Against the increasing likelihood of further constraints affecting Asia from the global economy, Computerworld Malaysia presents in random order some of the Malaysian industry practitioners and vendors' views of last year, and recommendations and expectations about the country's various ICT sectors in the year ahead..
Malaysian government ICT agency Multimedia Development Corporation (MDeC) chief executive officer begins the discussion with an overall take of the country's ICT economy during 2012 and new initiatives, designed to fast-track the developed digital economy objective by the year 2020. Then, senior analysts from Forrester Consulting, and GfK Malaysia, and the International Association of Outsourcing Professionals (IAOP), are followed by local leaders from Brocade, CA Technologies, and Fujitsu.
An edited version of this 'virtual roundtable', together with images of all spokespersons has been published in the January/February 2013 print edition of Computerworld Malaysia, available to the magazine's subscribers only. The second part of this online article continues with comments from other industry leaders.
Photo - YBhg Datuk Badlisham Ghazali, Chief Executive Officer of Multimedia Development Corporation Berhad (MDeC)
2012 has been both a challenging and exciting year for the Malaysian ICT [information and communications] industry. Challenging because the economic slowdown in Eurozone, as well as delayed growth in the United States, did impact our exports considerably, as 22 percent of our ICT exports are targeted at these markets. However, the impact was cushioned by Malaysia's growing trade ties with Asia and other emerging markets, in particular Indonesia, Vietnam, China and other ASEAN countries which accounts for nearly 58 percent of our total ICT exports. Software spending in these markets has been robust, as businesses deploy software tools and applications to help them implement cost-reduction strategies.
On the flipside, it has been exciting, because the Malaysian ICT sector continues to be transformed by mobile and cloud computing as the next "must have" competency and this trend can also be seen in many other industries using IT to transform themselves.
The Malaysian ICT industry gained significant growth in the past year. As the agency responsible for the development of the ICT industry in Malaysia, MDeC has also experienced the impact of this growth. 2012 has been a record breaking year for us with revenue of RM31.7 billion (US$10.43 billion), this was an increase of 16 percent from 2010, surpassing the RM30 billion mark (US$3.29 billion) for the first time since the inception of MSC Malaysia in 1996.
Our exports grew to RM 10.12 billion (US$3.33 billion), which reflected a 9 percent rise from the previous year. Similarly, MSC (Multimedia Supercorridor) Malaysia also saw a GDP [gross domestic product] contribution of RM9.6 billion (US$3.12 billion) against a projected target of RM8.7 billion (US$2.86 billion). This was an increase of 25 percent over 2010.
We also exceed our projected numbers in job creation with 7,602 jobs against a target of 5,464. This also represents a 7 percent growth from 2010 and brings the total number of jobs created in MSC Malaysia since 2007 to 119,138.
Building on these successes, we have introduced new initiatives this year aimed at driving our ICT industry further to move Malaysia towards a high income digital economy by 2020. Specifically, in 2012 we introduced the new go-to-market strategies for MSC Malaysia companies under our Information Technology (InfoTech) cluster.
This includes the "stacking" model ,which allows smaller and lesser known ICT vendors to stack their products and complementary solutions with bigger players in breaking into the bigger regional emerging markets. It is no surprise therefore that we have recorded potential sales of close to RM200 million (US$65.8 million) in the last two trade missions we conducted with 37 MSC Malaysia status companies to Ho Chi Minh, Vietnam and Jakarta, Indonesia.
Beyond the "stacking" model, we have also looked at enabling greater adoption of ICT and fostering a more conducive ecosystem for more homegrown innovations with the roll out of Digital Malaysia.
Founded on three strategic thrusts; of moving from supply to demand, consumption to production and from low value add to high value add, we believe that Digital Malaysia will drive the development of the ICT industry in Malaysia further due to its goal of driving digital adoption not just for the ICT industry but also at every level of society and economy. This is compounded by its target to increase Malaysia's ICT contribution to GNI from 9.8 percent to 17 percent or RM294 billion and create 160,000 high value jobs by the year 2020.
Another area of interest is our mobile and telecommunications industry. Total telecommunications spending in Malaysia has increased to US$$7.3 billion in 2011, a growth of 5.3 percent. This could be attributed to an increase in household broadband penetration rate which now stands at 65 percent and an increase in mobile penetration rate which now stands at 133.3 percent or 38.5 million devices over last year's 124.6 percent or 35.7 million devices.
Recently, it was also reported that given how fast the adoption of smartphones in Malaysia has been in the past year, it has the potential to reach 73 percent from the existing 47 percent, as early as next year while tablet penetration can go up to 48 percent from the existing 14 percent in the same period.
