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Industry Research : Malaysia to Move Up Outsourcing Ladder
To help Malaysia down the road to becoming a high income nation, the Multimedia Development Corporation wants to push the country's outsourcing sector up the value chain towards knowledge-based services.
"We are not neglecting the other segments in the shared services and outsourcing sector (SSO), but right now the high-value knowledge process outsourcing (KPO) services would be our main strategic focus," said MDec's vice president for outsourcing, Michael Warren.
"According to Gartner Research, knowledge-based outsourcing is projected to have a compounded annual growth rate of 24% from 2010 to 2014, reaching a market size of US$17bil (RM54.99bil) globally," he explained.
"There is huge potential in this segment," said Warren who pointed out that the knowledge-based segment contributed less than 10% of the total outsourcing services revenue of RM10.4bil last year - mostly in banking, financial services and insurance, oil and gas, and ICT.
He said up to June 30 this year, 16 companies with investments wanted to invest in outsourcing services, three of which were knowledge-based companies.
Warren said Malaysia has ranked as the world's third outsourcing destination behind India and China by management consulting firm AT Kearney since 2004.
The outsourcing sector contributed RM5.8bil to the nation's GDP last year, up 32% from 2011. But total new investments fell 59% to just RM500mil.
"This is because the US-based companies were pulling out their investments and pumping them in their own country last year. But we see that the trend is reversing this year. Hence, we would see a more solid new investment growth," Warren said.
"As we continue to move away from the generic call centre business, we are looking to upgrade the skill of the workforce, particularly in finance and information technology industries, to reach a higher level of knowledge and experience required to carry out knowledge-based outsourcing services," he said.
Warren maintained Malaysia was well positioned to move up the ladder. "We have skilled and multilingual talent, infrastructure, competitive costs of business operations and a safe haven with low occurrence of natural disasters. Malaysia also is one of the few countries in the world that has government support to drive the industry," he pointed out.
He added that MDec had several programmes in the pipeline to drive knowledge-based outsourcing growth, including the MSC Malaysia MyProCert-Strategic Reform Initiatives for talent development programme and the Score+ Acceleration programme, which provides funding assistance.
Posted by Veronica Silva Cusi, news correspondent
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Published: Monday, May 6, 2013