pedang
June 29th, 2007, 03:41 AM
Selling Malaysia as outsourcing hub
By Sharen Kaur
sharen@nstp.com.my
June 28 2007
MALAYSIA needs to improve the country's branding and publicity and leverage on certain key strengths to tap the growing potential of the shared services and outsourcing (SSO) industry worldwide.
Industry experts say that Malaysia benefits from good infrastructure, multi-lingual skills, political stability, skilled workforce and comparable cost advantage, which make it an increasingly favourable offshore locations.
Five panelists from the industry recently shared their views during a SSO Roundtable meeting organised by Business Times in Kuala Lumpur.
They were Multimedia Development Corp (MDeC) head of market and partners, SSO, Zulfiqar Zainuddin, Teledirect Telecommerce Sdn Bhd chief executive officer (CEO) Laurent Junique, Scicom (MSC) Bhd CEO Leo Ariyanayakam, SRG Asia Pacific Sdn Bhd senior manager Byron Fernandez and VPI International Inc business development manager Jevinder Singh.
They said the value of the outsourcing market in Malaysia is currently about US$2.5 billion (RM8.7 billion) but can exceed US$10 billion (RM34.9 billion) in the next three years to five years with more emphasis placed to boost the industry. The global SSO industry is valued at more than US$750 billion (RM2.6 trillion).
The outsourcing market is expected to grow at a compounded annual growth rate (CAGR) of 30 per cent in the next three to five years. According to a Frost & Sullivan report, by the end of 2012, revenue contribution from outsourcing within Asia Pacific is anticipated to represent 58.7 per cent of the total revenue of the Malaysian outsourcing market.
The marketplace is dominated by key players, notably Teledirect, Scicom, SRG, VPI, VADS Bhd, TeleTech Holdings Inc and Vsource Bhd.
"More needs to be done to brand the country as an effective SSO destination and train more skilled workers to meet the trade's growing needs. Ours is a niche business and we are competing with China and India to stay ahead in the business," said Ariyanayakam.
He said there is still huge potential in the industry, but Malaysia has to be further profiled and branded abroad, although it has been positioned as the top three most attractive countries in the outsourcing world.
Malaysia, nominated by Atos Origin, won the "Offshore Destination of the Year" category of the UK National Outsourcing Association (NOA) Awards last year.
"Some say we are not cheap. If we compromise the way of cost, we are going to get killed. The other fundamental issue is the negative publicity of Malaysia, which creates a problem, especially when we are looking for Western dollars.
"All the great stuff about Malaysia such as good infrastructure, stability and growing economy are killed with one stone through bad publicity here. Customers are pretty sensitive about these issues. A yes or no decision in the outsourcing industry is becoming so critical," he said.
Junique, meanwhile, said despite Malaysia being positioned as a global centre, the perception of the country overseas was not as expected.
"It's all got to do with age-old perception of Malaysia from many different people. We need to brand outside of Malaysia. It has to be a joint effort between MDeC, the Government and companies involved in the business. We have the foundation, infrastructure and information providers to build the sector," he said.
MDeC, meanwhile, is using platforms like roundtable meetings and working with other peers from all continents to promote Malaysia. It is also playing a big role in marketing and has plans to set up more representative offices overseas to promote the country, said Zulfiqar.
Another concern, he said, is the lack of English-speaking community in Malaysia, a country that is capable of producing multi-talented workforce.
The panelists said at the fundamental level, the Government should re-align and change the education system, and the agenda is being pushed through the development of SSO.
"To get the outsourcing business, we need to fix this. MDeC is coming out with specific plans to retrain the workforce but the message is not clear. We realise the importance of using the industry as an engine to speed up the academia programmes," Zulfiqar said.
Jevinder added that the gap between the English-speaking community in Malaysia and China is expected to become wider as the Chinese Government is placing a lot of emphasis on re-training its people to speak better English through various programmes.
"Some 10 years from now, a new generation of Chinese would be able to speak very good English and the gap is going to get wider. Simply by converting Mathematics and Science in English is not enough. The foundation has to be built at the primary level," he noted.
Ariyanayakam pointed out that since Malaysia can't go back in time to change the education system, it should turn back and re-train the misalignment and workforce to get the people to the right level.
"The Government is trying and there are so many agendas in play. For whatever they are doing right now, they see the light at the end of the tunnel. It's a very structural thing and will take a while," he said.
While English is a major issue, the infrastructural point concerning telecommunications is also a concern as it has been branded as expensive.
"Telecommunications here is expensive. It's easier to terminate a line in Manila than in Kuala Lumpur. Additionally, Malaysia needs to be profiled soon as nobody really understands what we actually do," Fernandez added.
Frost & Sullivan said in its report that Malaysia should aim to distinguish itself as a premier destination for high value outsourcing activities as it has the capability to rise from being a niche player to becoming a true global hub for outsourcing contact centres.
"One reason why we are attractive today is because of cost escalation in India for IT (information technology) services, which has sky-rocketed. People are quoting 25 per cent to 133 per cent higher for their services," Zulfiqar said.
The panelists said there is a trend where more companies in Singapore and Australia are looking at offshoring in Malaysia as they are recognising the country as an outsourcing hub in the Asian region.
"From our observation, we are seeing a second wave of offshoring opportunities. Malaysia has become an alternative destination," Zulfiqar said.
He said contact centres here are becoming popular and visible, and the telecommunication, IT and banking industry have been identified as the main catalysts to spur growth.