Moving into 2013: Digital Malaysia
While these developments are indeed positive, there are gaps and challenges in our industry that still need to be addressed for Malaysia to not only grow its ICT industry further, but to fully realise its vision of becoming an innovative digital economy by 2020. For example, it was reported that while Malaysians in general use the Internet more than any other form of media, most of the activities are for personal consumption and not activities that would yield any revenue for the individual and produce relevant content for the nation.
While there has been an increase in ICT spending in the past year, adoption of technology by SMEs (small and medium enterprises) is still rather low. Recognising this, we introduced the MSC Malaysia Cloud initiative in the fourth quarter of 2011, aimed at augmenting the push for software as a service and laying the foundation for a robust cloud computing framework for Malaysia, leading to benefits in lower costs of doing business as well as enhanced ICT infusion in the economy.
Furthermore, efforts such as Digital Malaysia that aims to solidify an innovative Digital Economy can play a significant role as it has been designed to increase Internet user production of high yielding activities on the Internet as well as encourage greater adoption of technology among individual online business owners, start-ups and SMEs regardless of whether they are players in the ICT industry or not.
For 2013, our objectives include:
- As total ICT spending for the country grew by 9 percent to reach US$6.5 billion in 2011, I believe we will see similar record growth at the end of 2012 and this trend will continue with the ICT sector growing at an even faster rate in 2013. This could be attributed to various new government initiatives that complement the infrastructural development and services offering diversification by the private sector.
The telecommunications industry in Malaysia is expected to remain strong. This will be further enhanced by the rollout of the 4G LTE network next year which will increase not only Internet speed, but also data traffic, accessibility and mobility of the Internet to more users and businesses. For MDeC this is indeed the move in the right direction for Malaysia as we begin the implementation of the initial eight projects under the first wave of Digital Malaysia; the Asian e-Fulfillment Hub, Enabling e-Payment Services for SMEs and Micro Enterprises, Shared Enterprise Services, Develop On-Demand Customised Online Education, Microsourcing to Generate Income for the B40, Facilitating Societal
Upliftment, Establish a Trusted Mobile Digital Wallet Platform and Growing the Embedded Systems Industry; all of which will require the right infrastructure in place, such as greater Internet access and speed in order to be implemented successfully.
Regional and global ICT in 2013: human talent
Regionally and globally, spending on information technology products and services by enterprises in the Asia Pacific is growing by 8 percent and will exceed US$367 billion by the end of 2012, according to Gartner. In the context of Malaysia, enterprise IT spending is expected to reach RM31.5 billion (US$10.02 billion) by the end of 2012, up 6.1 percent over 2011.
This has positioned Asia as a lucrative region of opportunities for ICT multinationals, particularly those from the US and Europe that are looking for new sources of growth to offset lower business prospects in their home markets. Nevertheless, one of the biggest challenges that Asia faces is the lack of ICT experts and highly skilled technology workforce that have been able to thrive with their own innovation.
While this pool is growing, the growth rate is not fast enough to support the rapid expansion of the market and the demand for such workforce. It is reported that there will be 4.4 million ICT jobs created in the Asia Pacific by 2015.
This has compelled multinationals to look beyond organic growth in the region and instead focus on mergers and acquisitions of regional incumbents with local know-how, skills and client relationships to drive their investment into the region. Realising this, Asian countries should seek to capitalise on this development in two ways:
1) to facilitate greater transfer of skills and knowledge from the MNCs to local talents and companies through joint development projects
2) to enable local talent and experts to gain exposure and to learn in a new and more sophisticated ICT ecosystems abroad and subsequently bring the knowledge gained back home to be applied in their home country.
On the home front, the total number of jobs contributed by MSC Malaysia status companies has been on a continuous upward trend from 2007 to 2011, at a compound annual growth rate (CAGR) of 10.81 percent. Despite this positive growth, the issue of mismatch between the supply of ICT human resources and the demand of the ICT marketplace remains a key challenge.
This is especially so for jobs that demands in-depth technical knowledge and soft skills. To be employed, IT graduates today must be adept in 10 skill clusters, among which software development, database networking and security are key. While a tertiary degree provides a start to a career, continuous specialisations and certifications will elevate a person to the next level of that career.
To help meet the industry demands, MDeC has over the years executed various programmes on a national level via industry-academia-government collaboration to raise workforce competencies by strengthening the ICT curriculum through a demand-driven approach to narrow the gap including programmes such as the MyProcert and MyUniAlliance as well as a host of entrepreneurial development programmes.
The opening MSC Malaysia Knowledge Development Centre (KDC) in partnership with the industry early this year is another testament of our continuous efforts to address the talent needs of the country. The RM27.34 million (US$8.99 billion) Cyberjaya facility with leading industry partners such as Huawei, IBM Global Development Centre, Agilent Technologies, Altera, KRU, Dream Catcher and iTrain will be used for training modules and infrastructure to help train current ICT professionals and fresh graduates.
