Touring the Asian Tiger: a quick review of the HR services market in APJ. Observations of an outsider
After having spent a few months in the epicenter of the Asian economic miracle, Singapore, I had the urge to put down some thoughts on what the HR services market looks like in the larger Far East region, also referred to as the Asian Tiger. People tend to discuss Asia very casually, as a single unit, similar to say, the European Union. This kind of generalization is an oversimplification of a very complex region that deserves to be level set, as the economic importance of the Asian region continues to grow. I’ve reflected on some of the key differences in this blog and wanted to share this with readers who want to get better acquainted with what it means to deliver HR services. Let’s go tour the Asian Tiger.
Our review starts down under. Australia and New Zealand form a very distinct market with enough weight to exist in relative isolation. On the other hand, HR solutions such as SAP, SuccessFactors and Workday which have been established in Anglo-Saxon markets are quicker to get adopted in the ANZ market also, due to somewhat lower entry barriers in terms of language and legislation. ANZ is also very much a mature market with second and third generation BPO deals underway.
China and Japan have both similarities and differences as markets when it comes to HR services. For both markets there is an important need to deliver a perception of quality, partnership and trustworthiness in the relationship between vendor and customer that goes far beyond what is normal in the western world. Both countries experience the pressure of globalization but in different, almost paradoxical ways: where China has become more open and exposed to the inflow of global joint ventures in the last decade, Japanese companies have successfully expanded globally but stayed very conservative locally, at least when it comes to HR practices.
In China, challenges for MNC’s revolve around topics such as accelerating global growth, with challenges around attracting western white-collar talent, which would allow the companies to fast forward their globalization process. The global workforce will typically assume that services in HR are structured and set up in the way they are used to, yet the Western way is not always the most natural one for Chinese champions going global.
South East Asia can perhaps best be compared with Central Europe when it comes to differences and similarities between countries, although by and large the differences between the countries are much more extreme. On one side we have markets like Singapore where clients are very much on the “high end” of HR service delivery (and technology adaptation) venturing into cloud-based services and offshoring service delivery faster than anyone else. On the other end of the spectrum we have for instance the neighboring market of Indonesia where heavy industry still dominates, and with an increasing gentrification we see an influx of Asian and global brands that meet a different set of labor practices and cost structures, but where internationalization of local companies is not yet strongly trending.
There is less interaction between the different sub-regions in the APJ market than perhaps expected, and the maturity in terms of HR service delivery is very different. This will logically lead to different priorities in the different sub-regions. Understanding the situation and unlocking the potential in each country will therefore be critical to delivering relevant HR services in Asia.
In summary the advice that can be given to anyone venturing into the HR services market in greater Asia is to carefully analyze which goals and outcomes are important in each sub-region, and try to break the global objectives down to locally motivating targets. From a global standpoint cost cutting is one of the key drivers for HR services outsourcing, but in Asia it may make sense to tailor the objective further, and push for benefits resulting from greater compliance, best practice adoption and process harmonization, which will all be likely to contribute to cost reduction as well.