Human resources functions are undergoing a shift as businesses in less mature markets realise the cost of high staff turnover and start to implement measures to improve retention.

That means a move away from viewing human resources as a purely administrative function to seeing it as a critical part of the business and a factor in commercial success.

That was one of the key findings of the Michael Page 2016 South East Asia Salary & Employment Outlook.

Polling more than 850 employers across a range of industry sectors in Singapore, Malaysia and Indonesia, the report found the human resources function looks set to enjoy continued steady growth, fuelled in part by the need for businesses to support their expansion into other areas.

Almost half (49%) of respondents expect headcount to increase in the next 12 months, compared to 42% who expect it to remain stable.

“There is also a move toward more specialist talent acquisition roles, rather than it being one of several responsibilities given to generalists,” the report stated.

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This is leading to modest salary inflation, with 62% of respondents expecting increases of 1-5% over the next 12 months, according to the report.

More than two out of 10 (23%) of respondents stated they expected a pay rise of 2-3%.

Expectations of turnover were also varied, with roughly one third each expecting 1-5%, 6-10% and 11% or more.

Staff turnover was, in fact, highlighted as a concern especially in Malaysia, due primarily to the sheer number of opportunities available to good candidates.

“Petronas and ancillary companies are still hiring key positions but have lost a lot of expat contractors,”  said Paul Cooper, managing director, Michael Page Malaysia & Thailand.

“There is also an increasing importance on employee engagement as companies engage in a war of talent to retain their key employees.”

The report added that such behaviour encourages a shift in how the human resources function is viewed – from being a pure administration to being a key business support partner, as firms try to retain and develop employees.

This means “a shift in the skills required, and possibly an increase in headcount in these departments. In many businesses, this means a move toward candidates with regional exposure, as MNCs are looking to expand regional hubs and local companies to improve HR practices”.

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