Malaysia on its way to becoming shared services hub
25 October 2003
CYBERJAYA, Oct 25 (Bernama) -- Malaysia has made a strong start in its bid to become a global shared services hub.
World-class companies which have started using service-providers in Malaysia are satisfied and plan to expand, but want lower telecommunication costs, better transportation and a pool of knowledge-workers with a wider range of skill sets.
The Multimedia Development Corporation Sdn Bhd (MDC) and Malaysia Debt Ventures Bhd (MDV) teamed up in January this year on the Multimedia Super Corridor (MSC) Shared Services Initiative.
Shared services are the pooling of services from different departments or groups into one location. These can include "off-shoring" to a different country and "outsourcing" to an unrelated company locally or abroad.
MDC's Flagship Coordination Unit manager, Robert Cayzer, said 4,000 shared services jobs have been created in Malaysia already and companies are committed to another 2,000 -- a good start to the goal of 60,000 high-value jobs by the year 2008.
MDC is aiming for the top 10 percent of an estimated half million jobs coming to Asia, Cayzer said.
Targeting foreign Chief Executive Officers and Chief Financial Officers, MDC points out that MSC-status companies can get pioneer status for 10 years, low-interest MDV loans, "competitive" telecommunications rates and immigration assistance for foreign knowledge workers.
MDC is negotiating strategic alliances with global outsourcers such as US-based Electronic Data Systems and IBM, and India-based Satyam.
MDC is also working with the Malaysian Computer Industry Association (PIKOM or Persatuan Industri Komputer Malaysia) to get local companies involved in the initiative and export-oriented.
Malaysia's MSC offers a "low-risk" environment and a high quality of life.
Satyam opened its Global Solutions Centre in Cyberjaya in April. The head of Satyam Computer Services Ltd, S. Sripathi, said the group is opening offices outside India because it wants to diversify into local markets and serve needs in the Asia-Pacific region.
"The trend is to be closer to our audience," he said.
The centre is already doing Enterprise Resource Planning (ERP) for Oracle and developing a clinical information system for Malaysia's Ministry of Health. Satyam expects to do more outsourcing by next year, in addition to high-end IT consultancy and development contracts.
The MSC-status company started with 34 Indian expatriates and one Malaysian administrator, but Sripathi expects to triple his staff by next year.
Satyam is happy with the infrastructure in Cyberjaya, including good road and international connections, good power supply, easy network connections and rents which are lower than India's metro areas and half the cost of rents in Singapore.
Sripathi also enjoys the quality of life in Cyberjaya: "It's very relaxed, I can go about easily, the evenings are good and I can travel on short trips to Cameron Highlands, for example."
But he said telecommunications rates should be lowered, "because we are totally dependent on connectivity."
India's telecommunications are one-quarter of the cost and calls in Malaysia are more expensive than calls from their office in Singapore.
A call to India from his Maxis fixed line during peak hours costs RM2.40 per minute compared to 60 to 70 sen from the Singapore office.
Satyam also had to hire its own buses for staff because public transportation to Cyberjaya is inadequate.
"We have to have a train station with a feeder train," Sripathi said. "Buses are not dependable and can take up to two hours from Cyberjaya to Kuala Lumpur. We need to be able to accurately predict the time by which we will reach a place."
Cayzer said MDC plans to increase the feeder bus service in Cyberjaya from every half-hour to every 15 minutes by the first quarter of next year, and add more direct buses to different destinations based on a survey.
MDC also plans to build more carparks and a monorail link is "under consideration", he said.
Satyam's Sripathi also said wages in India are 20 percent lower for certain IT jobs, because people with those skill sets are not available in Malaysia or command very high salaries because there are so few of them. These include administrators of huge databases, high-end consultants (e.g ERP and capability maturity models).
S & T Global CEO David Wong has also had difficulty finding certain skill sets for his company, an e-fulfillment solutions provider.
He has to bring in logisticians from Singapore and software architects from Australia. IT business analysts are also hard to find locally.
But the programmers, administrators, call centre and support staff who form 85 percent of his 300 employees are Malaysians.
Other than manpower problems, Wong has no complaints. He is able to offer order processing, warehousing, transportation, customer service management, reverse logistics (products returned or sent for repair) and payments at 30 to 50 percent less than neighbouring countries, a quarter of the cost in Japan and a third of the cost in the US.
His customers include Dell, Epson, IBM and NEC. Most of them have a small administrative or sales presence here and turn the Business Process Outsourcing (BPO) over to him.
For example, NEC Infrontia Asia-Pacific Sdn Bhd has 25 staff here doing sales and marketing. Its Managing director, Dave Chong, handed over its customer service management, reverse logistics and payment services for Malaysia, Singapore and Thailand to S & T Global six months ago.
"We did this to control costs and to let the experts do the job," he said. So far, he is very satisfied and has saved between 30 to 40 percent.
He plans to phase BPO from another 12 countries in Northeast Asia and Asia-Pacific to S & T Global over the next three years.
"Malaysia is second or third in terms of cost, after China and India, for call centres and after-sales services," he said.
"But we are not very far behind, and we have a multilingual workforce and in terms of infrastructure, we are one of the best. We have the bandwidth and telecommunications infrastructure and telecommunications costs are competitive."
NEC Infrontia was given Operational Headquarters status with a 10-year tax free period. "Malaysia is very conducive," Chong said, citing "a friendly government, good incentives, available human resources and unlimited visas for expatriate knowledge-workers."
And while it outsources some services to S & T Global, NEC Infrontia will also offshore some services from Japan. Chong said most of the marketing, sales and market intelligence for the Asia-Pacific region will be moved here from its headquarters in Japan.-- BERNAMA
