Malaysia covets China’s outsourcing spot

Malaysia wants to be the No 2 location worldwide for outsourcing activities, edging out China, in five year’s time, said the Multimedia Development Corporation (MDeC).

Datuk Badlisham Ghazali, MDeC chief executive officer, said the country will attain this goal by ramping up its production of knowledge workers.

Malaysia, in third place after leader India and China, has held that position for the fourth time in six years, according to global management consulting firm A.T. Kearney’s Global Services Location Index (GSLI).

According to MDeC, the total number of knowledge workers contributed by MSC Malaysia — MDeC oversees that national initiative — is 79,000. By 2010, MSC Malaysia alone will need 100,000 workers.

It is estimated that the demand for knowledge workers nationwide will far exceed that. MDeC, however, could not provide an exact figure.

To meet the goal, MDeC is collaborating with industry experts and professional outsourcing bodies to train and re-train fresh IT graduates, displaced workers and working professionals for the growing outsourcing sector.

Among its partners are Outsourcing Malaysia; Customer Relationship Management and Contact Centre Association of Malaysia; International Association of Outsourcing Professionals; and Chartered Institute of Management Accountants and Customer Operations Performance Centre.

For those seeking professional qualifications, MSC Malaysia offers training and advancement programmes under its K-Workers Development Initiatives.

These are the MSC Malaysia Undergraduate Skills Programme, MSC Malaysia Undergraduate Apprenticeship and Development Programme (an on-the job training scheme), and MSC Malaysia Graduate Trainee Programme.

Hurdle ahead

Increasing its pool of knowledge workers is a big challenge for Malaysia because China and India have a huge human-capital pool, said Joon Ooi, A.T. Kearney South-East Asia managing director.

But he believes Malaysia is headed in the right direction. “The process of increasing the talent pool has already begun and will create a virtuous cycle,” he said.

“As more companies outsource their services to Malaysia, more relevant resources will be trained and developed, and thus increase the human capital pool. This will in turn attract more companies and so on.”

Delesh Kumar, ICT (information and communications technology) director at Frost & Sullivan, said that besides being taught technical skills, knowledge workers should also be taught soft skills, such as communication, which are currently lacking.

“We are competing with countries like India and the Philippines and their people’s command of English and communication skills are better than ours. We need to beef up our skills in these areas,” he said.

“Presentation skills, public speaking and people management skills need to be inculcated from a young age at primary and secondary school levels.”

Delesh said the development of a more industry-relevant workforce can also be done via the existing vocational school system, whereby they can help create a pool of technology-specific talents.

“Vocational schools are more focused on manufacturing-related jobs and this should change,” he added.

Multicultural edge

Badlisham said the availability of skilled workers, competitive costs and an ideal business environment are the reasons why companies choose Malaysia for shared services, outsourcing and offshoring activities.

He believes that Malaysia’s multicultural traits are a strong selling point. “Many multinationals continuously praise our workforce’s versatility and adaptability.

“These companies are already one step ahead thanks to our readily available pool of skilled workers who are also multilingual,” he said.

The outsourcing industry is the biggest contributor to MSC Malaysia’s revenue, accounting for RM5.3bil (31.2%) in 2007.

According to MDeC, Malaysia continues to attract outsourcing jobs from high-profile companies, such as US-based hard disk manufacturer Seagate Technology Ltd, which began outsourcing its IT services in May and Australian mining giant BHP Billiton that began outsourcing its financing operations late last year.

A.T. Kearney’s GSLI, released bi-annually, ranks the top 50 countries for outsourcing activities, including IT services and support, contact centres and backoffice support. The ranking is based on financial cost, people skills and business environments.