Malaysia seeks to boost outsourcing business

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Malaysia call centerMalaysia’s outsourcing industry achieved a higher overall revenue of $490 million last year as compared to $385 million in 2012 from overseas outsourcing opportunities and projects.

This achievement is significant, said Outsourcing Malaysia (OM), an initiative of national ICT industry association PIKOM, as the outsourcing industry is one of the Entry Point Projects (EPP) under the Business Services NKEA of the Economic Transformation Programme (ETP) which focuses on areas of business such as business process outsourcing), IT process outsourcing and knowledge process outsourcing.

OM chairman David Wong said: “This 27-per cent increase in just one year in total revenue is pretty significant for Malaysia’s outsourcing industry, which is still relatively small compared to those of other regional countries.”

Wong attributes a driver to this positive earnings growth to the Malaysian government’s various initiatives via the ETP and industry-wide efforts.

However he noted: “There’s still a lot of room for improvement as out of this $490 million in overseas revenue, only 25 per cent is generated by local outsourcing players while the rest is by their foreign shared services players based in Malaysia.”

Wong said there are still many local outsourcing players which only focus on business from the local market only, rather than their global counterparts (established and operating in Malaysia) who are more keen to attract and secure foreign outsourcing business.

“This is where OM is able to come in to assist small medium businesses (SME)-like local outsourcing companies in assisting them to move up the value chain to improve their global attractiveness and their overseas income from in-bound outsourcing projects.”

Among OM’s initatives are missions to help the SMEs connect with overseas firms looking to outsource their non-core business in fields such as analytics, healthcare and robotics.

In the AT Kearney’s 2011 Global Services Location Index, Malaysia was ranked third after India and China in terms of attractiveness for shared services and outsourcing; with Asian countries dominating the top 10 positions on the index.

“The domestic market in Malaysia is getting smaller by the day and unless we look outwards for business, the industry’s growth will remain stagnant or decrease as neighbouring countries have started picking up the pace,” said Wong.

He noted that the largest Malaysian outsourcing company employs only 5,000 staff at the most, as compared with some of the larger outsourcing companies in China and Indian that are made up of over 100,000 employees.

“Due to Malaysia’s population size, it is impossible for Malaysia to compete in terms of volume-driven type of outsourcing projects that naturally require very large scale call center capacities.

“Malaysian players therefore need to start specialising their business service offerings and differentiate themselves from their Asian counterparts.

“They can look into sectors such as Islamic banking, healthcare, logistics, financial services where the world is constantly looking to outsource to players who can properly service these niche markets with higher sets of skills and expertise.”

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Reading Time: 2 minutes

Malaysia’s outsourcing industry achieved a higher overall revenue of $490 million last year as compared to $385 million in 2012 from overseas outsourcing opportunities and projects.

Reading Time: 2 minutes

Malaysia call centerMalaysia’s outsourcing industry achieved a higher overall revenue of $490 million last year as compared to $385 million in 2012 from overseas outsourcing opportunities and projects.

This achievement is significant, said Outsourcing Malaysia (OM), an initiative of national ICT industry association PIKOM, as the outsourcing industry is one of the Entry Point Projects (EPP) under the Business Services NKEA of the Economic Transformation Programme (ETP) which focuses on areas of business such as business process outsourcing), IT process outsourcing and knowledge process outsourcing.

OM chairman David Wong said: “This 27-per cent increase in just one year in total revenue is pretty significant for Malaysia’s outsourcing industry, which is still relatively small compared to those of other regional countries.”

Wong attributes a driver to this positive earnings growth to the Malaysian government’s various initiatives via the ETP and industry-wide efforts.

However he noted: “There’s still a lot of room for improvement as out of this $490 million in overseas revenue, only 25 per cent is generated by local outsourcing players while the rest is by their foreign shared services players based in Malaysia.”

Wong said there are still many local outsourcing players which only focus on business from the local market only, rather than their global counterparts (established and operating in Malaysia) who are more keen to attract and secure foreign outsourcing business.

“This is where OM is able to come in to assist small medium businesses (SME)-like local outsourcing companies in assisting them to move up the value chain to improve their global attractiveness and their overseas income from in-bound outsourcing projects.”

Among OM’s initatives are missions to help the SMEs connect with overseas firms looking to outsource their non-core business in fields such as analytics, healthcare and robotics.

In the AT Kearney’s 2011 Global Services Location Index, Malaysia was ranked third after India and China in terms of attractiveness for shared services and outsourcing; with Asian countries dominating the top 10 positions on the index.

“The domestic market in Malaysia is getting smaller by the day and unless we look outwards for business, the industry’s growth will remain stagnant or decrease as neighbouring countries have started picking up the pace,” said Wong.

He noted that the largest Malaysian outsourcing company employs only 5,000 staff at the most, as compared with some of the larger outsourcing companies in China and Indian that are made up of over 100,000 employees.

“Due to Malaysia’s population size, it is impossible for Malaysia to compete in terms of volume-driven type of outsourcing projects that naturally require very large scale call center capacities.

“Malaysian players therefore need to start specialising their business service offerings and differentiate themselves from their Asian counterparts.

“They can look into sectors such as Islamic banking, healthcare, logistics, financial services where the world is constantly looking to outsource to players who can properly service these niche markets with higher sets of skills and expertise.”

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