Almost all categories up from 2011’s impressive performance, but SSO new investments plunge 59%
MDeC unfazed, says the quality of investments and jobs being created matter more
ICT companies in the Multimedia Super Corridor (MSC Malaysia) saw total revenue of RM33.53 billion in 2012, up 5.7% from the previous year, said the Multimedia Development Corporation (MDeC).
While there was a slowdown in some areas MDeC measures, the national ICT custodian’s chief executive officer Badlisham Ghazali shrugged off any concern, saying the government-owned agency was more focused on quality rather than quantity.
A particular standout was the amount of new investments in the Shared Services and Outsourcing Cluster (SSO) of MSC Malaysia, which saw a 59% drop from 2011 to RM500 million.
“This is down because we’ve been targeting higher-value, higher-income investments in areas like Knowledge Process Outsourcing (KPO), rather than creating thousands of call-centre type jobs,” he told a May 21 media briefing on MSC Malaysia’s financial performance for the year 2012.
“We need to do this because Malaysia does not have the (population) numbers to compete on high-volume low-wage jobs,” he added.
It may have sounded like a copout, but Badlisham unveiled figures to back his argument: The average SSO job pays RM5,783 per month, which is 95% more than the average ICT salary of RM2,967.
“There were 502 new jobs created in the KPO sector, 15% up from 2011, and we saw a 51% growth in KPO salaries from 2010 to 2012, to RM7,028,” he said, also alluding to the Malaysian Government’s aspiration to create a high-income economy under the Economic Transformation Programme.
MDeC divides MSC Malaysia status companies into three clusters; in addition to SSO, there is the Information Technology or InfoTech Cluster, and the Creative Multimedia Cluster.
There are 292 MSC Malaysia status companies in the SSO cluster, which includes those involved in KPO, Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO).
At RM14.66 billion, the InfoTech Cluster accounted for 44% of the total revenue of MSC Malaysia status companies; while the SSO cluster contributed 31% or RM10.45billion. The Creative Multimedia Cluster recorded revenues of RM6.99 billion (21% of the total). The remaining 4% came from Institutions of Higher Leaning (IHLs) and incubators, which recorded revenues RM1.44 billion.
Overall however, MSC Malaysia continued its momentum from the previous year. Exports grew to RM11.6 billion, 14% up from 2011, resulting in MSC Malaysia’s contribution to the country’s Gross Domestic Product (GDP) standing at RM11.3 billion, a growth of 18% from 2011.
[RM1 = US$0.34]
Furthermore, 9,712 new jobs were created in 2012, a 28% growth over 2011, bringing the total number of jobs created since MSC Malaysia’s inception in the late 1990s to 128,850.
“All categories have gone up, and we sense that growth this year will keep at this pace,” said Badlisham (pic), noting that 2011 had previously been MDeC’s best year since MSC Malaysia’s inception. Currently, there are 2,397 active MSC Malaysia status companies.
Revenue from the InfoTech cluster, which has 2,392 companies under it, was actually down 4.6% from 2011; the cluster also saw the loss of 329 jobs or -5.5% on the job creation scale, which MDeC argued was in keeping with the global trend in the traditional IT sector.
However, the sector’s GDP contribution grew 3.6% to RM3.5 billion; exports were up 9.9% to RM4.1 billion while new investments grew a whopping 105% to RM2.08 billion.
The last year saw two major MDeC initiatives bear fruit, the first revolving around its cloud acceleration programme to get small and medium enterprises (SMEs) in Malaysia to adopt the technology, as well as encouraging independent software vendors ISVs) to develop cloud-based solutions .
According to MDeC, 93 ISVs got on the cloud in 2012, and eight locally developed applications were rolled out. It reported 1,371 new Malaysian SMEs using ICT solutions and conducting business online in 2012.
The second major drive in 2012 revolved around MDeC’s ‘stacking’ approach where one large company – which can include government-linked companies and the major telcos – takes the lead and works with a number of smaller companies which have complementary solutions. MDeC’s role here is to identify these companies and match them, describing the process as ‘creating market access via co-creation.’
Badlisham said there were four co-creation projects, and 57 MSC Malaysia status companies were promoted. There was a 14% matchmaking success rate that translated to opportunities valued at RM100 million.
“We can book the hall, play the music and get the partners to dance, but we can’t make you fall in love,” he commented on the 14% rate. “This can’t be forced; it has to be on a ‘willing seller, willing buyer’ basis.”
But he claimed the approach has allowed MSC Malaysia status companies to capture a larger portion of the South-East Asian emerging markets pie via channels development and solution stacking, with 38 new channel partners established and four solution stacks formed in 2012.
There are 373 companies in this cluster, which saw revenue grow 15% to RM6.99 billion; 1,887 new jobs (up 72%); an 8% growth in GDP contribution to RM1.9 billion; exports up 35% to RM490 million; and new investments up 32% to RM300 million (click chart to enlarge).
MDeC paid a lot of attention to creating international market access for companies in this cluster, and claims it has seen RM60.7 million in sales generated from marketing missions to North America, Asia Pacific and Europe.
The agency said that 10 projects from Malaysia were present at the Asian Animation Summit, generating RM2 million in opportunities to date; and 12 deals were closed at MIPCOM (the Cannes entertainment market).
“But we want to move beyond this, and an important aspect is creating Malaysian intellectual property,” Badlisham said, adding that 30 pieces of Malaysian-owned IP were developed under the IP Creator Challenge (IPCC) programme in 2012, comprising animation, casual games and digital interactive comics, amounting to RM1.5 million of value committed.
MDeC also wants to see the cluster move beyond entertainment and into digital publishing, training, simulation and even gamification, or the application of games concepts in other industries and ventures.
Moving forward, Badlisham said that MDeC this year will focus its efforts on:
1) Driving local ICT
Building a stronger cloud computing ecosystem
Developing competitive local outsourcers
Driving local companies to outsource
Enhancing quality of Malaysian content development
Spurring creative multimedia to go beyond entertainment
2) Market access
Increase the focus on South-East Asian emerging markets
Continue the ‘stacking’ approach
3) Funding ecosystem
Working on the IP Valuation Framework
Driving more accelerator programmes
MSC Malaysia’s ‘best year ever’
MDeC’s Badlisham: ‘The best is yet to come’
MDeC employs ‘stacking’ approach to create greater value
Homegrown MSC companies hit RM10bil local sales in 2011
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