The dark side of tech development in Singapore

Tech startup entrepreneurs do not often share openly about this, but developing your tech product in-house in Singapore is nothing short but challenging. In my previous articles, I have highlighted the issue of the lack of quantity and quality of software and hardware engineering talent. There is an obvious growth in the amount of new startups appearing in the ecosystem but the supporting group of tech engineers are falling behind. And until the issue of bringing the supply of engineers up, the ecosystem will face a stunted growth of quality tech products.

I did a series of interviews ranging from entrepreneurs, educators, MNC executives and government officials on this issue and due to the sensitivity of revealing secrets, all names have been changed.

State of engineering talent for startups

The odds are stacked against startups in obtaining entry-level programmers and engineers to work for them. According to the Education Ministry’s statistics, polytechnics and universities have produced 7016 and 4393 engineering science graduates in 2013 respectively. That is a small supply compared to the demand for workers to fill the workforce. At the polytechnic level, the male students who graduate go off for compulsory National Service, and the female students will consider growing furthering their education. If they want to join a startup, they need to overcome the hostility of parents who are upset of financial instability joining startups. “We have spent our hard sweat and tears to raise you not to fail!” is the common bemoan of Singapore parents.

Over at the university level, due to many years of cultivating an ‘iron rice bowl’ mindset, many graduates clamour for jobs in big large stable MNCs, which focuses them on management roles rather than to pursue software programming. “Why would I, someone who have first class honours, would want to work in a startup with limited pay and a high risk of being sacked?” exclaims Jon, a recent IS graduate who is currently working at an MNC.

Mindsets are changing, like Ash, a Republic Polytechnic year 2 student who pitched to me recently at an event, showed an interest in programming and wants to get involved in startups. But those numbers are still small, according to sources from the Polytechnics, and it may take more years before mindsets change.

So with such limited talents available, what can an entrepreneur do about it? The entrepreneurs I spoke with have all gave interesting insights on what they currently do to overcome their manpower crunch.

Sheep-stealing

“If you post a job advertisement on Jobstreet or StartupJobs, the candidates you get are already not grade A,” quips Jack, a CTO founder. He explains quality coders are only found via referrals. He takes a step further. He studies which tech startups have a good flock of engineers and starts digging into the LinkedIn profiles. From there, he contacts them and poaches them over to join him.

Initially it sounds fine at a micro-level that a new team is formed and a new product is being developed, but it becomes an unhealthy exercise with the constant sheep stealing from each other. You will find technical projects being half-done or become totally abandoned, which leads to startup failure. This is an unhealthy vicious cycle. For the engineers themselves, career progression becomes ad-hoc and mercenary. One engineer admitted to me that he jumps to another company every 3-4 months for a small increase of S$100, but there is no career direction is what he is doing.

Restart and … restart

Startups obtain S$50k at the Tier-1 level in the NRF iJAM development grant. (Disclaimer: Angels Gate Advisory is one of ten appointed incubators). For some startups we spoke with, this is not substantial to build a quality MVP. This leads to founders hiring less qualified engineers to aid them in developing a product. Once a basic MVP is done, they get seed round funding (eg. Tier-2 iJAM, TECS, TiS schemes) and hire better engineers, who will comment that the initial MVP is terribly done and the coding needs to be rebuilt.

This process is again repeated at Series A funding where high quality engineers will complain about the work done by the engineers at seed round. “So what you see is a restart of the technical project 2-3 times,” explains Dan, a tech co-founder. “But we don’t say that to follow-on investors, who would be upset to hear that our technology is not as stable due to poor previous developments. We just say we are constantly upgrading our technology, which in truth, is actually re-building the technology from scratch.”

Foreign talent

The next method would be the hiring of foreign talent, given that the employment pass (E Pass) does not require any minimum Singaporean quota. Startups are also small and less than 25 people, which exempts them from hiring from the Singapore Jobsbank. “You will see a trend that market rates for foreign programmers are hovering slightly above S$3,300, which is the E Pass minimum salary.

For local Singaporeans, we are happy to pay S$4,000 for the same skillset but sadly no one applies to us because we cannot provide security,” lamented James, a founder who recently obtained angel funding. But this method is also becoming difficult. Speaking to a government official about this, it is understood that the Manpower Ministry is tightening up this loophole and getting foreign talent to join a startup requires a lot more compliance and explanation. This statement is concurred by a few founders, who have reported having rejections or delayed approvals of E Pass by the Manpower Ministry despite meeting the criteria.

Local Development Houses

A common option which is pursued by non-technical founders is seeking out local development houses. “After experiencing such a badly developed product, I will never recommend anyone to outsource,” says a founder. “This development house we used took on too many projects, and they themselves had their own engineers who kept quitting on them.

Foreign Development Houses

Ending thoughts