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News : Malaysia Capitalizes on Outsourcing Opportunities and Projects
Kuala Lumpur, July 30, 2014 -- Malaysia’s outsourcing industry achieved a higher overall revenue of RM1.59 billion last year as compared to RM1.25 billion 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% increase in just one year to RM1.59 billion 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 RM1.59 billion in overseas revenue, only 25% 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 centre 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."
Posted by Veronica Silva Cusi, news correspondent
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About Outsourcing Malaysia:
Outsourcing Malaysia (OM) is an initiative of the Shared Services & Outsourcing (SSO) industry and a chapter of PIKOM, The National ICT Association. It was formed and officiated by Malaysia's Prime Minister back then in 2006. With the support from its founding partner i.e. Multimedia Development Corporation (MDeC) and senior leaders from the global services industry; this outsourcing consortium aims to enhance the global visibility to provider capabilities in Malaysia (spanning IT, Business Process and Infrastructure Services) while collectively and cohesively enabling global organizations to leverage the multitude of Malaysian capabilities as they work towards adopting services globalization.
Published: Thursday, July 31, 2014