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One Malaysia
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Discussion Starter · #1 ·
Selling Malaysia as outsourcing hub

By Sharen Kaur
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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.
 

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I think before we selling our country as a outsourcing hub, why don't we outsource our Proton to Papua New Guinea?:lol:
 

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I have watched a documentary on SBS about Australian companises outsourcing jobs overseas last year, their preferred destination in Asia is India, followed by Malaysia :banana: , Malaysia has an advantage as it is nearer to Australia and strategic location while India's because of low cost. Similarity is that both have large pools educated workers.
 

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Discussion Starter · #7 ·
M'sia moves up in SSO ranking

by Lee Wei Lian
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Malaysia has moved up a step to fifth ranking among the best countries for shared services and outsourcing (SSO), behind Singapore, Ireland, China and the leading country, India, according to a Frost & Sullivan study.

Frost & Sullivan's director of consulting, Siew Kam Soon, said Malaysia was ranked fourth in the banking, financial services and insurance sector, third in the transportation and logistics sector, second in the energy sector and eighth in the technology/ICT sector.

"The country should focus on areas which are not easily replicated," he said at the launch of its 2007 Global SSO study, which was held in conjunction with the Frost & Sullivan Global Sourcing Asia Pacific Summit, which was hosted by the Multimedia Development Corporation, here yesterday.

The report also said the global SSO market for the seven industry verticals covered in the study was projected to grow at a rate of 15% from US$930 billion in 2006 to US$1.43 trillion by end-2009.

The top three verticals by SSO spending in 2006 were the Banking Financial Services and Insurance sector at US$273 billion, the technology/ICT sector at US$233 billion and the healthcare sector at US$130 billion.

Siew said the dominant piece of the pie held by the shared services however, the outsourcing component is expected to grow faster.
 

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One Malaysia
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Discussion Starter · #8 ·
Move to create major outsourcing hub

PENANG: Malaysia must strive to become South-East Asia’s biggest outsourcing hub, said Prime Minister Datuk Seri Abdullah Ahmad Badawi.

“Nowadays, nobody builds things from start to finish. Everybody is looking to outsource.

“We must empower our labour force with the necessary knowledge and skills so that they can become value-added workers capable of operating modern machines and are adept in the latest technologies,” he said when opening the Kolej Kemahiran Tinggi Mara (KKTM) Balik Pulau here yesterday.

The Prime Minister said a highly skilled labour force would give investors the confidence to set up operations in Malaysia.

“I believe that one day, the country’s skilled labour will be even more than the number of engineers in the country.

“Parents and teachers should encourage our youths to upgrade their skills because this will lead to higher income,” Abdullah said.

Also present at the event were Chief Minister Tan Sri Dr Koh Tsu Koon, Entrepreneur and Co-operative Development Minister Datuk Seri Mohamed Khaled Nordin, Finance Ministry parliamentary secretary and Balik Pulau MP Datuk Seri Dr Hilmi Yahya and Mara director-general Datuk Nam Marthinin.

In his speech, Mohamed Khaled said this was the country’s third KKTM.

“The Government has already approved the setting up of nine more colleges which are in various stages of development. By the end of the Ninth Malaysia Plan, five new colleges would have been completed,” he said, adding that the KKTM Balik Pulau building and technologically advanced equipment were set up at a cost RM152mil.

The minister also noted that skills training provided by the college should not be perceived as “secondary” to academic education.

“Skills training is an alternative, not a ‘second chance’ option,” he said.
 

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They outsource Malaysians because proven experiences in building our nation, not because of cheap salary. For example our civil engineers, they are not just design engineers, but also employed as project managers. Malaysians go overseas not to learn or to get experiences, but they involved in work seriously.
 

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BusinessTimes

That's right ! Malaysia has all the ingredients -- Excellent infrastructure, well-educated English-speaking workforce, political stability, perfect weather, nice friendly n hospitable people :D, great food, easy life, luxurious lifestyle ... :banana:
 

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Good news! M'sia needs to compete like crazy to prevent more of the pie being lost to our competitors! We need a business savvy environment, more multilingual speakers
 

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China no threat to Malaysia in contact centre outsourcing biz
By Woon Wu Lin
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KUALA LUMPUR: China is unlikely to surpass Malaysia in the contact centre outsourcing industry for the next five years as the world’s most populated country is still fulfilling domestic demand, says US-based software technology provider Verint Systems Inc.

Verint principal global solutions consultant Bill Durr said the contact centre industry in China was struggling to keep up with the domestic demand, including the large population and indigenous companies.

“With a billion people and more disposable income, it is just a struggle for those organisations to keep up with internal demand. There is no spare capacity to go,” he added.

Durr’s colleague, Verint Asia Pacific vice president Nigel Hewett said the large population in China would provide the resources for back-office outsourcing in there.

“We are seeing stuff in the back-office (segment) because you do not necessarily need the language skills for what they do there. It takes a while to train hundreds of thousands of people to speak very good English to serve, say the US market... whereas here today in Malaysia you have already got those resources,” he added.

Hewett said even if China did manage to outsource front-end section of call centres, it would be similar to India in the beginning with low-cost activity where quality is less important.

Durr and Hewett agreed Malaysia could benefit from the current trend of US-based companies looking for more quality in their outsourced contact centres as Malaysia had the infrastructure and education.

Durr said: “From a US perspective, outsourcing is only going to continue, and grow strong as cost of labour in the US continues to go up.”

He said in the past, US companies turned to countries such as India for contact centre outsourcing due to cheaper costs. “They have now had some period of time to experience the reality of working with outsourcing organisations in other nations... cost is not the key driver anymore.”

“It is all about delivering high quality and customer satisfaction. More and more companies in the United States are subscribing to this philosophy,” he said.

Hewett said another trend was the closing down of outsourced contact centres in foreign countries as there was a backlash from consumers being unable to communicate their wants to the staff due to language issues and lack of empowerment.

“There is an opportunity for Malaysia to market itself, and take that business rather (than) those US companies move their (contact centre) operations back, they could potentially move it here,” he said. For Malaysia to benefit from these two trends, he said the government had to market itself better.

On competition from other countries, Hewett said Singapore’s potential was limited by its ability to support large call centres, hence the trend for many Singapore companies to focus on Malaysia as their contact centres.

The Philippines and India had the advantage in terms of infrastructure.

However in Malaysia, four Chinese dialects, Japanese and even the Korean language is spoken here.

Hewett said “From a sustainable point of view, Malaysia is probably the strongest country,” while Durr added, “I don’t think there’s much else you can do but execute that game plan.”
 
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