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The last few years have been very good for Malaysian software engineers. Large increments when switching jobs and 17 year olds earning RM14,000 per month were not uncommon. In 2022, the optimism has been dampened by predictions of a looming mother-of-all recession. How will this impact the average Malaysian software engineer’s salary?
The law of Supply and Demand
So what contributed to the increase in software engineer salaries? The answer is the law of supply and demand. There are more jobs (demand) than software engineers (supply) available. We’ve examined what’s driving the demand and what’s happening in supply, and here’s what we found!
The ever increasing need for Malaysian software engineers
1. Accelerated demand for digitalization from non-tech companies
The needs and opportunities from digitalization are unbelievable! This is happening 2 ways. Companies that have traditionally outsourced have started to look into building their in-house tech teams. Companies who are non-tech such as in F&B, Property, Retail, Healthcare and Manufacturing are also starting to build up their own tech capabilities. If those companies do not want to invest in their own in-house tech teams, they will work with vendors to help them ramp up their capabilities. All of this has contributed to a tremendous increase in demand for Malaysian software engineers.
2. 24% increase in new business registered in 2021
The pandemic has seemed to unleash “a tidal wave of entrepreneurial activity”. In the US, there has been a 24% increase in new business registered over the last year. All this means that the demand for labor increases. The vast majority of these companies will require tech one way or another.
3. Stronger USD, a boon for the Malaysian job market
The difficulties in hiring software engineers is not a phenomenon unique to Malaysia. In fact, countries like the US, UK, Singapore, Australia and the EU report the same thing too. There is a global shortage of software engineers. With the US dollar strengthening by 7.14% against the Malaysian Ringgit in 2022, it has allowed more companies to hire more Malaysian software engineers.
Will supply catch up?
1. Prolonged economic downturn
There are a couple of ways supply can catch up. The first is a severe economic downturn. In 2022, there has been more than 770,000 layoffs according to Layoffs.fyi. Upon inspecting the numbers further, most of these layoffs are in non-engineering roles such as human resources, back office support, marketing and sales. Take Shopify’s layoff as an example. Out of 140 candidates, only 3 were from engineering. When we look at data from other companies such as Klarna and Carvana, we see a similar pattern too.
2. A flood of new software engineers
The rise of bootcamps, coding schools and online resources should increase the number of new software engineers available. However, the lag time to fulfill this demand requires a few years to meet. It is worth mentioning that more software engineers in the world can only be a good thing.
The need for builders will never end
With ever increasing demand, and supply struggling to catch up, software engineer salaries should continue to tick up for the foreseeable future. However, with remote work comes a more global competitive landscape for jobseekers. Thus, the competition for the highest paid jobs will become more competitive.
So no, the good times will not end soon for software engineers in Malaysia. If anything, the market will continue to correct itself and that means salary will move upwards and closer to global standards. One thing is for sure, whether the economy is doing well or not, the world will always need more builders.
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