Tuesday, 25 September 2009 21:48

MALAYSIA's outsourcing market will continue its high growth but outsourcing players should carve out their own niche, according to results of the organisation Outsourcing Malaysia's report, Outsourcing in Malaysia: Scaling New Heights, released in Petaling Jaya on 25 August, 2009.

Outsourcing Malaysia, a chapter of the national ICT association, PIKOM (Association of the Computer and Multimedia Industry Malaysia) and is the first of its kind in Malaysia to provide a detailed analysis of the vendor landscape, along with future trends, insights and challenges for the Malaysian outsourcing industry. The research was jointly undertaken with ValueNotes Database, a leading provider of business intelligence and research organisation.

According to the report, the Malaysian outsourcing industry is estimated to be worth US$1.1 billion for the year 2009, with a compound annual growth rate (CAGR) of 15% over the next five years to reach US$1.9 billion in terms of revenue in 2013. These include revenues from IT services, business process outsourcing services and knowledge services.

Currently, IT outsourcing services in Malaysia comprise 50% of the market, followed by business process outsourcing (BPO) services at 32% while knowledge services outsourcing (KPO) services remain in its infancy at a mere 2%. Although Malaysia has been acknowledged as one of the preferred destinations for outsourcing, the report identified key challenges and hurdles which must be overcome before it can become the preferred first choice destination.

“One of the key concerns for the outsourcing industry in Malaysia is to be able to offer high value services as opposed to highly commoditised services in IT or BPO,” said Arun Jethmalani, chief executive officer ValueNotes.

The repost states that Malaysia lacks the scalability required for high volume services due to its relatively high employee costs and small talent pool which present challenges in the availability of suitable human resources. This is compunded by the lack of alignment between the outsourcing industry and the present education curriculum, as well as the shortage in government funding which also hampers the industry's advancement.

“Despite the challenges, our research has identified a multi-pronged and focused strategy for Malaysia to capture the burgeoning global outsourcing opportunities,” said David Wong, chairmand of PIKOM and of Outsourcing Malaysia. “To sustain growth, Malaysia needs to carve its own niche that fits its strengths. For instance, Malaysia has become one of the preferred destinations to offshore services for companies in the Middle East, especially in key sectors such as oil and gas and Islamic finance, and we need to build further upon this.. More importantly, we should also focus on the strengths of our culture and language to cater to Asian markets in selected areas,” Wong explained.

The report also recommends Malaysian outsourcing companies to take advantage of the strong domestic market with capabilities in legal, engineering, manufacturing design and animation services to provide services globally and to tap into an abundant pool of accounting and finance professionals to cater to the growing demand for finance and accounting services.

The Outsourcing Malaysia and ValueNotes joint-report can be purchased from PIKOM's secretariat. Either call PIKOM at 03- 7955-2922 or e-mail Victor Low or Lisa Lee at info@outsourcingmalaysia.org.my.