JAKARTA -- Undaunted by a scarcity of digital talent, India-based budget hotel network Oyo is looking to build its own technology development team in Indonesia as it continues its rapid expansion in the archipelago nation.
"We are moving the technology product [development team] here" for business in Indonesian, country head Rishabh Gupta recently told the Nikkei Asian Review.
"Technology products always work best if you understand the business and the insights" in the country, he said.
The Indian startup, backed by SoftBank Group's Vision Fund, offers affordable, standardized lodging and has quickly grown into one of the world's largest hotel chains since its 2013 founding. Technology has played a key role in its global expansion. It has a system that instantly calculates a hotel's projected occupancy rates and revenue after joining Oyo through data analytics. Hotel owners who become part of the chain receive dedicated software that handles everything from inventory management to bookkeeping to housekeeping.
The need to localize and optimize these applications and businesses -- for example, language as well as connecting the various online travel-booking websites to the platform -- for the Indonesian market is a reason for the startup to create its data development team in the country, Gupta explained.
Startups in Indonesia have often bemoaned a lack of local digital talent. Despite being Southeast Asia's largest digital economy, Indonesia produces only 278 engineers per million people a year, far behind such regional peers as Malaysia or Thailand, which produce well over a thousand, according to consultancy A.T. Kearney. And Indonesian unicorns like Go-Jek and Tokopedia tend to attract the cream of the crop that does exist.
Gupta sees Oyo having the same allure as the unicorns. One of them, Traveloka, "has been able to build its local development team," he said. "Go-Jek also has a large local engineering team. Why cannot we have a large local development team?"
"We show the people and resource two things," Gupta said. "This is an exciting mission, and second, this is a place where we care for our employees. Those two alone can create a right traction for people to come in and work. We [can be] attracting the top talent here."
Oyo has rapidly increased its listed properties in Indonesia since launching in the country last October. It previously pledged to invest $100 million in the market and recently announced that its hotel count has hit 720 and that its rooms have reached 20,000. This puts it in the same league as a Southeast Asia-focused budget hotel chain with a similar business model, RedDoorz, which has 70% of its 1,150 listed properties in Indonesia.
"Of the $100 million that we have committed, a lot of the capital goes into the infrastructure changes," Gupta said, referring to the refurbishments the company undertakes when a property lists under the Oyo brand. He revealed that only 5% to 10% of the properties do not need refurbishing, meaning that the Indian company has had to take a hands-on approach to most of its listed properties.
This differentiates it from other players in the market, Gupta said. "We are dealing with medium- to small-scale entrepreneur hoteliers, and they don't even have the cash. We are giving them financial capabilities and infrastructure development capabilities. ... That's [one of the steps] that allows us for this rapid expansion."
Nikkei staff writer Ismi Damayanti contributed to this report.