By Sharen Kaur
sharen@nstp.com.my
June 28 2007
MALAYSIA needs to improve the country's branding and publicity and leverage on certain key strengths to tap the growing potential of the shared services and outsourcing (SSO) industry worldwide.
Industry experts say that Malaysia benefits from good infrastructure, multi-lingual skills, political stability, skilled workforce and comparable cost advantage, which make it an increasingly favourable offshore locations.
Five panelists from the industry recently shared their views during a SSO Roundtable meeting organised by Business Times in Kuala Lumpur.
They were Multimedia Development Corp (MDeC) head of market and partners, SSO, Zulfiqar Zainuddin, Teledirect Telecommerce Sdn Bhd chief executive officer (CEO) Laurent Junique, Scicom (MSC) Bhd CEO Leo Ariyanayakam, SRG Asia Pacific Sdn Bhd senior manager Byron Fernandez and VPI International Inc business development manager Jevinder Singh.
They said the value of the outsourcing market in Malaysia is currently about US$2.5 billion (RM8.7 billion) but can exceed US$10 billion (RM34.9 billion) in the next three years to five years with more emphasis placed to boost the industry. The global SSO industry is valued at more than US$750 billion (RM2.6 trillion).
The outsourcing market is expected to grow at a compounded annual growth rate (CAGR) of 30 per cent in the next three to five years. According to a Frost & Sullivan report, by the end of 2012, revenue contribution from outsourcing within Asia Pacific is anticipated to represent 58.7 per cent of the total revenue of the Malaysian outsourcing market.
The marketplace is dominated by key players, notably Teledirect, Scicom, SRG, VPI, VADS Bhd, TeleTech Holdings Inc and Vsource Bhd.
"More needs to be done to brand the country as an effective SSO destination and train more skilled workers to meet the trade's growing needs. Ours is a niche business and we are competing with China and India to stay ahead in the business," said Ariyanayakam.
He said there is still huge potential in the industry, but Malaysia has to be further profiled and branded abroad, although it has been positioned as the top three most attractive countries in the outsourcing world.
Malaysia, nominated by Atos Origin, won the "Offshore Destination of the Year" category of the UK National Outsourcing Association (NOA) Awards last year.
"Some say we are not cheap. If we compromise the way of cost, we are going to get killed. The other fundamental issue is the negative publicity of Malaysia, which creates a problem, especially when we are looking for Western dollars.
"All the great stuff about Malaysia such as good infrastructure, stability and growing economy are killed with one stone through bad publicity here. Customers are pretty sensitive about these issues. A yes or no decision in the outsourcing industry is becoming so critical," he said.
Junique, meanwhile, said despite Malaysia being positioned as a global centre, the perception of the country overseas was not as expected.
"It's all got to do with age-old perception of Malaysia from many different people. We need to brand outside of Malaysia. It has to be a joint effort between MDeC, the Government and companies involved in the business. We have the foundation, infrastructure and information providers to build the sector," he said.
MDeC, meanwhile, is using platforms like roundtable meetings and working with other peers from all continents to promote Malaysia. It is also playing a big role in marketing and has plans to set up more representative offices overseas to promote the country, said Zulfiqar.
Another concern, he said, is the lack of English-speaking community in Malaysia, a country that is capable of producing multi-talented workforce.
The panelists said at the fundamental level, the Government should re-align and change the education system, and the agenda is being pushed through the development of SSO.
"To get the outsourcing business, we need to fix this. MDeC is coming out with specific plans to retrain the workforce but the message is not clear. We realise the importance of using the industry as an engine to speed up the academia programmes," Zulfiqar said.
Jevinder added that the gap between the English-speaking community in Malaysia and China is expected to become wider as the Chinese Government is placing a lot of emphasis on re-training its people to speak better English through various programmes.
"Some 10 years from now, a new generation of Chinese would be able to speak very good English and the gap is going to get wider. Simply by converting Mathematics and Science in English is not enough. The foundation has to be built at the primary level," he noted.
Ariyanayakam pointed out that since Malaysia can't go back in time to change the education system, it should turn back and re-train the misalignment and workforce to get the people to the right level.
"The Government is trying and there are so many agendas in play. For whatever they are doing right now, they see the light at the end of the tunnel. It's a very structural thing and will take a while," he said.
While English is a major issue, the infrastructural point concerning telecommunications is also a concern as it has been branded as expensive.
"Telecommunications here is expensive. It's easier to terminate a line in Manila than in Kuala Lumpur. Additionally, Malaysia needs to be profiled soon as nobody really understands what we actually do," Fernandez added.
Frost & Sullivan said in its report that Malaysia should aim to distinguish itself as a premier destination for high value outsourcing activities as it has the capability to rise from being a niche player to becoming a true global hub for outsourcing contact centres.
"One reason why we are attractive today is because of cost escalation in India for IT (information technology) services, which has sky-rocketed. People are quoting 25 per cent to 133 per cent higher for their services," Zulfiqar said.
The panelists said there is a trend where more companies in Singapore and Australia are looking at offshoring in Malaysia as they are recognising the country as an outsourcing hub in the Asian region.
"From our observation, we are seeing a second wave of offshoring opportunities. Malaysia has become an alternative destination," Zulfiqar said.
He said contact centres here are becoming popular and visible, and the telecommunication, IT and banking industry have been identified as the main catalysts to spur growth.