The majority of startups (98 per cent) across Southeast Asia and India agree that artificial intelligence (AI) is important in their future strategy, a new study commissioned by global CRM company HubSpot has revealed.
This sentiment is high, particularly in India and Indonesia, where as many as 73 per cent and 63 per cent of respondents, respectively, strongly agreed with this statement.
The study conducted by Milieu Insight explored the trends and innovations shaping the startup landscape in Southeast Asia and India.
According to this study, the emergence of AI is fundamentally transforming the startup landscape in the region, as it can automate repetitive tasks and create new roles that demand advanced skill sets.
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About 32 per cent of the startups surveyed see AI as a faster way to bring products to market, while 30 per cent believe it can help deliver products more quickly. As many as 30 per cent view AI as a tool to level the playing field against bigger competitors and incumbents.
“Today, AI is viewed as the single largest economic opportunity since the start of the internet, and data is the currency of AI,” said Laurence Butler, Global Senior Director of HubSpot for Startups. “By leveraging AI, startups can quickly identify gaps in their business models, better anticipate customer needs, and improve their overall ability to deliver highly personalised customer experiences.”
However, technological advancement comes with its own set of challenges, particularly in the area of talent acquisition. For non-go-to-market positions, AI and machine learning engineers top the list of hardest-to-hire roles (35 per cent), followed closely by experts in data analytics (33 per cent), product management (33 per cent), and industry-specific specialists (33 per cent). Software engineers also remain in high demand (32 per cent).
For go-to-market positions, marketing (46 per cent), customer success (40 per cent), and sales and business development (38 per cent) roles are the most difficult to hire
Cost and experience are identified as the primary shortcomings in the current talent pool across the region. Other challenges include a lack of soft skills among candidates and a mismatch of expectations regarding remote and hybrid working arrangements.
The talent landscape varies across different countries:
In Singapore, the lack of diversity in the talent pool (41 per cent) and the shortage of specialised technical skills (37 per cent) are significant challenges, alongside costs (37 per cent).
In India, limited experience in startup environments (49 per cent), expectations misalignment regarding remote/hybrid work (49 per cent), a general shortage of talent (48 per cent), lack of soft skills (47 per cent), and high turnover rates (41 per cent) are prevalent issues, with cost being a major factor (50 per cent).
Indonesia mirrors many of India’s trends, although the challenges related to soft skills, remote/hybrid working expectations, and turnover rates are less pronounced.
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With the talent shortage showing no signs of easing, startups must rethink their talent strategies to overcome these hurdles. Solutions could include investing in upskilling and reskilling employees by tapping government-led talent initiatives such as Singapore’s SkillsFuture programme, leveraging remote work to access a broader talent pool, and fostering a culture that values diversity and continuous learning.
The HubSpot study further found that despite current global economic headwinds and private funding in the region declining to its lowest levels in six years, the startup ecosystem in Southeast Asia and India remains resilient, demonstrating significant signs of maturity.
On average, about half (53 per cent) of startups across the region found it easier to grow their businesses in the past year compared to previous years. Notably, startups recognise the need to balance growth and profitability, with most regional startups agreeing that a clear path to profitability (98 per cent) has become more important in the last year compared to the previous years.
This resilience is characterised by an interesting dichotomy: while geographical expansion presents challenges, with 23 per cent of startups finding it harder to enter new markets, customer acquisition and retention have become more manageable.
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Although 18 per cent mentioned that acquiring customers has become more challenging, more than half (55 per cent) of startups report improvements in customer acquisition and retention.
Increased competition (31 per cent), stricter customer demands (31 per cent), and access to capital (29 per cent) were cited as the key challenges to customer acquisition among those who mentioned acquiring customers have gotten harder.
Amid ongoing economic uncertainties, the findings collectively suggest that the most successful startups will be those that adopt the relevant technologies to collect and leverage customer data, boosting their growth or expansion prospects.
These findings were based on responses from 600 startup founders and decision-makers across Singapore, Indonesia, the Philippines, and India from February to March 2024.
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