Local outsourcing sector sees 27% jump in overseas revenue


  • TECH
  • Wednesday, 30 Jul 2014

Outsourcing Malaysia (OM), an initiative of The National ICT Association Of Malaysia (Pikom) achieved RM1.59bil revenue in 2013, a 27% jump from RM1.25bil in 2012 from overseas outsourcing opportunities and projects.

OM chairman David Wong says, “This 27% increase is significant for Malaysia’s outsourcing industry which is still relatively small compared to other countries in the region.”

Wong said this positive earnings growth was due to the Government’s various initiatives via the Economic Transformation Programme and industry-wide efforts. 

However Wong says, “There’s still a lot of room for improvement as out of this RM1.59 billion in overseas revenue, only 25% is generated by local outsourcing players while the other 75% is by their foreign shared services players that are based in Malaysia.” 

Wong says there is still many local outsourcing players that only focus on business from the local market only, rather than their global counterparts (established and operating in Malaysia), that are keener to attract and secure foreign outsourcing business. 

This is where OM is able to come in to assist Small Medium Businesses (SME)-like local outsourcing companies to improve their global competitiveness,” explains Wong.

“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,” says Wong.

He shares that the largest Malaysian outsourcing company, Vads Bhd, employs only 5,000 staff at the most, as compared with some of the larger outsourcing companies in China and Indian that are made up of over 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,” says Wong. 

“Malaysian players therefore need to start specialising their business service offerings and differentiate themselves from their Asian counterparts. 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,” says Wong. 

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. 

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