As early stage venture investors in Southeast Asia, our team actively invests ahead of where technology is changing the future of work.

In 2020, three major employment-linked themes rapidly accelerated – remote work as the preferred way to collaborate, online commerce as the preferred way to shop for goods and on-demand meal, grocery and package delivery as the preferred way to purchase local services.

In fact, while Uber’s total rides decreased, the share of non-passenger trips in Q1 2020 increased in both absolute and relative terms by nine to 31 per cent compared to Q1 2019, according to data. In emerging markets, the same pattern emerged for gojek and Grab here in Southeast Asia and all signs point to these trends accelerating post-COVID.

On-demand freelancing is the next wave of the gig economy

If the 2010s unleashed the on-demand “gig” economy upon consumer services, the 2020s will expand this into the realm of businesses, a trend we consider to be the formalisation of blue-collar labour to meet B2B and B2B2C demand. Many jobs in logistics, supply chain and local services are well placed to benefit from being organised via software platforms, where real-time business demand can be met by short term supply of freelancers.

Globally, this is the natural extension of business process outsourcing, which is expected to generate US$230 billion in 2027, expanding at a CAGR of 5.2 per cent (post-COVID-19), according to data. In high growth emerging markets such as Southeast Asia, we expect this trend to grow even faster.

As an example, Indonesia, a country of 260 million people, 40 per cent of the regional population and over US$1 trillion of annual GDP output, is also the home market for gojek and other technology pioneers in the rapidly growing, on-demand market for consumer and business services.

In November, Indonesia passed the omnibus bill, a key element of President Jokowi’s policy focused on bolstering economic growth by making the Indonesian workforce more fluid and less hindered by bureaucratic hurdles. Previously, labour laws prevented employers from quickly hiring or rightsizing their workforces based on business needs, and also limited the number of functions that could be eligible for short term outsourcing.

Also Read: Why the future of work in Singapore is remote

President Jokowi has claimed that the bill intends to create “an additional million jobs a year”, many of which will come from expanding demand for short term, blue-collar by growing businesses that need labour on short notice.

Taking a page out of the ridesharing playbook

These tailwinds have spurred the growth of innovative workforce companies such as Sampingan, a software platform that connects businesses with trained freelancers for task-based jobs. In the company’s two-year history, it has provided over 300,000 workers with temporary employment, at an accelerated rate even during COVID-19.

The co-founding team, Wisnu Nugrahadi, Margana Mohamad and Dimas Putra previously led product and growth teams at Gojek and Palu, a BPO services business. Having witnessed first-hand the success of Gojek’s technology playbook for matching ride demand with ojek or drivers, Sampingan’s technology matches business demand for couriers, warehouse workers, canvassers, surveyors and other roles with blue-collar labour.

This market has to date been served by traditional “job shop” staffing agencies like ISS and Arina on the one end and desktop-era job boards such as Jobstreet and JobsDB or more recently, mobile optimised jobs classifieds apps like AdaKerja and Google Kormo on the other end.

Only now are on-demand platforms like Indonesia’s Sampingan, India’s Apna, Thailand-focused Workmate and Malaysia’s GoGet attempting to combine the quality assurance of integrated supply with the speed and cost of decentralised recruitment and advanced technology to manage and verify fulfilment. This is the future of organising the informal economy in the region.

Technology is the key enabler of recruitment speed and success

Our analysis of the market suggests that key success factors combine speed, reach and quality of recruitment with flexibility to substitute blue workers across different roles. Mobile technology is a critical enabling factor to ensure rapid fulfilment rates as well as a level of customisation that would otherwise require specialised training.

For example, a leading player in the payments industry partnered with Sampingan to recruit and deploy a short-term workforce in a matter of days, to onboard warung merchants in tier two and three cities onto their payment network. Sampingan was able to recruit rapidly and verify fulfilment real-time.

Also Read: Is the gig economy taking over?

A worker facing mobile app used geo-location and smart photos to verify activity and a merchant checklist to ensure a “handshake” had taken place.

Concurrently the customer was provided with real-time dashboards to track recruitment, deployment, completion and to review other measures of fulfilment quality across disparate tasks and vendors. Previously this would have to be done via first-party recruitment and training or engagement of a staffing agency, both of which would have been costlier and taken longer to execute.

Global trends suggest consolidation will occur in Southeast Asia

We’ve seen large companies built based on the use of technology for recruitment in other mature markets. For example, in the US, UpWork is an American freelancing platform that raised US$170 million from leading VCs such as KPCB, Benchmark, NEA before IPO-ing in 2018.

The company is now valued at US$4.5 billion. Other companies have come hot on their heels in the on-demand staffing space, such as Wonolo, a Bain Capital and Sequoia portfolio company last valued at US$160 million; Shiftgig, a GGV Capital portfolio company last valued at $150 million and Instawork, a Google Ventures and Benchmark portfolio company that has raised over US$30 million, according to Pitchbook. Closer to home here in Asia, companies such as Betterplace in India and 51job.com in China have also raised substantial investment capital.

Finally, we expect that global leaders in the staffing industry will be increasingly acquisitive in Southeast Asia, looking to acquire technology businesses with key digital capabilities in workforce recruitment and management.

SEEK Group, an ASX-listed company valued at US$8 billion has acquired majority stakes in multiple employment marketplaces including JobsDB in 2010, JobStreet in 2014 GradConnection in 2019 and FutureLearn more recently.

We expect that as the region continues on its onward march of economic growth, more jobs will be created and in particular, short-term, blue-collar jobs for businesses that need tasks completed on demand.

This virtuous cycle will be supported by new businesses that match demand and supply and, crucially, ensure high-quality fulfilment in a flexible way, which is only scalable using technology. And with that will come the global growth and exit opportunities, driving wealth and value back into the regional economies here in Southeast Asia.

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This article was co-written by Huiting Koh.

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