Moving up the value chain by concentrating on Knowledge Process Outsourcing services and building local outsourcers
Kuala Lumpur, 30 July 2013 – MSC Malaysia’s ‘best year’ momentum continues with its Shared Services and Outsourcing (SSO) Cluster rolling in RM10.4 billion in revenue in 2012, a 14% jump from 2011. Moving forward in 2013, the SSO cluster reinforced its strategy at a business update press conference today. This involves moving Malaysia’s SSO industry up the value chain by concentrating on high value Knowledge Process Outsourcing (KPO) services, keeping in line with Malaysia’s transformation into a sustainable, highly-competitive, high-value and high-income developed nation by 2020.
With its complete IT and outsourcing infrastructure as well as an increasingly competitive and skilful workforce, Malaysia has consecutively been ranked the world’s third SSO destination by the global management consulting firm AT Kearney since 2004, after India and China. As a driving force of this success, it is no surprise that the MSC Malaysia SSO cluster contributed RM5.8 billion to the nation’s GDP in 2012, up 32% from 2011. The cluster also saw a whopping 57% increase in job creation with over 7,300 jobs created in 2012, bringing the cumulative number of jobs to 65,800 since MSC Malaysia’s inception in 1996.
Speaking at the press conference, Datuk Badlisham Ghazali, Multimedia Development Corporation’s (MDeC) Chief Executive Officer said, “The Shared Services and Outsourcing cluster’s performance is a mark of the great strides that Malaysia continues to make in the SSO industry. Malaysia offers a unique value proposition especially to foreign investors as the nation churns out over 190,000 multilingual and capable graduates annually, while providing current and potential investors with world class infrastructure, competitive costs of business operations and a safe haven with low occurrence of natural disasters. Additionally, Malaysia is also one of the few countries in the world to provide extensive government support to drive this industry. MDeC is honoured to have been the pioneering force in getting the industry off the ground since 2002.”
The key contributors to the cluster’s revenue were the following top three industries: Banking, Financial Services and Insurance (BFSI), Oil & Gas and ICT (Information, Communications & Technology). The BFSI industry recorded RM2.26 billion in revenue in 2012, while the Oil & Gas and ICT industries contributed RM2.45 billion and RM3.66 billion in revenue respectively within the same period. The remaining industries that contributed to the SSO industry also include the Logistics & Transportation as well as Pharmaceuticals & Healthcare.
“There is a huge potential for the global SSO industry in the future. Gartner reported that the worldwide Business Process Outsourcing (BPO) services are expected to grow from USD$126 billion (RM402.8 billion) in 2010 to USD$162 billion (RM517.9 billion) in 2015; while the worldwide Information Technology Outsourcing (ITO) services are expected to grow from USD$225 billion (RM719.3 billion) in 2010 to USD$281 billion (RM898.4 billion) in 2015. Evalueserve, on the other hand estimated the global KPO services to grow from USD$8.9 billion (RM28.6 billion) in 2010 to USD$ 17 billion (RM54.7 billion) in 2014. These projections bode well for Malaysia and sets the right tone for our short term goals for 2013 while also offering great insights into and ultimately, achieving our 2020 aspirations,” added Datuk Badlisham.
Having made a mark in the ITO and BPO sector of the industry, MDeC is set to drive the industry’s next phase of development and subsequently move Malaysia up the value chain with its focus on the high yield KPO sector. This will be done by encouraging existing investments to take up KPO-type of activities, attracting new investments in KPO-type of services as well as growing and further developing niche areas – such as expanding Engineering & Design services to the Oil & Gas industry and beyond.
The cluster also aims to facilitate the growth of local outsourcers under the Entry Point Projects 2 (EPP2) programme. This will be done by benchmarking local EPP2 companies against the International Association of Outsourcing Professionals (IAOP) global standards, providing incentives and initiatives to allow smaller local players to flourish. These include the InnoSource programme which facilitates market expansion in terms of funding needs such as private equity and venture capitals, and the SCORE+ Acceleration programme to nurture local companies with respect to growth, market expansion, market access and promoting industry dialogue.
Michael Warren, Vice President of Shared Services and Outsourcing, MDeC, added, “As we continue to move away from the generic call center business, we are looking to upskill or reskill our professionals, particularly in the finance and IT industries to reach the higher level of experience and knowledge required in carrying out KPO services. The current talent development programmes in the pipeline such as the MSC Malaysia MyProCert-Strategic Reform Initiatives (SRI) programme and BFSI Training Programme are key training initiatives that will help us achieve this aim.”
In addition to training and benchmarking programmes, the SSO cluster will also establish partnerships for knowledge development centres, leveraging on MDeC’s networks in the United States, Europe, Japan and Singapore and working with Outsourcing Malaysia and partners such as Gartner to increase Malaysia’s presence abroad.
In 2012, the MSC Malaysia SSO cluster received more than 30 new investments, including foreign direct investments from companies such as Amway Business Services Asia Pacific Sdn Bhd, BT Global Technology (M) Sdn Bhd, and Xchanging Malaysia Sdn Bhd. Additionally; MSC Malaysia also received key domestic investments from Brandt International Sdn Bhd, Pulse Group Sdn Bhd, and MyTelehaus Sdn Bhd.
Moving forward, deepening focus on newer avenues and embracing emerging technologies are some of the growth strategies adopted to enable MSC Malaysia’s SSO companies to thrive in key markets. MDeC is confident of continued growth and believes that there will be even more opportunities for the Malaysian SSO industry in the future.
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