Hong Kong’s post-pandemic economic recovery has been challenging to say the least.
Multiple factors including recession, ongoing global geopolitical volatility, and substantial brain drain over the years have combined to make the city’s efforts to restore its position as Asia’s premier financial hub an uphill task. Nonetheless, Hong Kong’s Information Technology (IT) sector continues to be the silver lining, unlocking umpteen opportunities and new avenues of growth. Continuing its upward trajectory from previous years, Hong Kong’s IT market is projected to grow at a CAGR of 6.87% between 2022 and 2027, increasing in size by over US$2.5 billion.
With both MNCs and SMEs in Hong Kong undergoing rapid digital transformation, IT is now at the front and centre of driving change and catalysing business growth. Coupled with the city’s booming startup ecosystem and increased government investment to boost technology adoption and development, Hong Kong’s IT landscape is evolving by the day. With numerous organisations shifting towards cloud computing, modernising legacy architecture, building next-gen customer-facing applications, and incorporating big data and AI, there is a rallying cry for skilled local IT talent amidst cut-throat competition.
Despite the challenging macro-economic environment in Hong Kong, organisations need to invest heavily in identifying, developing, and retaining their top IT talent if they are to achieve their digital transformation goals.
Looking at 2024 and beyond, the following are some of the key trends and drivers that are impacting Hong Kong’s IT labour market.
1. Economic Slowdown and the Impact on the Financial Sector
Reeling from the aftermath of recession, most financial institutions including several Chinese and global investment banks, hedge funds, and asset management firms implemented hiring freezes and downsized their business and IT teams in 2023. Although a moderate upturn is expected in the financial services sector in 2024, driven by the anticipated US-Fed rate cuts, most organisations are playing conservatively and slowing down investment on talent acquisition. Q1 already saw multiple banking institutions announce layoffs in a bid to curtail costs and optimise workforce productivity. With the financial sector forming the backbone of Hong Kong’s economy, this could have widespread ramifications, with top IT talent now exploring other domains where they can pursue new career opportunities and have better job stability. As the year progresses, the influx and outflux of talent within banking and finance could very well change the dynamics of the IT workforce in Hong Kong.
2. The Rise and Rise of Hong Kong’s Startup and Innovation Ecosystem
Despite the pandemic, Hong Kong’s startup ecosystem has boomed over the past few years, growing across a diverse range of industries with FinTech, e-commerce and logistics, and IT at the fore. With over 4,250 startups, Hong Kong is the fifth fastest growing innovation ecosystem in the world, employing a major proportion of the city’s highly skilled and entrepreneurial digital talent. Recent years have seen an increasing trend of Gen Z IT talent in Hong Kong preferring to pursue their own business ventures instead of going the conventional corporate route. This is further accelerated by significant government investment and the rise of incubation ecosystems like Cyberport and Hong Kong Science and Technology Park, with an overarching focus on building and scaling new technology initiatives and cutting-edge solutions. With startups now attracting top IT talent in town, enterprises need to up their game and repurpose their Employee Value Proposition (EVP) to appeal to the younger generation.
3. The Demand for Highly Skilled Digital Talent has Never Been Greater
IT talent shortage has been a recurring issue in Hong Kong for years. A recent study by The Hong Kong General Chamber of Commerce revealed that 74% of Hong Kong’s business leaders need more talent, with 60% of them identifying IT talent shortage as the biggest roadblock to adopting emerging technologies. With a limited talent pool available coupled with intense competition, attracting and retaining skilled IT talent has never been this challenging particularly in pivotal fields like cybersecurity, data science and AI, and automation. This calls for a paradigm shift in how organisations position, value, and develop their people and transform their IT workforce to accelerate project delivery and achieve their digital transformation roadmap. Enhanced employee experience is the pre-requisite for higher productivity and workforce efficiency, which in turn leads to improved customer experience and business growth.
4. Mobility, Flexibility, and Everything That Top Talent Wants
A key factor for companies to drive successful hiring and retention is gauging the pulse of what top talent wants and prioritises. 51% of employees in Hong Kong intend to switch jobs in 2024, with the three biggest driving factors being remuneration, job stability and flexible working arrangements. Particularly post the pandemic, the flexibility to work from home has become a vital factor of consideration, with 68% of employees in Hong Kong preferring a hybrid working arrangement. On top of flexibility, they care strongly about career progression and diverse learning experiences that can enable them to remain up-to-date with the latest tools and technologies. AI integration into the workforce has become an important theme, with majority of IT employees sharing the view that their employers should provide training and the necessary assistance to facilitate the ethical and responsible utilisation of AI at work.
5. Contingent Hiring and the Future of Work
Amidst a highly volatile, candidate-short, post-pandemic market, it is unsurprising that risk mitigation is of paramount importance to businesses in Hong Kong. This is reflected in more and more organisations shifting towards contingent hiring and outsourced talent solutions to fill business-critical vacancies and drive delivery on time-sensitive projects. The IT services market in Hong Kong is projected to reach US$7.55 billion by the end of 2024 – a reflection of companies increasingly opting to partner with onshore and offshore vendors to get their work done at scale and pace, with the flexibility to ramp up and ramp down resource teams at will. Although majority of Hong Kong’s IT talent still prefer the security and benefits that come with permanent positions, a growing number of IT professionals are now inclined towards contract-based work to gain wider exposure and the flexibility to switch between projects.
As businesses rebuild post the pandemic and accelerate their digitalisation efforts, the dynamics of Hong Kong’s IT market are rapidly changing. With disruptive technologies on the rise, there are wide-ranging implications on both organisations and their people. Opportunities in IT remain abundant, waiting to be unlocked, as the playing field levels up. Ultimately, the future belongs to those who seize the initiative. There is no better time than now.