Malaysian outsourcing sector’s overseas revenue up 27% in 2013
By Digital News Asia July 31, 2014
- RM1.59bil recorded in 2013 compared with RM1.25bil in 2012
- Local outsourcing players encouraged to move up value chain
MALAYSIA’S outsourcing industry saw revenue from overseas outsourcing opportunities and projects going up 27% to RM1.59 billion (US$499.6 million) in 2013 from RM1.25 billion (US$392.8 million) in 2012, according to Outsourcing Malaysia.
Outsourcing Malaysia is an initiative of the National ICT Association of Malaysia or Pikom.
Outsourcing is one of the Entry Point Projects (EPPs) under the Business Services NKEA (National Key Economic Area) of the Economic Transformation Programme (ETP), Outsourcing Malaysia noted in a statement.
The ETP seeks to transform Malaysia into a high-income nation. The Business Services NKEA focuses on areas such as business process outsourcing (BPO), IT process outsourcing (ITO), and knowledge process outsourcing (KPO).
“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 with other countries in the region],” said Outsourcing Malaysia chairman David Wong (pic).
He attributed this growth to the Malaysian Government’s various initiatives via the ETP, and industry-wide efforts.
“There’s still a lot of room for improvement as out of this RM1.59 billion in overseas revenue, only 25% was generated by local outsourcing players, while the [remaining 75% was generated] by foreign shared services players that are based in Malaysia,” Wong noted however.
Moving up value chain
In the 2013, Outsourcing Malaysia began monitoring the domestic revenue growth of the sector in Malaysia, saying this amounted RM1.77 billion (US$556.2 million).
Wong said there are still many local outsourcing players which only focus on the domestic market, compared with their global counterparts (established and operating in Malaysia) which are more keen on attracting and securing foreign outsourcing business.
This is where Outsourcing Malaysia can come in, to assist small and medium enterprise (SME) local outsourcing companies in moving up the value chain to improve their global attractiveness and their overseas income from in-bound outsourcing projects, he claimed.
Recently, Outsourcing Malaysia led a market mission to the World BPO Forum in New York with a delegation of three Malaysian outsourcing companies, to provide local players with the opportunity to interact with world leaders and users in the global outsourcing industry, the association said.
In A.T. 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,” Wong cautioned.
Higher specialisation skills
The largest Malaysian outsourcing company employs only 5,000 staff at the most, compared with some of the larger outsourcing companies in China and India that are made up of over 100,000 employees, Wong said.
“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,” he noted.
“Malaysian players therefore need to start specialising in their business service offerings to differentiate themselves from their Asian counterparts.
“They can look into sectors such as Islamic banking, healthcare, logistics and financial services, where the world is constantly looking to outsource to players which can properly service these niche markets with higher sets of skills and expertise,” he added.
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