Outsourcing industry set to double in growth by 2017

25 October 2013

OUTSOURCING Malaysia (OM), an initiative under the National ICT Association of Malaysia (Pikom), recently said the outsourcing industry in Malaysia was set to double in growth by 2017 with a Compound Annual Growth Rate (CAGR) of 15% from its current 2012 revenue of US$1.7bil.
OM released its second industry report titled ‘Malaysia’s Global Services Outlook’ in conjunction with the four-day Asia-Pacific Outsourcing Summit (APOS) in Iskandar, Johor. The research findings by leading B2B market researcher Valuenotes were commissioned by OM to provide insights into the industry in Malaysia.

OM chairman David Wong said one of the major insights is the key advantage that Malaysia has, being ranked 12th worldwide by the World Bank for the ‘Ease of Doing Business’ category.
This ranking is also the highest among all countries that are considered ‘ outsourcing countries’.

“A simple illustration of this is that a potential investor can start doing business in Malaysia in six days, while it takes an average of 36 days to do the same in some other countries,” he said.
At the same time, Wong said Malaysia, among all outsourcing countries, had the highest ‘infrastructure availability’ worldwide ranking at 32nd spot, compared to India, which was ranked 84th.

“With the Malaysian government’s continued initiatives to set up new business cities that are fully equipped with infrastructure such as transportation, electricity, water supplies and telecommunications such as here in Iskandar, it will further increase our appeal to investors who are looking at Asia to outsource their business processes,” Wong said.
Currently, more than 200 industrial estates and parks and 14 Free Industrial Zones (FIZs) have been developed throughout the country for businesses to kick-start their operations faster and more efficiently.

The strong and diverse language (From left) Pikom chairman Woon Tai Hai, IAOP Chairman Michael Corbett and Wong unveiling the research finding during the event. capabilities, strategic geographic location, stable business and economic environment as well as strong government and industry support and initiatives were also listed as the some of the other key factors that make Malaysia a viable outsourcing destination.

The research findings reveal the urgency for Malaysia to move away from playing the numbers game in outsourcing and from the level outsourcing sector.

“The largest Malaysian outsourcing company only employs 50,000 people as compared to more than 100,000 employees in some of the larger firms in India and China. This illustrates the average size of outsourcing centers in Malaysia — which limits our capability in taking on volume-driven type of outsourcing projects,” Wong said.

“This is why we have to focus on providing more highly specialised end-to-end services in niche markets such as business financial services, healthcare, logistics and oil and gas in order to remain globally competitive,” he added.

“On our part, we will continue to create avenues for discussion and networking through events such as APOS to continue driving the industry’s overall development with an emphasis on niche market growth as well as driving more interest in outsourcing as a viable career amongst the local workforce,” Wong said.

APOS 2013, themed Creating Sustained Value for Regional Integration, is the first of five regional summits that will be organised by OM together with the International Association of Outsourcing Professionals (IAOP) across AsiaPacific in the next five years.

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In Tune specialises in finance outsourcing and accounting outsourcing, human resource (HR) outsourcing to SME business owners in Malaysia; that traditionally cannot afford professional services which they now can at a fraction of the cost less the headache; so that they have more time to focus on the business operations that matters to them.

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