Outsourcing Malaysia launches extensive industry report on Outsourcing industry in Malaysia
KUALA LUMPUR, 22 October 2013 – Outsourcing Malaysia (OM), an initiative under PIKOM, today shared that the outsourcing industry in Malaysia is set to double in growth by 2017 with a Compound Annual Growth Rate (CAGR) of 15 per cent from its current 2012 revenue of USD1.7 billion.
OM announced its second industry report titled ‘Malaysia’s Global Services Outlook’ in conjunction with the four day international Asia-Pacific Outsourcing Summit (APOS) in Iskandar, Johor. The research findings by leading B2B market researcher Valuenotes, was commissioned by OM to provide the SWOT (Strength, Weakness, Opportunity, Threat) insights of the industry in Malaysia.
David Wong, Chairman of Outsourcing Malaysia (OM) shares that one of the major insights is the key advantage that Malaysia has, being ranked 12th worldwide by the World Bank for the ‘Ease of Doing Business’ category. This ranking is also the highest amongst all countries that are considered ‘outsourcing countries.’ “A simple illustration of this is that a potential investor can start doing business in Malaysia in a mere 6 days, while it takes an average of 36 days to do the same in other APAC countries,” he explains.
At the same time, Malaysia has the highest ‘infrastructure availability’ worldwide ranking at 32nd spot amongst all outsourcing countries compared to India ranked 84 – with connectivity, electricity supply and Internet penetration per population at the highest scores. “With the Malaysian government’s continued initiatives to set up new business cities that fully equipped with infrastructure facilities such as transportation, electricity, water supplies and telecommunications such as here in Iskandar, it will further increase our appeal to investors who are looking at Asia to outsource their business processes,” says Wong.
Currently, over 200 industrial estates/ parks and 14 Free Industrial Zones (FIZs) have been developed throughout the country for businesses to kick-start their operations faster and more efficiently.
The strong and diverse language capabilities, strategic geographic location, stable business and economic environment as well as strong government and industry association(s) support and initiatives were also listed as the some of the other key factors that make Malaysia a viable outsourcing destination.
Move Up the Value Chain; Identified Verticals for Specialization Focus
The research findings also reveal the urgency for Malaysia to move away from playing the numbers game in outsourcing and from the entry-level outsourcing sector. Wong explains, “The largest Malaysian outsourcing company only manages to employ 5,0000 people as compared to over 100,000 employees in some of the larger firms in India and China. This illustrates the average size of outsourcing centers in Malaysia - which limits our capability in taking on volume-driven type of outsourcing project.”
“This is why we have to focus on providing more highly specialised end-to-end services in niche markets such as a) Business Financial Services Industry (BFSI) b) Healthcare c) Logistics and d) Oil and Gas in order to remain globally competitive.”
BFSI currently accounts for 30 percent of the market share and is expected to escalate further especially in Islamic banking with the potential to offer off-shoring services. The fastest growth will be seen in the Healthcare (CAGR 10%), Government (CAGR 9%) and Travel and Logistics (CAGR 8%) sector. Infrastructure management and payment processing are some of the services that are being predominantly outsourced by business in the sector.
Some of the most popular ITO projects are Generic Office Enrolment (GOE), Electronic Procurement (eP) and Human Resource Management Information System (HRMIS). Oil & Gas is another critical sector where there is high potential for growth. Malaysia’s strategic location, good port quality and road infrastructure on the other hand is contributing to the growth of the Logistics sector.
“On our part, we will continue to create avenues for discussion and networking through events such as APOS to continue driving the industry’s overall developments with an emphasis to push for niche market growth as well as driving more interest in outsourcing as a viable career amongst the local workforce,” ends Wong.
Themed ‘Creating Sustained Value for Regional Integration,” APOS 2013 is the first of five regional summits that will be organised by Outsourcing Malaysia together with the International Association of Outsourcing Professionals (IAOP) across Asia Pacific in the next five years.