Malaysian outsourcing is at a stand still

December 12, 2011: Malaysia, which is ranked as the third most preferred global destination for shared services and outsourcing (SSO) is now at standstill. The country still faces challenges in moving up the value chain to become a preferred destination for Knowledge Process Outsourcing.

A study conducted by IDC has observed that Malaysia enjoys a favorable position among the competitors in the region as one of the preferred locations for global service delivery. The factors that contribute to the position that Malaysia enjoys are its strategic location, different favorable trade and economic ties, the ease with which business can be set up through MSC Malaysia and the campaign directed at acquiring foreign knowledge workers.

According to Woon Tai Hai, executive director of advisory and management consulting at KPMG, people skilled in different languages , diverse culture, low labor cost and relatively less number of natural disasters has further complimented Malaysia as shared service destination. He said that, moving up the ladder to deliver KPO services will need more than the above factors. Mr. Woon added that the appeal of any location in terms of KPO service delivery is closely linked with the quality and quantity of highly skilled and employable work force available in the region.

Bobby Varanasi, Chief Executive Officer of Matryzel Consulting, was of the view that rank enjoyed by Malaysia in the SSO sector is irrelevant and is not reflecting the ground reality. He was critical in his remarks on the rankings by different agencies. Matryzel is a consulting agency providing services to the outsourcing industry.

Mr. Bobby said that the 3rd rank assigned to Malaysia does not make any sense from an industry standpoint. He noted that the ranking will do nothing than assuring the market that it is a country which aggressively promotes the SSO industry like any other country. Adding to this he suggested that importance should be given to projecting the strengths of the industry such as delivery capabilities and vertical centricity rather than exaggeration and emphasis on location. Mr. Bobby emphasized that too much marketing will attract attention for a short period and will mask significant parameters that will attract sustainable investments.

Even though efforts are being made by the government and various other independent organizations to bring improvement in the industry, factors such as competition, expertise and specialization still needs more attention. Only if these factors are taken care of, Malaysia can move up the value chain to become a KPO destination.

The SSO companies in Malaysia have to realize that they are only middle level performers and are unsustainable. They have to hone up their skills in high end data processing and knowledge servicing if they want to move up the value chain.

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