is well-positioned as a leading global digital hub, with corporate- and individual-centred support regulations and a strong educational system. Yet it cannot be complacent if it wishes to unlock the greatest value from this future. Evolution in the global technology landscape offers some lucrative prizes, with shifting geopolitical dynamics positioning Singapore as an attractive destination for fast-growing Chinese companies such as TikTok owner ByteDance, as well as US companies exploring new options in the Asia Pacific region.
Digital disruption is also driving new opportunities, with an increasingly connected 600 million young citizens spread throughout Southeast Asia. Singapore must act to anchor regional winners in fast-growing sectors, while maintaining its attractiveness to digital talent. It should continue to invest in building on existing strengths such as financial services to remain on par with global hubs like London.
Digital technology is a rapidly evolving space, and technology hubs are quickly evolving alongside that. Israel, China, India are not standing still, and other Southeast Asian countries such as Indonesia and Vietnam are also making progress.
If Singapore is to retain its leading position, it needs to maintain its strategic investment and commitment to digital technology and talent.
Dr Michael Meyer is managing director and partner at the Boston Consulting Group while Shahar Lavian is a partner with Boston Consulting Group
