Funding squeeze spurs cost-cutting in Vietnam: startup salaries decline, recruitment focuses on efficiency

Limited access to capital and lengthy fundraising cycles are prompting many startups to tighten their hiring belts. This shift coincides with a decline in startup salaries observed throughout 2023, with particularly notable drops reported in Indonesia and Vietnam.

The 2024 Southeast Asia Startup Talent Report by Glints and Monk's Hill Ventures paints a picture of a cautious startup landscape. Fundraising struggles are pushing companies to prioritize cost-saving measures, impacting recruitment decisions. Startups are increasingly seeking adaptable talent over those with highly specific skill sets.

Limited access to capital and lengthy funding rounds are leading to a more cautious approach to hiring. While many startups have held steady or even reduced recruitment budgets in 2023, the talent hunt hasn't entirely stopped. 78% of surveyed startups still have recruitment needs, underlining their ongoing requirement for specialized personnel to fuel expansion and innovation.

Salary trends reflect this shift. A significant downward correction hit startup salaries in 2023, particularly in Indonesia and Vietnam. Junior and mid-level positions, especially those in engineering (-6% for junior engineers) witnessed the steepest declines. Tech talent layoffs and cost-cutting measures have led to a surplus of qualified professionals, driving down salaries across the region, with junior positions bearing the brunt of the impact.

This environment presents both challenges and opportunities. Startups must be more strategic in their hiring, focusing on the adaptable talent they can train for specific needs. On the other hand, the influx of talent creates a buyer's market for startups, allowing them to secure valuable skills at a more competitive price point.

Despite funding challenges, talent remains crucial for startups. While junior and mid-level tech salaries declined in 2023, particularly in Indonesia and Vietnam, senior positions like engineers saw modest increases (2-3%). This trend reflects a shift towards adaptability over specific skills.

The revenue focus is evident in skyrocketing salaries for Business Development and Sales (up to 20% increase), showcasing startups' prioritization of generating income. The overall tech talent premium remains high (29% more than non-tech roles), but companies are seeking those who can navigate a changing market. This resonates with Ms. Thi Nguyen, HR Director at Mfast, who observes a shift from expecting high salary increases to prioritizing job stability and adaptability in Vietnam's 2023 hiring landscape.

Startups prioritize cross-border recruitment and hybrid work

The fight for top talent continues in the startup world, with a growing emphasis on cost-efficiency and skill diversification. A key finding from the report is the surge in cross-border recruitment, with 70% of startups aiming to hire talent from other countries. This strategy allows them to access a wider pool of skilled professionals and build more diverse teams.

Retaining talent is equally important. Flexible work models, particularly hybrid arrangements, are emerging as a leading strategy. This approach acknowledges both the need for work efficiency and employee preferences for flexibility. According to an Ascend Vietnam Ventures Fund representative, this trend reflects a shift towards internal restructuring with a focus on multi-tasking skills. Both founders and employees are embracing flexibility, allowing for internal rotation and role expansion. This trend is expected to continue through 2024.

Recent tech talent layoffs have inadvertently created a rebuilding opportunity. Startups are now more selective, seeking individuals who are not just skilled but also mission-driven and aligned with the company's vision, as emphasized by Ms. Mimi Duong of Ascend Vietnam Ventures. This shift underscores the evolving priorities of startups in the current environment.