GovTech layoffs reflect broader reorganisation trends in tech sector, say analysts

However, Associate Professor Walter Theseira from Singapore University of Social Sciences said the exercise should be viewed primarily through the lens of the technology industry, where companies routinely cut some roles while hiring aggressively for others as they reorganise around new capabilities.

“There’s no indication from what has been announced that the government considers, for example, the public sector bloated,” he said. 

“There’s generally a sense that actually the public sector is maybe a little too lean for the kinds of demands that are placed on it today because basically, (it is) not just economic restructuring, dealing with (artificial intelligence) and so on, but in general, the higher demands that the public has for public services.

“So I think the public sector continues to actually be fairly lean, and certainly, I think (the Ministry of Finance) exercises a huge amount of discipline in restricting headcounts in the public sector. 

“To me, it’s not a signal that the public sector has too many people; it’s actually more of the public sector needs to pivot in certain ways, especially in technology functions, and as part of that pivoting, they cannot get it done without actually restructuring.”

SHIFTS IN THE DIGITAL WORKFORCE

GovTech announced on Tuesday (Jul 15) that about 7 to 9 per cent of its workforce will be affected as it shifts from a project-delivery model to one centred on continuous product ownership. The first phase will see 93 officers leave the agency, while more than 200 others will be retained, redeployed or placed on full-pay apprenticeships.

Assoc Prof Theseira said GovTech’s restructuring resembles what many technology firms have already been doing since the COVID-19 pandemic.

Turning to GovTech’s decision to retrench staff while recruiting for new roles, Assoc Prof Theseira said such moves are common in the technology sector, where companies frequently reorganise around new growth areas rather than reduce overall headcount.

“Unless your organisation is in a business sector which is clearly contracting, what you’re usually trying to do is reorganise and redeploy your resources for a new area of growth,” he said.

He noted that many technology companies expanded rapidly during the COVID-19 pandemic as demand for digital services surged, and have since been reorganising to better align their workforce with changing business needs.

GovTech’s restructuring could similarly represent a delayed adjustment after that period of rapid expansion, he said. 

Assoc Prof Theseira stressed that the affected workers still possess valuable skills. Rather than reflecting poor performance, the restructuring is driven by changing capability requirements, although workers with highly specialised expertise may find it harder to pivot into adjacent roles.

That broader shift is not unique to GovTech, said Mr Ethan Ang, founder of tech talent platforms NodeFlair and TalentGPT. 

“Organisations increasingly want stronger internal ownership rather than relying on external vendors, mainly for technology ownership, productivity gains, and more,” he said.

While the restructuring is symbolically significant because public sector retrenchments are rare, its immediate labour market impact is likely to be limited, he said.

Mr Ang added that not all affected workers would face the same transition. Project and vendor managers could move into adjacent roles in areas such as product management, product operations and technical programme management because many of their core skills are transferable.

However, moving directly into software engineering or cybersecurity would be considerably more difficult, as those roles require deeper technical knowledge and hands-on experience. 

“Artificial intelligence can reduce the barrier, but it does not make everyone technically competent. It narrows parts of the execution gap, but does not eliminate the competency gap,” Mr Ang said.