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Malaysia to Host Global Innovation Centre
21 August 2012
Malaysia has reaffirmed its credentials as a major global centre for shared services and outsourcing with the announcement from analyst firm Frost & Sullivan that it intends to set up a global innovation centre in Malaysia to drive global business growth over the next decade.
The centre expects to employ 830 people by 2020, and will develop the company’s thought leadership and intellectual property programmes, ensuring that it operates at best practice level.
“We believe that the establishment of this global innovation centre in Malaysia will gain us competitive
advantage in our business globally. We aim to develop and deliver capabilities that assist in driving growth, innovation and leadership for our local and global clients,” said Manoj Menon, Frost & Sullivan partner and managing director for Asia-Pacific.
Over the past two decades, Malaysia has established itself as a leading player in the shared services and outsourcing industry, with AT Kearney ranking the country for the past eight years as the world’s third most popular global services location after China and India. Over 200 multinational companies have chosen Malaysia as their shared services location, including BMW, BP, Dell, DHL, GlaxoSmithKline, HSBC, IBM, Prudential and Shell.
Despite being much smaller than China and India, Malaysia has attracted companies of this calibre due to factors including the country’s excellent IT, communications, transport and energy infrastructure; its political and geographical stability; and its costeffective, highly skilled workforce. This final factor in particular has been influential in attracting international investment, with Malaysia specializing in providing high value knowledge workers in areas such as finance and accounting, rather than just outsourced call centres, the company said in a statement.
This growing trend for multinational companies to offshore important business functions in countries such as Malaysia was highlighted by a recent report from IDC, Offshore Outsourcing Service Trends – A Malaysian Perspective. The report notes that “the decision to offshore or outsource back-end processes, specifically F&A processes, is more of a strategic decision as opposed to a simple cost metric-based one.”
The IDC report also states that “the key reasons cited for using Malaysia as a regional hub for consolidating F&A operations were the government incentives and policies, access to modern infrastructure, the talent pool and the ICT skills and resources (hardware, software, services) readily
available. The study also noted that while cost is still a key evaluation metric for Malaysia, other parameters were cited as increasingly relevant for selection as an outsourced destination. The talent pool and the number of shared services centers created an ecosystem which ensured a consistent growth in terms of value of services and the maturity and capability of individuals which are delivering the services.”
Michael Warren, Director Global Sourcing Cluster at the Malaysian government’s development agency, MDeC, said that Malaysia offers multinational companies looking to offshore and outsource key business functions a unique combination of world-class infrastructure, low costs, and a young, talented, multilingual white collar workforce. “We are rapidly transitioning from being perceived on the global stage as a developing market to becoming a nation driven by a knowledge-based economy,” he said. “Our expertise in the delivery of shared services and outsourcing models is a vital element in this transformation.”
