03.07.2006 The shared services and outsourcing (SSO) industry has become an increasingly important cog in moving Malaysia towards the New Economy. Although competition for market share is stiff in Asia-Pacific, with India and China taking the lead, we have nonetheless fared well over the past few years. No surprise then that the government has identified SSO as a focus area in the Ninth Malaysia Plan (9MP). It is now up to Multimedia Development Corp (MDeC), the agency that is tasked with delivering the Multimedia Super Corridor’s vision, to take the SSO industry to the next level. “Our target for 2004 was 8,000 SSO centres, but we have far exceeded that. In fact, we hit 15,000 last year. The target for this year is 24,000 and I’m confident we will be able to achieve it. These figures cover all SSO centres, including the ones located outside Cyberjaya, like in Technology Park Malaysia, Kuala Lumpur, and the supply chain centres in Penang as well,” says Rob Cayzer, programme director of MDeC’s SSO industry development division.
Recently, the industry scored a big victory when Dell Computers decided to locate its technology development centre in Cyberjaya. Cayzer says most companies usually want to grow step by step, but Dell intends to grow the headcount for this centre to 1,000 employees within the next few years. He points out that this will greatly benefit local industry because research and development will cover a large portion of Dell’s activities. Hence, employees will get the opportunity to gain experience and knowledge on technology development.
Moving forward, MDeC has developed three strategies that will help drive the SSO industry.
The first thrust is to focus on mega deals in specialised verticals. To remain competitive in the future, Cayzer points out that Malaysia has to move into high value-add areas and niche sectors such as finance, energy, technology and logistics. These are verticals towards which MDeC will be driving the SSO industry in the future. Niche sectors require people to be trained in more expensive and rare skills, giving the country an edge over others when competing for contracts in these verticals. Dell’s technology development centre will be the first, and Cayzer is confident there will be other multinationals that will follow suit.
One little-mentioned success story in this area is Prudential Services Asia Sdn Bhd. The IT hub was established in 2004 to embark on the development of a common IT platform to serve the growing business needs of the Prudential Group of Life companies in Asia. Currently serving operations in Malaysia, Singapore and the Philippines with a staff force of 500, Prudential Services plans to bring more Prudential businesses from the region to its IT hub in Malaysia. Expanding rapidly, Prudential Services’ regional IT development and data centre is actively seeking more insurance and IT professionals to spearhead and manage new projects as well as run the hub’s core activities of application management, application development, data centre consolidation, and so on.
“The second thrust is to develop specific core competencies. For this, we have identified four areas of growth in terms of numbers and human talent pool — software factories, data centres, rare skills and main frame. What we want to do is create software engineering as a basic competency and attract software companies like Microsoft and Infosys to set up their factories here.
In fact, we have a pilot going with Satyam, which has found that Malaysian graduates are better at software engineering than their Indian counterparts. We want Satyam to think of Malaysia as another Bangalore,” Cayzer explains.
In terms of data centres, he says Malaysia has been doing well because we are more or less on a par with Singapore and Australia, the best in Asia. Currently, the country boasts a data centre portfolio that includes BMW, DHL, HSBC and Amway. But to continue to attract more companies, it is necessary to ensure that telecommunication processes are in line with the requirements of those in highly specialised industries, he adds. This is because data centres “live, eat and breathe telecoms” and cannot afford to have any kind of risk — be it real or perceived.
Cayzer says bringing in big players will also help modify the overall perception. Perhaps MDeC should go after companies that run some of the largest data centres in the world, for instance, eBay, Google, AOL, Yahoo! and Amazon.com.
“Thirdly, we want to flood the market with a talent pool that is equipped with rare skills that are currently in high demand, such as SAP. We have created a programme for SAP training and such is the demand that even the ones who did not manage to get certified in the programme already have jobs.
“Lastly, we want to develop more mainframe engineers. For instance, there is a company, ITAC, which focuses on COBOL programming for mainframe computers. It is a Malaysian company but a lot of its operations are done out of Singapore. Even though COBOL is an old programming language, companies that are still using legacy systems require it. Engineers who specialise in this area are few and far between, which is why their skills are in demand,” explains Cayzer.
David Wong, who co-chairs Outsourcing Malaysia, an industry-led initiative for outsourcing, with Cayzer, says: “Focusing on niche areas is the right way to go because we don’t want to go for verticals at the lower end of the value chain. Moreover, Malaysia already has a leading edge and strong fundamentals in the four mentioned verticals from previous experiences. It is our strong domain.
It is just a matter of moving forward from there rather than concentrating on too many things at the same time.” With MDeC and the newly formed Outsourcing Malaysia (OM) taking the lead and actively driving the SSO industry, the outlook for the industry is mostly good. Wong says the government’s recent emphasis on outsourcing via dialogues, seminars, meetings and discussions is a good sign that the industry is set to scale greater heights.
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