Photo - David Wong, Outsourcing Malaysia Chairman.
Outsourcing Malaysia, an initiative of the National ICT Association [PIKOM], said the country's overseas outsourcing revenue jumped 27 percent in 2013 to an overall revenue of RM1.59 billion [US$500 million] compared to the RM1.25 billion [US$390 million] in FY2012.
"This 27 per cent increase in just one year to RM1.59 billion [US$500 million] in total overseas revenues, is pretty significant for Malaysia's outsourcing industry which is still relatively small as compared to those of other regional countries," said Outsourcing Malaysia [OM] chairman, David Wong.
The positive earnings growth has been helped by various Malaysian government initiatives via the Economic Transformation Programme [ETP] and industry-wide efforts, said Wong.
Outsourcing is one of the Entry Point Projects (EPP) under the Business Services NKEA of the Economic Transformation Programme (ETP), which focuses on areas of business such as business process outsourcing (BPO), IT process outsourcing (ITO) and knowledge process outsourcing (KPO).
"However, there's still a lot of room for improvement as out of this RM1.59 billion [US$500 million] in overseas revenue, only 25 percent is generated by local outsourcing players while the rest of the 75 percent is by their foreign shared services players that are based in Malaysia," he said.
From local to global
Wong said that in FY2013 OM began to monitor the domestic revenue growth for the outsourcing sector in Malaysia, which noted a RM1.77 billion [US$550 million] in revenue.
He said there were still many local outsourcing players that focused solely on business in the local market while their global counterparts (also established and operating in Malaysia) were keener on attracting and securing foreign outsourcing business.
"This is where OM is able to come in to assist Small Medium Businesses (SME)-like local outsourcing companies in assisting them to move up the value chain to improve their global attractiveness and their overseas income from in-bound outsourcing projects," said Wong.
Recently, OM embarked on a market mission to the World BPO Forum, New York, USA 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, he said.
Wong added that in the A.T. Kearney's 2011 Global Services Location Index, Malaysia was ranked 3rd 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," he said,
Move up the value chain
Wong said the largest Malaysian outsourcing company employed only 5,000 staff while some of the larger outsourcing companies in China and Indian have more than 100,000 employees.
"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 said. "Local outsourcing players must move themselves up the global value chain,"
"Malaysian players need to start specialising their business service offerings and differentiate themselves from their Asian counterparts," Wong said. "They can look into sectors such as Islamic banking, healthcare, logistics, financial services where the world is constantly looking to outsource to players who can properly service these niche markets with higher sets of skills and expertise."
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