In Indonesia, the fight for IT professionals is getting tougher

Demand for specialists increases more than supply. For foreign companies, it is becoming increasingly difficult to find programmers or other IT professionals. Their salaries are rising fast, and loyalty is low.

Indonesia is committed to the digital future. Virtually all young city dwellers use a smartphone. Paying for purchases digitally common matter. And the Indonesian digital industry has already spawned four so-called unicorns with an estimated enterprise value of at least US$1 billion.

Building on this, the Indonesian government presented the strategy "Making Indonesia 4.0" in the spring of 2018. The document aims to chart a path for the domestic economy towards assimilating the digital future. But nobody truly knows where the necessary know-how should come from.

Foreign companies report that it is becoming increasingly difficult to find information technology (IT) professionals – especially programmers and software engineers, while those who can hire them has to reach deeper into their pockets. In the IT sector, the salary difference between the country of origin of the companies and Indonesia, which is often large in all other areas, is melting ever faster.

For a medium-to-high level programmer with more than five years of experience, employers now have to pay monthly salaries ranging from $1,000 to $2,000, with a rising trend. If the person is given further management responsibilities simultaneously, the sum can be significantly higher. Some companies have even begun to outsource part of their programming to India, where the pool of skilled workers is bigger and their workforce cheaper.

A high salary is the most important incentive
Businesses need to be creative in facing this shortage. Many are already acquiring IT staff at universities or hiring headhunters. Smaller companies use the online job boards JobStreet, jobsDB and Karir, which are commonly used in Indonesia. There, general job advertisements can attract hundreds of applicants. However, these ‘prospective’ applicants are mostly already employed and are often more interested in exploring their market value.

A high salary is by far the most important incentive for IT professionals. Younger people can sometimes be lured by extra vacation days (most employees only have the statutory minimum of twelve days). A well-known, cool-image company that's helpful for developing careers will find it easier to find IT professionals than a no-name company.

Well-established companies are competing for the best brains to replicate the success of the four Indonesian unicorns Go-Jek, Tokopedia, Bukalapak and Traveloka. They need thousands of IT specialists and are willing to pay them high salaries with the hundreds of millions of dollars raised in funding rounds from across the globe. In addition, they must also be considered just as cool of an employer.

One big problem for Indonesian IT professionals is, as many foreign companies have attest, poor English skills. Even in major cities such as Jakarta, Surabaya and Bandung, IT professionals often have to be retrained in courses.

Singapore is also recruiting in Indonesia
The need for skilled workers has spurred various innovative approaches. Some providers have set up Coding Boot Camps in which applicants are drilled for a specific skill level in just a few days or weeks for a course fee. The graduates have an above-average salary, with which their investment pays off quickly.

The other option is to self-train. The Indonesian island of Batam, which is located just south of Singapore and which functions as a free trade zone, is home to the Glints Academy. Via the Batam Economic Development Board, the city's highest economic authority, Singapore uses the academy as a recruitment pool for its digital industry.

Here, Indonesians are trained as programmers in nine weeks, and after a one-year transitional period in Batam, they are guaranteed a job in a Singaporean company with a monthly salary of between $370 and $1,100 (the salaries of Singaporean IT professionals are many times that amount). The only requirement for the participant is a passed entrance test.

Investment in higher education
Indonesian politics has also recognized the lack of IT specialists as a bottleneck for further economic development. But near-term solutions are not in sight. In the autumn of 2018, the Department of Information and Communications pledged just $9 million to support local higher education institutions to train 20,000 IT professionals each year.

A more sustainable, albeit broader project is the development of polytechnic education. The government has launched the Polytechnic Education Development Project with an Asian Development Bank loan of $75 million. So far, according to the Ministry of Education, only 262 out of nearly 4,500 higher education institutions are polytechnically oriented.

GTAI is the foreign trade and inward investment agency of the Federal Republic of Germany. The organization advises foreign companies looking to expand their business activities in the German market. It provides information on foreign trade to German companies that seek to enter into foreign markets.