'Back global business services in Budget 2017'

  • News
  • Thursday, 20 Oct 2016

Cheah said a growing number of companies worldwide are using GBS firms in Malaysia to streamline operations.

OUTSOURCING Malaysia (OM), a chapter of the National ICT Association of Malaysia (Pikom), is appealing to the Government for measures in Budget 2017 that support the country’s global business services (GBS).

GBS was formerly known as shared services and outsourcing industry.

“A growing number of companies worldwide are using GBS firms in Malaysia to streamline operations and achieve better quality and cost efficiency.

GBS is a new driver of business and investments for Malaysia, and yet we face an acute talent shortage that will impact our potential to be a global player,” said OM chairman Cheah Kok Hoong.

According to OM’s GBS Business Services Outlook Report, Malaysia’s GBS sector is poised to record growth of 10% to 15% for the next five years, creating more than 6,000 jobs in 2016.

The industry has even surpassed the 85,000 mark for jobs created, which was the target for 2017.

“As such, OM urges the government to consider the following under its budgetary plans for the coming year,” he added, citing funding for talent development initiatives with local universities as one of them.

Cheah pointed out that the World Bank’s Malaysia Economic Monitor published in December 2013 reported that one in five degree holders in Malaysia under the age of 25 were unemployed.

In addition, the 2014 Labour Force Survey report by the Department of Statistics released in June 2014 revealed that one-third (31%) of those unemployed in Malaysia had a tertiary education, translating to about 130,000 persons.

This is corroborated by Education Ministry statistics that show close to 25% of local graduates were unemployed (51,835 out of 202,328 graduates).

“In line with the 11th Malaysia Plan where there is a focus on accelerating human capital development for an advanced nation, OM recommends that funds be allocated for joint upskilling programmes involving collaboration by academia, industry and the government to develop industry-ready talents for the GBS industry,” Cheah said.

“OM has already established close working relationships with public universities which can be tapped to ensure local graduates can secure jobs and develop industry-relevant skills in a fast-growing, industry.

OM also recommends the creation of an industry-oriented global GBS institute with a government investment of RM50mil,” he suggested.

Another measure proposed is financial support for Malaysian GBS companies.

OM said while the Government has done well to support technopreneurship and innovation, there had been a lack of support for GBS companies.

“This will impede the growth of the industry and the progress of local companies in the mid to long term.

“OM recommends that a specific loan or equity scheme be allocated for the development of local GBS companies as working capital or for mergers and acquisitions.

“In addition, a creation of a single point of funding and facilitation for the expansion of local firms is recommended with an expansion fund of US$100mil (RM420mil),” Cheah said.

Thirdly, OM proposed greater outsourcing of Government functions to the local private firms.

“With government bodies having already outsourced their ICT, Human Resources and customer contact functions to private local sector business and shared service providers; it is hoped that the outsourced functions remain in Malaysia, and that more local GBS companies will be given opportunities to provide these services,” Tan stated.

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