Frost & Sullivan’s game changer bet on Iskandar Malaysia

• Company to leverage on ‘Mega Trends’ it has identified, especially mega corridors
• Expects its US$176mil investment to be a game changer for Frost to become a more competitive business

FROST & Sullivan expects to invest an estimated RM550 million (US$176 million) into its Global Innovation Center (GIC) in the Iskandar Malaysia development hub by 2020.
 
Because of the services based nature of its business, most of this investment will be in the form of operating expenses, including salaries [estimated to eventually average RM7,500 monthly for the 830 knowledge workers it will have by 2020] and in the IT infrastructure it will build out.

Having given the media the headline they were looking for, Frost global president and managing partner Aroop Zutshi (pic) dives into the reasons he believes that the development of the GIC, which was officially launched Aug 29, will be a real game-changer for the future of the company.
 
“This GIC will dictate how we are going to evolve our company in the future. The bulk of our work was subscription-based and around consulting, but we are now becoming a visionary innovator, both as a company and of course by helping our clients as well.”
 
It is doing this by focusing on identifying new white spaces, as Aroop calls them, and focusing on areas of convergence, “because, today, you cannot survive as a business if you stay in one vertical.” The key is to identify changes in consumer behavior and the impact of current and future technology on meeting the needs of this changing behavior.
 
In fact Frost has identified 50 technologies which it believes will be completely disruptive in the future. “We are showing clients how these will interplay with convergence based on the ‘mega trends’ we have identified and how they should leverage these technologies to meet the opportunities that will present themselves.”
 
Aiming to help customers meet this challenge, Frost has started changing the way it delivers its value. It conducts a lot more think-tanks, scenario planning and C-level coaching on the mega trends and impacts these trends will have.
 
Essentially the consulting, research and training company is taking the advice that it gives out to clients and the result is its GIC in Iskandar Malaysia, or to be precise, in Nusajaya.
 
Specifically Frost is acting on the set of Mega Trends it first identified and published in Oct 2010. [Click here to download a PDF copy of the Mega Trends report.] It was also at this time that Frost started its next 10-year planning which would take it to 2020. Mega corridors loomed large in the thinking of its executives.
 
“This was the mega trend that we found in our analysis that we had to leverage on to give us the competitive advantage to serve our clients better and to create a dominant position for ourselves in the global market,” says Aroop.
 
Fortunately, the region between Kuala Lumpur all the way south to Iskandar, and over into Singapore, fits neatly into one of the Mega Trends it identified -- Mega Corridors.
 
As Aroop puts it, “In future, competition will be between corridors, not cities and countries. What this means, is that a country like Malaysia will be working with Singapore and vice versa.”
 
In fact, for Singapore, Iskandar Malaysia is an absolute must and Aroop predicts that there will be tremendous interest from the Singaporean Government and companies there in Iskandar Malaysia, “because they realise they have the chance to be part of something at a very early stage and thus play a role to create something that will help them become more competitive in the world.”
 

Interestingly, this “part of something at a very early stage” was exactly what Frost itself experienced in 1999 when it took the then bold step of setting up a GIC in Chennai, despite the poor infrastructure.
 
“We were pioneers then too. Our GIC there was the catalyst to help us completely revolutionize the company [Frost is based in the United States] and became a game changer for us. We became so much better at what we did, served our clients better and became much more competitive as a company,” says Aroop.
 
He is excited over the possibilities of the Iskandar Malaysia GIC which will see the establishment of five centers of excellence (COEs) which will initially serve customers in Asia before expanding to serve the world.
 
The digital media COE is one of five, each of which will drive a unique value proposition for Frost. The other four COEs are focused on consulting, innovation, growth innovation leadership (GIL) university and financial.
 
Digital media looks particularly interesting because Frost predicts that its customers will start consuming more video-based content and this COE will be positioned to deliver that content, in whatever form customers want.
 
Meanwhile the launch next month of its GIL University, to serve the training needs of corporate clients, will be the second such centre after the one in London.
 
Besides this, Iskandar Malaysia also met all the other basic requirements Frost needed --  being in a high-growth region in the world, having great infrastructure, multilingual workforce, geopolitical stability, etc.
 
In fact, Aroop goes to the extent of declaring that Frost has enjoyed “a fantastic business environment in its 12 years in Malaysia with tremendous support from various government agencies and customers. This [GIC] would not have been possible without them.”
 
The success of the GIC will also not be possible without the ability of the center to attract the best of both Malaysian and global talent. Aroop is hopeful here that the exciting and global focus of the work to be done out of the GIC will attract top Malaysian talent that is overseas.
 
“Studies consistently show that salaries and perks are only 30% of the reason why people stay in a job. The balance is actually all about job content and we think the quality of the content that we will be producing from the GIC here will prove to be an exciting challenge and lure to woo Malaysian talent back.”
 
 
Related Stories:
 
Frost opens Global Innovation Center of Excellence in Iskandar
 
Frost's Iskandar investment at ‘hundreds of millions’