Companies from around the world are flocking to Malaysia in search of a new playground for innovation.

Malaysia is a popular destination for business leaders looking to fast-track their entry into the Southeast Asian (SEA) market. One area, in particular, has shifted into hyperdrive since the pandemic - SEA’s digital economy, which is forecasted to exceed US$300 billion by 2025 and potentially hit a value of US$1 trillion by 2030.

According to a 2021 Google report, 40 million new internet users came online in SEA last year, boosting the internet penetration rate in SEA to 75%.

For tech entrepreneurs looking to snap up a slice of the pie, setting up a business foundation in Malaysia makes sense. Arizton’s research report said that Malaysia’s data centre market is expected to grow at a CAGR of around 7% between 2022 and 2027, as hyper-scale providers leverage tax benefits and local digitalisation initiatives. Malaysia is also one of the first countries in the region to build a 5G ecosystem, which would attract and create new business opportunities for the local economy.

Entering Malaysia’s business landscape is an intuitive process, especially since large companies are diversifying their businesses, which would create new opportunities for small and medium-sized enterprises (SME) and start-ups. However, establishing a new business in Malaysia poses a challenge to companies that are unfamiliar with local regulations, especially where employment is concerned. This area is where a trusted recruitment partner can be of great support.

in demand digital jobs in malaysia
in demand digital jobs in malaysia

In this article, we discuss some of the key advantages of partnering with a recruitment agency when it comes to supporting human resources with their industry expertise, recruiting challenges and the common hiring mistakes that startups can avoid.

Find out how startup leaders can hire top tech talent in Malaysia even during a talent crunch.

dealing with the recruitment challenges in tech startups

With these tech companies in Malaysia constantly creating new jobs, skilled ICT professionals have become high in demand everywhere you turn.

According to the Malaysia Digital Economy Corporation (MDEC), the number of job vacancies tripled from 19,000 to 56,000 within a year during the COVID-19 pandemic. The LinkedIn Talent Insights platform revealed that some of the most in-demand digital skills are in analytics, engineering and computer science. The tech talent shortage in Malaysia and the lack of specialised tech talent affect everyone - especially startups.

When it comes to hiring critical talent, early-stage tech startups may struggle to compete with tech giants who offer a more structured career progression and have more spending power to meet tech workers’ rising expectations.

1. competing with giant tech companies on salary

In the past few years, Southeast Asian tech companies have begun offering salary increments of 10% to 20% for in-demand jobs, especially in fast-growing sectors like fintech.

In some rare cases, employers may even be paying up to a 60% salary increase to secure niche talent who are difficult to source and recruit.

2. tech startups are seen to lack job security and stability

Many workers tend to avoid joining startups because of the perceived instability in their jobs and the company.

Tech giants like Tencent and Google will almost never go out of business because of the sheer scale they operate on. On the other hand, a startup may be acquired by a larger company or go bust altogether if they run out of funds.

However, there are also startups like Grab, GoJek and Klook that have found the niche to chart sustainable business growth. Since their incubation, these startups have matured their business by developing a viable business structure that offers strong job stability to their employees.

3. lack of career growth in startups

One other factor that stands out to tech talent when applying for new jobs is how interesting and meaningful it can be for them. IT professionals want to work in jobs that allow them to hone their skills and enhance their capabilities so they can stay agile and competitive.

When retaining young talent, employers must work hand-in-hand with their younger workforce and provide upskilling and development opportunities to align with their rising expectations.

This includes ensuring that employees are working on projects they’re passionate about while giving them a transparent view of how they can progress in the company.

Startups are particularly attractive to younger generations as they provide more opportunities for professionals to learn and upskill in hands-on roles. In contrast, advanced professionals prefer companies with a structured environment and career progression.

common mistakes tech startups make in hiring

From the corporate team who works behind the scenes to front office salespeople, your workforce comprises critical talent that work together to build your employer brand.

There’s immense pressure for hiring managers to land the best possible candidate - after all, depending on the role, a bad hire can cost anywhere from six to 12 months of their salary.

Common hiring mistakes can be avoided if you get involved with a recruitment agency at the beginning of your recruitment process.

1. startups lack a strong employer brand

Startups face tougher challenges in new talent acquisition because they have to convince potential candidates that they are a better employer compared to larger companies.

Take for instance a software developer who’s browsing for a new job online. They might stumble across a job advertisement from a big bank they’re very familiar with, followed by one from a new fintech company they’ve never heard of. The developer is much more likely to apply to the job offered by a more established company, whose offer seems more secure.

