- Southeast Asian SMBs plan to invest USD 130 billion into tech over the next three years
- 84 per cent want tech providers to help in their digitalization efforts; data analytics an area of focus in the next two years
SINGAPORE–(BUSINESS WIRE)–Small and medium-sized businesses (SMBs) in Southeast Asia have set their sights on leveraging external tech providers to accelerate their digital ambitions, paving the way for global providers, including those in the US, to seize opportunities in the region, according to findings from the latest report from TDCX (NYSE: TDCX).
Titled ASEAN SMEs: Small Business, Big Opportunity for Tech Providers, the report aims to help tech providers in the US and globally understand the approach that Southeast Asian SMBs are taking to grow their business in the digital economy and their expectations of tech providers. The report shows that SMBs are looking to tech providers such as cloud providers, system integrators, cybersecurity specialists, as well as digital platforms for the expertise they require as they grow their businesses.
The Southeast Asia region represents a bright spot for US and global companies seeking to tap into high-growth markets in Asia outside of China. According to the International Monetary Fund (IMF), Southeast Asia is forecast to grow by 2.7 per cent in 2023, substantially faster than the global average.1 By 2030, the region’s economy is predicted to eclipse Japan’s and be the world’s 4th largest single market after the EU, US, and China.1
Mr. Laurent Junique, Chief Executive Officer, TDCX said, “Post-pandemic, SMBs have fully come around to the benefits of going digital. What was once a nice-to-have is now a must-have and SMBs in Southeast Asia are making up for lost time by tapping the expertise of digital solution providers. Hence, the time is also ripe for tech providers in the US and globally to engage with SMBs to support their digital transformation in this high-growth market.”
Collectively, there are more than 70 million SMBs across Southeast Asia which make up about 97 per cent of all businesses in the region. These businesses have signaled their strong commitment to digitalizing through their investments: over the last three years, they have invested more than USD 78 billion on such initiatives and do not plan to slow down, with a further USD 130 billion planned for investment over the next three years2.
The study revealed that close to half (49 per cent) of SMBs have only digitalized a few functions across their business. On average, Southeast Asian SMBs are currently using three tech solutions to support their business needs, with digital marketing being the top area of focus.
While the pandemic has expedited the speed of digitalization among Southeast Asian SMBs, the rate of advancement is uneven across the region. One-fifth (20 per cent) of the region’s SMBs only took the plunge to digitalize in the last two years and those in the Consumer Goods, Retail, and F&B sectors lag behind their peers in their digitalization journey.
Southeast Asian SMBs, however, are taking steps to bridge their digitalization gap. The study found that their top priority over the next two years is to enhance their data analytics and innovation capabilities. To support their digitalization push, SMBs are looking to work with tech providers that have strong technical skills (76 per cent), industry knowledge (69 per cent), and speedy response times (65 per cent).
Key findings across Southeast Asia from the report:
1. Opportunities abound for US and global tech providers as Southeast Asian SMBs invest big in digital
Tech investments are crucial for SMBs to remain competitive and to meet customer expectations in Southeast Asia’s rapidly growing digital economy which reached a gross merchandise value of USD 200 billion in 20223.
In addition to improving their data analytics and innovation capabilities, Southeast Asian SMBs are focused on transforming their traditional business model to an e-Commerce enabled one (69 per cent) and digitalizing operations such as sales and marketing and customer relationship management (69 per cent) in the next two years.
However, they continue to grapple with a host of challenges. These include access to knowledge and expertise (67 per cent), training programs to reskill or upskill employees (66 per cent), and advisory and consultation on technology adoption (65 per cent).
2. Southeast Asian SMBs are now more receptive to partnering with external tech providers to go further
As SMBs mature in their digitalization journey, things can get increasingly complex and more difficult to manage. Southeast Asian SMBs are now more receptive to getting an external tech provider to help them manage certain functions to achieve their goals more quickly. Across the five Southeast Asian countries surveyed, more than 84 per cent of SMBs see value in working with an external tech provider.
The top two areas where they are leveraging external support are their digital marketing and employee training needs. This suggests that Southeast Asian SMBs are prioritizing revenue generation and ensuring that employees have the right skillsets to adapt to a digital future.
On the operations front, there remains a big opportunity for Southeast Asian SMBs to tap digital solution providers to enhance their capabilities. For example, in the area of payments and collections, only one in four SMBs (25 per cent) are leveraging external solutions to provide such services.
3. Southeast Asian SMBs are on the lookout for tech providers who can better meet their needs and support their growth
To serve Southeast Asian SMBs, tech providers need to keep a pulse on what SMBs want and understand the pain points of a frustrating experience. According to the TDCX report, more than four in five (82 per cent) of the SMBs surveyed expressed their openness to switching providers, with advanced technology (71 per cent), more responsive customer care (68 per cent) and better pricing (45 per cent) being the top three factors driving this desire.
The need for better customer support was further highlighted by the SMBs surveyed. Customer-experience related issues were the top two reasons behind their dissatisfaction with their existing tech provider. Specifically, these were the speed of responding to customers (74 per cent) and the availability of human interaction as part of customer experience (64 per cent).
An SMB owner shared, “Many digital service providers have pitched seamless customer service as part of their differentiators. But the response time ends up being dismal. When we work with external partners, we almost expect them to be part of our team, jumping in to help resolve issues once they occur.”
TDCX’s ASEAN SMEs: Small Business, Big Opportunity for Tech Providers report was conducted by Intuit Research from September to December 2022, to understand SMBs’ mindset toward digitalization. A total of 750 SMBs were interviewed in five countries, namely, Singapore, Indonesia, Malaysia, Vietnam, and Thailand, with an equal number of participants from each country.
The report is available for download here.
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1 UK-ASEAN Business Council
2 Data from Intuit Research.
3 Source: e-Conomy SEA 2022 report by Google, Temasek, and Bain & Company.
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