Quarterly Update - Q3FY23

Welcome to our latest newsletter, where we bring you the freshest insights and trends in the ever-evolving business landscape. In these pages, you'll find valuable information to stay ahead of the curve. Join us as we explore the forces driving growth, innovation, and transformation.

Let's dive right in!

Growth Areas

In a maintained trend, the growth areas of AI and Cybersecurity continue to be a strong focus of investment and therefore hiring.

Whilst the Forbes Cloud 100 announcement had a number of repeat attendees, newcomers were largely dominated by an AI-flavour. Open-AI took out #1 on pace to cross $1B ARR in the next year. Notably, Cyber vendors were the fastest climbers in the prestigious list.

Digital Asset Revival

We have seen a noticeable resurgence in the digital asset space. A turbulent last 18 months in the space has seen less scrupulous players fall and those that are overinflated make large cuts to their workforces. Those with market-leading products - in particular, blockchain infrastructure - are capitalising on the conducive regulatory environments in APAC - particularly Hong Kong and Singapore - vs. the US. They are now adding strategic headcount in this region.

Services Sector

Domestic-based services businesses are attracting further market share in comparison to their multi-national competitors. The appetite for hands-on skilled delivery professionals is increasing, perhaps as a result of eye-watering invoices from consultancies and/or the desire to distance themselves from recent unfavourable press. These businesses represent an increasingly attractive proposition to many candidates from more traditional international vendor backgrounds.

IPO Signals

In the private market, three recent high-profile S1 fillings (Klayvio, Instacart, Arm) may signal a shift in investor appetite and readiness. After a protracted IPO drought, keen eyes will be watching these listings with bated breath as potential markers for the private logjam over the last 18 months.

Start-ups

Fundamentally strong companies (i.e., companies with established product market fit and referenceable customers) with limited or no presence in APJ are starting to make stronger investment overtures. Expect newer entrants to resume expansion in Q4 2023 and Q1 2024. Analyst reports on net new revenue for vendors indicate a dramatic bounce back in customer spending in Q2. This is the first time since the peak in Q4 2021 that there has been this sort of activity. VCs are indicating their intent to resume growing GTM teams, albeit with a renewed focus on profitability rather than ‘growth at all costs’.

M&A

Q2 has seen considerable movement across the M&A market. In some cases, vendors have been able to bolster their offerings by adding new capabilities to their platforms to stay competitive in a market, despite increased financial pressure. This is particularly true in the cybersecurity space as vendors react to a fast-changing landscape e.g. Imperva, Panoptica, Laminar, Polar. In other cases, PE firms have swooped on early-stage privates to boost their portfolio. The rumour mill continues to swirl around a potential mega-deal between Wiz and SentinelOne.

South East Asia

Asian Start-Ups, principally out of India, are continuing to expand into both ASEAN and international markets, in particular the Middle East: Saudi Dubai, Abu Dhabi and Qatar. These are lucrative markets due to nation-building and the abundance of sovereign wealth funds. Saudi Arabia, and its Vision 2030 economic reform plan, is leading this transformation.

Business transformation – Leadership roles

To no surprise, many businesses are continuing to restructure their leadership teams. As a noticeable trend, companies are prioritising hiring leaders with transformational change experience. Companies also err on the side of hiring more senior, ‘battle-tested’ leaders. Leaders with a track record of multiple new market entries, and complex solution selling, along with robust customer and channel networks, are in high demand.

Layoffs

Thankfully, multiple reports are confirming what we have anecdotally been hearing, namely, voluntary company departures have overtaken the number of company layoffs for March and June.

This is a return to the historical norm that was inverted in late 2022 and early 2023. In July, layoffs dropped below 10,000 for the first time this year, down approximately 90% from this year's peak in January at 85,000.

Source: TechCrunch, Layoffs.fyi ? This chart was last updated August 1, 2023.