From left, Temasek director Tai Le, Go-Jek Indonesia founder and chief executive Nadiem Makarim, Google Indonesia managing director Tony Keusgen, Traveloka.com chief marketing officer Dannis Muhammad and MatahariMall.com chief executive Hadi Wenas during a discussion hosted by Google Indonesia in Jakarta on Thursday (28/08). (Antara Photo/Dian)

Local Tech Startups Face Critical Shortage of Software Engineers

BY :DION BISARA

AUGUST 26, 2016

Jakarta. Leading local technology companies have called on the government to relax rules on skilled foreign workers and to create incentives for them to come to Indonesia to train local talent in order to address a critical weakness that may prevent the country from gaining the maximum benefit from a digital market that is estimated to amount to $81 billion by 2025.

A shallow talent pool is among the biggest challenges faced by more than 2,000 Indonesian technology startups, according to a study by Singapore-based wealth fund Temasek and global technology giant Google, released in May.

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Nadiem Makarim, founder and chief executive of Go-Jek Indonesia, noted that the scarcity of programmers was particularly severe in so-called back-end architecture, which enables online companies to seamlessly scale up their services to millions of people, instead of just thousands when they started.

The study shows that 119 million Indonesians will become online buyers by 2025, from just 18 million currently. This will put pressure on local startups to design and set up systems that could handle the enormous growth in the number of orders.

On the other hand, skilled programmers are plentiful in cities such as Bangalore and Shanghai and also Silicon Valley, where startups are without doubt also vying for a slice of the Indonesian market.

"If you want scale [here], you need to let an army of programmers come in and coach our engineers directly. That's the only way," Nadiem said during a discussion hosted by Google Indonesia in Jakarta on Thursday (28/08).

Others participants noted that relying on existing institutions to train enough software engineers would require too much time to actually catch up with an ever changing technological environment.

"You do not learn this type of thing in school. Instead, you learn while solving problems on the job, working side by side with other programmers," said Dannis Muhammad, chief marketing officer of Traveloka, an online travel booking service.

Nadiem said the government could focus on providing incentives for foreign software engineers to enter the market. This could include tax breaks for two years, or instant residence permits for programmers who relocate to Indonesia.

"It's not a very complicated road map, but it requires political will," he said.

Google Indonesia chief Tony Kuesgen agrees with the assessment, adding that Indonesian entrepreneurs could benefit from best practices in developed countries.

"I think what Indonesia really needs to focus on is how to leverage from other countries and bring in skills," Kuesgen said.

Thanks to rapid penetration of mobile Internet and Indonesia's relatively young demography, the country's online market — only accounting for e-commerce, online travel, ride-hailing services and digital ads — would grow by 26 percent annually over the next decade to $81 billion in 2025, according to the study by Temasek and Google.

Such sheer size and growth pace will not go unnoticed by global players.

Ride-hailing giant Uber is expected to shift its focus to Southeast Asia, and Indonesia in particular, after deciding to pull out of China last month.

Global Chinese e-commerce behemoth Alibaba acquired Lazada in April, creating stronger competition for local e-commerce companies such as MatahariMall.com, Tokopedia and Bhinneka.com.

"Our existential threat comes from $100-billion-and-above companies. That's what we are up against," Nadiem said.

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