Moving forward, our partnership with the industry will be instrumental in achieving MDeC's goal of training 10,000 Malaysian ICT professionals over the next four years, thus ensuring the competitiveness of the Malaysian ICT industry.
While, programmes such as the Silicon Valley Comes to Malaysia (SVC2M) symposium, which was held in 2011, gave Malaysian start-ups and individuals the opportunity to learn critical skills from some of the best global minds in the business.
Following the conference, a series of pitching contest kicked off on October last year which resulted in the winning entrants gaining opportunity to be trained in Silicon Valley with prospects of securing investment from Angel investors for their innovative ideas. And I am happy to share that we produced several outstanding Malaysian successes from this programme including companies like Piktochart who emerged as the grand winner.
Despite the possible constraints of the global economy in 2013, I believe the Malaysian ICT industry will continue to perform well overall. This is especially in light of the global ICT industry forecast, which is expected to grow by 3 percent in 2013 with global ICT spending estimated to reach US$3.7 trillion, in spite of earlier estimation pegging global growth to only be in the region of 2.5 percent.
For MDeC specifically, we would like to continue on the momentum of our record revenue performance in 2011, going into 2013. To this effect, we have implemented and are in the midst of implementing programmes which will have strong impact on every sector of the ICT industry.
Global shared services & outsourcing
One of our key focus areas for 2013 is the global shared services and outsourcing industry (SSO). To date, Malaysia is ranked third in the world as a great SSO destination behind India and China, with more than 130 SSO companies and 250 call centres registered with MSC Malaysia. In 2013, the SSO industry in Malaysia is expected to grow to US$$1.9 billion and employ 100,000 people.
Realising this potential, our global shared services cluster will continue to position Malaysia as the ideal global data centre hub due to its English-speaking competent workforce and competitive pay rates. To do this, MDeC aims to continue on a comprehensive strategy to develop and sustain a dynamic SSO talent workforce.
In addition, we will continue working with bodies like Outsourcing Malaysia to increase global awareness on Malaysia's SSO capabilities through more trade missions and marketing initiatives.
Another key development strategy is to encourage more homegrown ICT innovation and subsequently create more local technopreneurs in the process. To realise this aim, MDeC has worked with the Intellectual Property Corporation of Malaysia (MyIPO) to announce the IP Valuation framework in December 2012.
This will allow Malaysian innovators and technopreneurs to leverage on their Intellectual Property as an asset in securing financing with proper and accurate valuation on these intellectual assets. These assets would include patented products and innovative copyrighted solutions that will be used to value the net worth of a company/ business. In addition, it will provide Malaysia's financial services institutions with the needed push to expand their market share by providing financial assistance to companies based on the value of their intellectual assets.
This initiative will provide an Intellectual Property Financing Fund scheme worth RM200 million at its inception and provide training programmes for local intellectual property evaluators.
Comprehensive Go-to-Market Strategy for MSC Malaysia Companies
MDeC's next broad strategy will be helping a new wave of up-and-coming MSC Malaysia status companies break into key emerging markets via a comprehensive private sector driven programme. This will focus on enhancing sales and marketing capabilities through a comprehensive mentoring and partnership model known as "stacking".
Stacks are essentially a consortium of companies with a set of non-competitive, complementary and interoperable solutions, led by an anchor company in sharing and operating within common target markets. This approach increases market exposure for new players via channel buyers or "superbuyers" as well as develop MSC Malaysia status companies to match market demand and expectations.
Given the rapid developments in cloud, MDeC will continue to push the development in this area further. According to research, results on cloud computing readiness and awareness amongst Malaysian businesses is encouraging as 36 percent of companies surveyed are "currently using" cloud computing and 40 percent are "currently planning" to use cloud in the coming year.
In 2011, we introduced the Cloud Computing Enablement initiative which is focused on stepping up development of the cloud ecosystem in Malaysia, comprising the Cloud Onboarding Programme, Software-as-a-Service (SaaS) Acceleration Programme and the SME Cloud Computing Adoption Programme.
Aimed at driving the adoption of cloud-based services, the programme has enabled Independent Software Vendors (ISVs) to deploy cloud software and services as a utility, while catalysing demand by local enterprises for Made in Malaysia cloud software and services. Since its introduction, more than 70 ISVs have come onboard while 21 percent of 1430 target SMEs have adopted the cloud computing services.
The excitement and ROI (return on investment) around Cloud Computing in general is causing a shift in how our SMEs are thinking about IT and service delivery. Moving forward, MSC Malaysia will continue to play a proactive role and provide an enabling environment for a thriving cloud ecosystem in Malaysia.
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