Rick Hammell is the Founder and CEO of Elements Global Services, a leading HR technology and services company.
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Many can agree that we will finally breathe a little easier this year. Well, almost. After a year of battling the coronavirus pandemic and inheriting a battered global economy, how close is the light at the end of the tunnel?
Fortunately, with the vaccination rollout, countries around the world are en route to a gradual economic recovery. However, what has struck me the most is the swift response and resilience that the Asia-Pacific region displayed throughout the pandemic. Right from the get-go, the region was committed to their highly effective strategies to eliminate the coronavirus.
It was this methodical control of the pandemic that gave rise to Asia-Pacific as a leading region in the global economic recovery. Asia-Pacific's gross domestic product (GDP) recuperated to its pre-pandemic peak in the fourth quarter of 2020, led by growth in the economies of India, China and Vietnam, and the region is poised to have the fastest GDP growth in 2021.
With the region leading the global return to business, HR leaders have new considerations and opportunities as they look to grow their teams, especially if they are looking toward Asia-Pacific.
Digital Acceleration During Covid-19
Companies worldwide have accelerated their digital transformation significantly, outpacing years of changes within months, according to a McKinsey survey on technology transformation in businesses during the pandemic. To stay in business, companies remodeled their operations. There was a quantum leap in digital adoption across the board, especially in Asia-Pacific, where it has been embraced and adopted more quickly than in other regions.
Case in point: When customer interaction shifted rapidly onto digital channels, companies in both Europe and North America recorded an adoption acceleration rate of three years, while companies in Asia-Pacific recorded four years, according to the same survey.
With accelerating technology adoption and increased digitalization, the global workforce is being transformed, and this opens a door of opportunities for HR leaders to rethink their human capital decisions. With the right HR technology solutions, business leaders are no longer bound by geographical considerations when searching for talent — they can easily tap into a global pool to build an agile workforce and focus on finding the best and diverse talents that possess their organization’s values, wherever they may be.
Asia-Pacific’s Swift Rise
Asia-Pacific is home to 60% of the world’s population and according to a McKinsey report, the region is expected to contribute to half of the world’s GDP by 2040. Another McKinsey study also revealed that in 2020, Asian companies made up 43% of the world’s largest 5,000 companies.
In the latest Fortune Global 500 list, more than 200 companies in the Asia-Pacific region made the rankings. Plus, for the first time ever, Chinese companies outnumbered U.S. companies in the coveted roster. To put things in perspective, no Chinese companies made the list when it first started in 1990, just three decades ago.
Digitalization has fueled the region, which is now also home to half of the world’s internet users — with the two most populous countries, China and India, already accounting for one-third. Innovation and technology are not showing signs of slowing down, with China second only to the U.S. in the number of billion-dollar startups. Other countries in Asia-Pacific like India, South Korea and Indonesia are also in the top 10 countries for unicorns. It is no surprise that the region accounts for close to half of total investments globally.
Heavyweight economies like China and India are attractive for foreign businesses looking to set up their regional bases, and countries like New Zealand, Singapore and Hong Kong are leading the rankings for ease of doing business. Not to mention that the region also has five of the top 20 spots in the 2019 Global Innovation Index.
Instead of importing talent, accessing the right talent through a global workforce can create a borderless team. While it may be tempting to simply look for low-cost labor, HR leaders should focus on finding the best and diverse talents that possess their organization’s values, wherever they may be.
However, hiring abroad is more than just looking beyond borders for talents. It involves the complexities of compliance, legal, taxes, payroll and much more. It could be a daunting task for in-house HR teams to navigate these complexities, especially when they are not trained in such areas.
The Future Of Asia-Pacific
Economists have long talked about the Asian Century, relating to Asia’s return as a global economic powerhouse in the 21st century. It is seen as a reversal, where Asia dominated the world economy for most of human history, before being overtaken by the Western hemisphere in the last two centuries.
Asia’s GDP gap with the rest of the world is gradually narrowing and it is not just due to its two largest economies: China and India. The diversity in the region can be owed to the distinction of the four Asia groups:
• China: The world’s second-largest economy and the anchor economy in Asia-Pacific.
• "Advanced Asia”: Urbanized economies such as Japan, Singapore and South Korea.
• “Emerging Asia”: Includes Indonesia, Malaysia and Thailand, all of which hold high growth potential and consumption.
• “Frontier Asia and India”: Economies such as Bangladesh, Sri Lanka and India, which have young labor forces that can serve fresh opportunities in the market.
These distinct and diverse groups of economies will continue to complement each other and contribute to regional and global economic prosperity. HR leaders must not overlook the potential of tapping into the resources of these burgeoning markets with the right partner and ensure a robust, future-proof HR management system.
Asia’s much-discussed future potential has already arrived, and as the region gears up to reoccupy the center of the world, business leaders must be ready to sail into these flourishing waters.
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