Companies who want to attract highly skilled talent should first strengthen their employer brand. This includes getting the word out about their company culture, opportunities and incentives, and spotlighting a more agile environment that’s not as common in larger, more conservative MNCs.

the cost of a bad hire
the cost of a bad hire

In order to stand out more from your competitors, working with a recruitment agency might be better than hiring directly. This allows you to partner with an organisation that will take the time to understand your company values, business goals and hiring requirements. The agency would also serve as an effective ambassador for your employer brand, encouraging ideal candidates to consider opportunities at your organisation.

2. discriminatory hiring practices in startups

Beyond being able to tap a wider pool of talent and foster a culture of inclusivity, there are other factors that will impact your hiring strategy - one of which is Malaysia’s regulations to ensure that employers do not engage in discriminatory hiring.

One of the most common issues talent encounter during the hiring process is being discriminated against for personal attributes such as age, race, gender, pregnancy or marital status, disability and mental health conditions.

You can avoid the headaches associated with employment laws and the human resources issues that some startup companies face. In order to maintain compliance and secure talent without worrying, it’s easier to work with recruitment agencies who are already familiar with the local regulatory landscape.

Executive recruitment agencies like Randstad provide highly-specialised recruiters who are trained to screen, shortlist and place highly-qualified candidates in front of you for an interview, allowing you to focus solely on making the right hire. We also have an in-house contract administrative team to help you with labour-intensive tasks such as contractors’ leave, payroll and employment visas.

In today’s candidate-short market, it’s especially important to look beyond the traditional ‘ideal hire’ and keep an open mind not just for talent diversity but career backgrounds.

By focusing your recruitment strategy on finding the best-fit talent for your team, your business will grow to be more innovative, resilient and adaptive to change.

3. longer hiring process

A common pitfall for tech companies is believing that in order to succeed, they must hire people the way that FAANG (Facebook, Amazon, Apple, Netflix, and Google) companies do. Consequently, they fall into the trap of frustrating top candidates by conducting too many interviews.

The Tech Talent Expectations survey also showed that Malaysian tech workers are rejecting job offers due to a fundamental disconnect between hiring managers and tech candidates. 

35% of respondents said that they rejected job offers during the interview process because they did not have a positive impression of the hiring manager. Meanwhile, 33% of respondents rejected offers because the interviewer did not have an adequate understanding of the job or role that they were hiring for.

Hence, it is crucial for interview processes to be efficient and thorough. Hiring managers need to ask the right questions, be transparent and provide detailed information about the company and the available role. If there are no compelling reasons for them to change jobs, tech candidates are likely to stick with their current companies where they can continue to be engaged and upskilled.

Having a meaningful human touch can help employers stand out, especially when they are trying to engage and attract top candidates.

Our recruiters use the interview process to ascertain if a candidate’s interests and skills are a good culture fit for the company and the job opportunity, while sharing much-needed first-hand information about the business to make candidates feel valued.

hiring strategies for tech startups in malaysia

Should startup companies work with a recruitment agency to hire the talent they want? In short - yes.

With the tech talent shortage in Malaysia, startup companies can work with recruitment agencies to build a strong employer brand and effectively market their organisation - two crucial elements for any company looking to navigate a new business landscape with unfamiliar regulations.

The recruiting process involves more than just giving recruiters the job description and budgeted salary, and requesting a shortlist of qualified candidates. Instead, if you know how to work with us, it’s a comprehensive, high-touch process that helps you find, screen, and successfully hire top-performing talent for your business. With access to specialised labour market insights and cutting-edge HR technology, recruitment agencies can help you streamline and speed up the recruitment process.

Partnering with us gives you access to a talent pool of IT professionals and recruitment experts who know your industry inside and out. Rather than being interviewed by someone who may not fully understand industry-specific roles, your candidates will connect to a recruitment specialist who can determine if they’re truly a good fit for the role and the organisation.

It also ensures that you stay on track with relevant candidates at all times. Besides undergoing a more comprehensive screening and application process, job seekers can expect a tighter feedback loop, because we will check in frequently to ensure a smooth onboarding process.

get access to the best IT talent
get access to the best IT talent

When you work with us, you also benefit from our in-depth understanding of today’s talent - from what they expect of their employers and how to attract them to work for you. Employing the right people to round out your workforce - rather than simply filling a role with any available candidate - will lead to lower employee turnover, higher productivity and improved business performance.

That being said, our specialists are tasked to find the best talent for your teams - but it takes an organisation with a strong employer brand to properly engage and retain them.

partner with randstad

If you’re looking to increase your headcount or hire in Malaysia for the first time, let us help you find specialised talent for your recruitment needs. You can speak with our recruitment specialists, get expert advice, and learn more about how you can improve your employer brand within a highly competitive tech landscape.

Work with us to tap into contract workers to support your business growth plan and access tailored end-to-end recruitment and HR services solutions. Alternatively, if you are an active candidate, explore your options in the tech space. Check out our latest job listings and apply for jobs.

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