By Cat Yong
The second Asia Pacific Outsourcing Summit (APOS) event to come to Malaysia since 2009, was held in Iskandar-Nusajaya, Johor, in late October. Its theme of “Creating sustained value for regional integration” never rang truer because of the event’s location so close to neighbour country Singapore, and the ‘integrated menu’ of outsourcing capabilities both Singapore and Malaysia together offered for investors and businesses.
Outsourcing Malaysia (OM) chairman, David Wong had said, “Iskandar is a fantastic example of integration in the region,” as well as cited trade bloc agreement AFTA 2015 or Asean Free Trade Agreement which will open the gates of trading among Southeast Asian countries in a few years.
“Shared services and outsourcing can capitalise on this removal of borders and come together to work as one ASEAN to provide better and more solid services to the world!”
The APOS 2013 event which was organised together with the International Association of Outsourcing Professionals (IAOP), also launched a research report titled “Malaysia’s Global Business Services Outlook.”
Key findings include Malaysia being found to rank 12th in the world for ease of doing business, and verticals like Oil & Gas, Islamic banking and logistics identified as areas Malaysia has strong competency in.
Wong opined that Iskandar would take half, if not lesser, the time it took for Cyberjaya to achieve everything it has up till today.
On the whole
During the press conference, IAOP chairman and Chief Strategy Officer, Michael Corbett had shared global outsourcing trends. He said, “The keyword right now is collaboration and there is push for service providers to collaborate to provide solutions for customers.
“The other keyword is also in tech and other businesses, and it is a much more horizontal view. That means thinking of solutions in an applications-based way. CIOs are looking at outsourcing to satisfy their users.”
Corbett had pointed out the region’s relevancy to the overall global outsourcing industry, and how one can’t talk about the future of outsourcing without talking about future of outsourcing in Asia. “This region will be driving growth for the next 10 years,” he observed.
As for Malaysia’s own prospects, besides optimistic research results, PIKOM chairman, Woon Tai Hai, had shared on-the-ground observations that there are large outsourcing contracts due for renewal.
Made in Malaysia
Local IT outsourcing success stories are few and far in between, Scicom, VADS, Symphony being just a few that come to mind.
Others who seem to remain below the radar in Malaysia, especially system integrators and software developers, are actually doing exceedingly well in other countries. A majority of them were ‘driven away’ to foreign markets because they view the domestic Malaysian market as lukewarm and unwelcoming.
Are Malaysian businesses’ own non-confidence in Malaysian-made IT services and solutions, hurting the local tech outsourcing industry?
OM’s Wong had observed that big GLCs tend to go to big MNC-level service providers, which in turn involve local service providers to become ‘sub-outsourcers.‘
The first impression is that local outsourcing industry is playing second fiddle, but Woon pointed out a positive which is that MNCs will promote best practices during solutions implementation. “For local companies to start to excel, it doesn’t happen overnight.”
The truth however, could also be that the general mindset amongst local IT and services businesses, especially smaller to medium-sized ones is that, everybody wants to be the ‘jaguh kampung’ (village champion), and are unwilling or not ready to cross borders to compete on a global platform, according to Wong.
A ‘jaguh kampung’ mentality makes it difficult for industry consolidation like mergers to happen, when it could actually help a Malaysian business solidify their expertise, complement point product and solution offerings to become more complete application suites, and have a better platform from which to negotiate deals.
Wong shared, “SMEs are happy to be where they are,” adding that mergers and acquisitions also tend to happen across borders, not within the local industry.
There are currently over 78,000 SME companies across a wide range of industries in Malaysia, and increasing steadily.
