Feb 27, 2014 (Thu): Outsourcing Malaysia (‘OM’), an initiative of PIKOM, today announced that it extends its purview for a greater representation of local and foreign shared services and Outsourcing companies.
OM’s membership is currently made of local players comprising of 90 percent of outsourcing companies, and just 10 percent of shared services companies.
David Wong, the Chairman of OM says, “Shared services companies comprise close to 30 percent of the entire outsourcing market in Malaysia. Over the years, more than 300 foreign and multinational shared services companies have set up their regional and global centres here, generating billions of ringgit in investments and thousands of employment opportunities.”
OM believes that their move to include more shared services companies will also benefit existing members via mutual knowledge sharing and partnerships.
He adds that in OM’s numerous dialogues with shared services companies and with the support from MDeC, it clearly shows that there is a need for both sides to work together to ensure the continuous growth of the industry. “OM therefore will be embarking on new efforts to drive to garner greater collaboration between local and foreign players in both shared services and outsourcing.”
Both shared services and outsourcing companies share common issues and opportunities such as lack of skilled talent, talent development, Malaysia as a choice of location, ease of doing business and infrastructure and operating cost.
“This year, we will establish a talent council consisting of all major shared services and outsourcing companies to oversee the challenges faced in talent sourcing, development of skills and talent and increase efforts to promote outsourcing as a career of choice by helping facilitate the placement of talent directly from universities into outsourcing companies,” explains Wong.
With ever increasing global competition, Wong says that OM needs to look at the bigger picture to lend its support to the whole ecosystem of the outsourcing industry, to create the optimal arena for the local outsourcing players to converge their efforts via mergers and partnerships.
Growth Potential of Shared Services
Although there are fewer shared services companies, they are generally larger corporations with bigger number of employees to service business operations across country borders into international markets.
“In 2012, about 70 per cent of Malaysia’s outsourcing revenue still came from international deals; and out of this, a huge 90 percent were generated by shared service companies,” shares Wong in emphasising the significant role of shared services in the outsourcing sector.
Initially, shared services entities were set up in Malaysia by global financial institutions to support their non-core regional business operations in a centralised location in order for these FSI multinationals to be more cost efficient in managing the common business processes such as information technology (IT) infrastructure management, procurement, human resources and payroll, customer support and more.
As this model matured, these shared services entities comprising primarily contact centres and back office operators, began to offer their business process outsourcing services to other businesses besides their parent company. “Because shared services supply the underlying need for companies to outsource non-core yet critical business functions, the growth of the shared services market share in the outsourcing sector is inevitable and will continue to be strong in the future,” says Wong.
The BPO Factor in Shared Services Growth
The outsourcing sector widely consists of three areas: – Business Process Outsourcing (BPO); Information Technology Outsourcing (ITO) and Knowledge Process Outsourcing (KPO) with the former two – BPO and ITO, being the more dominant areas in Malaysia.
In Malaysia, BPO has shown the most growth in the last few years – growing from 39 percent in 2009, to 48 percent in 2012. And within BPO, shared services providers make up the dominant 60 percent market share employing a total workforce over 13,000 people.
“In the next few years, BPO will emerge as the fastest growing area for outsourcing in Malaysia with a 25 percent growth rate,” adds Wong.
ITO on the other hand, accounts for 45 percent of the industry market share, with shared services players providing ITO, declining to 40 per cent in 2012 (down from 48 percent in 2009).
Some of the shared services companies who have already become OM members are:- Bank Negara, IBM Malaysia Sdn Bhd, DHL Asia Pacific Shared Services Sdn Bhd, HSBC Electronic Data Processing (M) Sdn Bhd, UOB Centre of Excellence (M) Sdn Bhd, Kimberly Clark Regional Services (M) Sdn Bhd, Hitachi Sunway Information Systems Sdn Bhd, Citigroup Transaction Services (M) Sdn Bhd , Sime Darby Global Services Sdn Bhd, Fujitsu (M) Sdn Bhd, Scope International (M) Sdn Bhd, Fuji Xerox Asia Pacific Pte Ltd, Hewlett – Packard (Malaysia) Sdn Bhd, Malayan Banking Berhad (Maybank Shared Services), Lafarge Shared Services Sdn Bhd, e2 Power Sdn Bhd and more.
OM continues to encourage more shared services companies to join and participate in their various networking activities, forums and conferences. For more information, please visit www.outsourcingmalaysia.org.my
“There is definitely a growing investor interest in Malaysia’s shared services market and we need to enhance our ability to adapt to the way business is being done globally through strategic partnerships to achieve the Government’s Entry Point Project 2 (EPP2) goal under the Economic Transformation Programme; of developing globally competitive outsourcing companies,” ends Wong.
OM Elects New Committee For 2014
Earlier in the day, OM held its fourth Annual General Meeting (AGM) at the Sime Darby Convention Centre where the new committee for the 2014/ 2015 term were elected.
“I’d like to take the opportunity to thank members from OM and PIKOM for the support and trust they continue to place on me and my team. With the inclusion of shared services companies, the Outsourcing industry in Malaysia moves into its next stage of growth and strategic partnership,” said David Wong, the Chairman of Outsourcing Malaysia.
The newly elected office bearers list for 2014 – 2015 term are as below:
|Anthony Raja Devadoss
|Deputy Chair Outsourcing
|Kimberly Clark Regional Services Sdn Bhd
|Lim Han Boon
|Envotech Global Reseources Sdn Bhd