44% say more employees are resigning now compared to 12 months ago. 53% are having more trouble hiring or finding replacements. 53% are seeing few qualified applicants, or none at all. That's the talent situation for small and medium-sized enterprises in Southeast Asia, according to the findings of a new survey by SAP.

The talent challenge sticks out among other optimistic responses to SAP's poll - 55% of SME leaders around the region said their organisation had proved resilient during the panic, with another 24% neutral or uncertain, while 56% said their revenues had improved since 2020. 84% are moderately, very, or extremely optimistic about growth over the next 12 months.

But the difficulty in hiring and retention may put a spoke in that wheel. Digital transformation has been a known avenue of growth for SEA's SMEs for some time - the OECD had recommended that governments should bridge the gap between digital economy policy and SME policy in 2019, with research into SME digital growth going back a few years before that.

Now workforce volatility is affecting 77% of SMEs' ability to innovate and digitally transform, going by the results of SAP's poll. Only 21% are slightly or not at all affected. And the top challenge they face (44%) is lack of skilled talent, even more so than lack of budget.

Commenting on the findings, Paul Marriott, President, SAP Asia Pacific and Japan, said that the study findings show one way the Great Resignation can be seen as an existential threat to many organisations. “Digital transformation is a fundamental way SMEs not only build resilience, but how they create agile, innovative paths to growth. But without the right people, any transformation will struggle. Investment in talent must match investment in innovation to ensure SMEs in APJ both survive – and thrive.”

So what investments are SMEs in Southeast Asia making?

They're trying to retain staff, for a start, and flexible work arrangements are the top priority (43%). While this is a sea change from the region's broader business culture of face time, it's ironically been made easier by the pandemic having normalised remote and hybrid work. 

SMEs are also working to upskill their employees (42%) with 78% focusing specifically on digital training and development. In tandem with that, they are offering better financial incentives (39%) and better career advancement (38%) - a necessity, given that employees are very likely to seek higher pay and more responsibilities as they gain more skills. However, these two incentives in particular have tended to be a challenge for SMEs, simply due to the limitations of the organisation's size and margins.

“Talent requires the right remuneration, flexibility, and a clearly communicated progression journey," Marriott commented. "Prioritising upskilling and career progression, and supporting it with access to the right technology and partners is proven to be a win-win for employees and for SMEs.”