Outsourcing Malaysia to ramp up representation of shared services companies

AvantiKumar

Outsourcing Malaysia conference 

Photo - (From left)  Lim Han Boon ,Treasurer of Outsourcing Malaysia; Justin J Anthony, Head of Outsourcing Malaysia; Cheah Kok Hoong, PIKOM Chairman; David Wong, Chairman of Outsourcing Malaysia; Jason Crimson, Deputy of Shared Services, Outsourcing Malaysia and Anthony Raja Devadoss, Deputy of Outsourcing, Outsourcing Malaysia; at the Press Conference of Outsourcing Malaysia.

 

Outsourcing Malaysia [OM], an initiative of the National ICT Industry Association of Malaysia, PIKOM, will extend its role and represent both local and foreign shared services companies where previously its membership comprised local outsourcing players, it said.

Outsourcing Malaysia chairman David Wong said the body's membership is currently made up of outsourcing companies (90 percent) and just 10 percent of shared services companies.

"Shared services companies comprise close to 30 percent of the entire outsourcing market in Malaysia," said Wong. "Over the years, more than 300 foreign and multinational shared services companies have set up their regional and global centres here, generating billions of ringgit in investments and thousands of employment opportunities."

He said OM believes that their move to include more shared services companies will also benefit existing members via mutual knowledge sharing and partnerships.

Wong said OM's conversations, which were also supported by the national ICT industry agency Multimedia Development Corporation [MDeC], with shared services firms showed a deed for closer collaboration. .

"OM therefore will be embarking on new efforts to drive to garner greater collaboration between local and foreign players in both shared services and outsourcing," he said.

 Similar challenges

"Both shared services and outsourcing companies share common issues and opportunities such as lack of skilled talent, talent development, Malaysia as a choice of location, ease of doing business and infrastructure and operating cost," said Wong.

"This year, we will establish a talent council consisting of all major shared services and outsourcing companies to oversee the challenges faced in talent sourcing, development of skills and talent and increase efforts to promote outsourcing as a career of choice by helping facilitate the placement of talent directly from universities into outsourcing companies," he said.

OM needed to look at the bigger picture in the light of increasing global competition in the outsourcing sector, said Wong, adding that shared services formed a significant part of the outsourcing sector.

"In 2012, about 70 per cent of Malaysia's outsourcing revenue still came from international deals; and out of this, a huge 90 percent were generated by shared service companies," he said.

Many Malaysian shared services organisations were set up mainly by global financial institutions to support their non-core regional business operations, said Wong.

"As this model matured, these shared services entities comprising primarily contact centres and back office operators, began to offer their business process outsourcing services to other businesses besides their parent company," he said. "Because shared services supply the underlying need for companies to outsource non-core yet critical business functions, the growth of the shared services market share in the outsourcing sector is inevitable and will continue to be strong in the future." 
 
 BPO shows significant growth potential

Wong said the Malaysian outsourcing sector widely consists of three areas: - Business Process Outsourcing (BPO); Information Technology Outsourcing (ITO) and Knowledge Process Outsourcing (KPO) with the former two - BPO and ITO, being the more dominant areas in Malaysia.

He said that in Malaysia, BPO has shown the most growth in the last few years - growing from 39 percent in 2009, to 48 percent in 2012. "And within BPO, shared services providers make up the dominant 60 percent market share employing a total workforce over 13,000 people."

"In the next few years, BPO will emerge as the fastest growing area for outsourcing in Malaysia with a 25 percent growth rate," said Wong.

"ITO on the other hand, accounts for 45 percent of the industry market share, with shared services players providing ITO, declining to 40 per cent in 2012 (down from 48 percent in 2009)," he said.

"There is definitely a growing investor interest in Malaysia's shared services market and we need to enhance our ability to adapt to the way business is being done globally through strategic partnerships to achieve the Government's Entry Point Project 2 (EPP2) goal under the Economic Transformation Programme; of developing globally competitive outsourcing companies," said Wong. 

Some of the shared services companies who have already become OM members include: Bank Negara, IBM Malaysia, DHL Asia Pacific Shared Services, HSBC Electronic Data Processing (M), UOB Centre of Excellence (M),  Kimberly Clark Regional Services (M), Hitachi Sunway Information Systems, Citigroup Transaction Services (M), Sime Darby Global Services, Fujitsu (M), Scope International (M), Fuji Xerox Asia Pacific Pte Ltd, Hewlett - Packard (Malaysia), Malayan Banking Berhad (Maybank Shared Services), Lafarge Shared Services, and e2 Power.