Indonesia struggles to retain pandemic advances in HR tech adoption

Many Indonesian companies are interested in incorporating digitalisation into their business strategies, including in the HR profession. IT development, automation and other technological adaptations are becoming increasingly vital to Indonesian industrialisation as many of the country’s companies struggle to compete in an expanding global market. 

The challenge of improving digital infrastructure through technological adaptation of HR professionals is imperative. This was evident in President Joko Widodo’s 2022 state budget draft. Two of the president’s five priority programmes to increase government efforts to maximise profit from Indonesia’s digital economic activities revolve around HR, and technological adaptation was highlighted as a challenge. Indonesia’s UMKM (small, micro and medium-sized enterprises) sector wants to reach the top of Southeast Asia’s digital economy in just two years, and it needs cooperation from state-owned enterprises. Widodo has acknowledged the importance of expediting technological processes for Indonesia’s HR scene, describing the effort as a transformation.

The Covid-19 pandemic massively accelerated global digitisation, especially in the Asia-Pacific region. According to a study conducted by McKinsey in 2020, digital transformation in APAC increased from 31% in 2017 to 54% in 2020, which is 10 years ahead of the rate expected before the pandemic. 

This was felt across both human resources and human development sectors in Indonesia, and the sentiment is echoed by Bob Aubrey, Founder of the ASEAN Human Development Organisation and Chair of its advisory board. “What we’re seeing is that there needs to be more technological capability for the country, but also more use,’’ he tells Chief of Staff Asia, “Everybody knows by now that it was the Covid pandemic that was the greatest driver of the adaptation or the adoption of online working. That would have taken 15 years otherwise.”

However, during and directly after the pandemic eased in 2022, Indonesia’s digitisation rate suffered. Indonesia ranked 87th overall (and 14th among the other 17 countries in Southeast Asia) in the 2021 Global Innovation Index, which measures 80 indicators of innovation performance. This research points to a clear issue in successfully incorporating technological innovations into the workplace. 

A balance between traditional and digitised work policies using technological adaptation must be achieved. HR can create a number of customised organisational solutions to address this problem.

The Asia Region Head at HR of Danish technology company FLSmidth, George Xavier says overcoming this challenge will present opportunities to HR. “The increasing use of technology in HR functions provides new opportunities for HR professionals to improve processes, reduce costs, and enhance the employee experience,” he says. “This will also allow HR professionals to focus on more strategic initiatives, such as talent management and organisational culture.”

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Chief of Staff Asia