- 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
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.”
Research Methodology
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.
About TDCX
Singapore-headquartered TDCX provides transformative digital CX
solutions, enabling world-leading and disruptive brands to acquire
new customers, build customer loyalty, and to protect their online
communities.
TDCX helps clients achieve their customer experience aspirations
by harnessing technology, human intelligence, and its global
footprint. It serves clients in fintech, gaming, technology, home
sharing and travel, digital advertising, and social media,
streaming and e-commerce. TDCX’s expertise and strong footprint in
Asia have made it a trusted partner for clients, particularly
high-growth, new-economy companies, looking to tap the region’s
growth potential.
TDCX’s commitment to delivering positive outcomes for our
clients extends to its role as a responsible corporate citizen. Its
Corporate Social Responsibility program focuses on positively
transforming the lives of its people, its communities, and the
environment.
TDCX employs more than 17,800 employees across 28 campuses
globally, specifically Singapore, Malaysia, Thailand, Philippines,
Mainland China, Hong Kong, South Korea, Japan, India, Romania,
Spain, Colombia, Türkiye, and Vietnam. For more information, please
visit www.tdcx.com.
________________ 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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