Outsourcing sector keeps the wind beneath its wings (updated)

• Commendable growth for Q1 2012 with 2,212 new jobs and RM318mil in export revenue
• Confident of hitting RM1.01bil 2012 target

EPP2, one of the best performing 2011 Entry Point Projects (EPP), looks to have started 2012 with the intention of maintaining its fast pace. The EPP’s target is to create globally competitive Malaysian outsourcers.
 
Outsourcing Malaysia (OM) chairman David Wong (pic) shared with Digital News Asia that the end of the first quarter of this year (Q1 2012) saw the outsourcing industry create 2,212 new jobs and hit RM318 million (US$102 million) in exports.
 
“This is a significant jump over the corresponding period in 2011 with the 2,212 new jobs representing a 52% increase and the RM318 million representing a 9% increase,” noted Wong, who is also group CEO of Snt Global Sdn Bhd, a logistics outsourcing player.
 
The Asia Pacific outsourcing industry is forecast to grow 10% per year to 2014. Malaysian companies in this space are developing their competitive advantages in a number of areas such as financial services, oil & gas, and logistics.
 
While the export markets are going well, one key focus area for EPP2 is to open possibilities for local outsourcing specialists to serve the large Malaysian companies.
 
To this end, Wong said that last month saw a significant industry gathering of the top Government Linked Companies (GLCs) with the invites coming personally from Pemandu chief Datuk Seri Idris Jala.
 
[Pemandu or the Performance Management & Delivery Unit of the Prime Minister's Department oversees the implementation and assesses progress of the Malaysian Government’s various transformation programs.]
 
It worked as 44 GLC CEOs attended the luncheon including Datuk Sri Nazir Razak, chairman of the CIMB Group and Employees Provident Fund CEO Tan Sri Azlan Zainol. A number of non-GLC chiefs attended too, with Datuk Yvonne Chia, the Group Managing Director of Hong Leong Bank Bhd one of them.
 
The aim of the luncheon was to emphasize the importance of business transformation through outsourcing to local champions and introduce the capabilities of Malaysian outsource companies to the CEOs.

But that is just Part 1 of this engagement between Malaysian outsource companies and their potential customers in the GLCs. To build on the momentum of the CEO luncheon, on Aug 8, 31 EPP 2 Focus companies will be having a roundtable session with the intention to prepare these Focus Companies to highlight their capabilities and expertise to the CIOs.
 
And building on this even further, Wong says that in September, OM together with Multimedia Development Corporation (MDeC) will be having a two-day event where the 31 EPP 2 Focus companies will break up into various verticals with their potential buyers in the GLCs to really understand each other’s issues and capabilities, after which the onus lies on the outsource companies to present solutions that can meet the needs of the GLC buyers.
 
It is an ambitious and concentrated effort and if successful, expect to see stronger export numbers for the local outsourcing industry and they will have successfully answered the one key question all outsourced companies get asked when they go overseas, “How strong is your customer base in your own market?”
 
Meanwhile, Wong says OM is happy with the progress of the sector and feels that the revenue target of RM1.01 billion (US$323 million) for 2012 can be achieved. “Last year, the outsourcing sector created 5,000 new jobs, I am confident we can hit the target of 8,000 new jobs.”
 
The overall target by 2020 is for 43,330 jobs to be created with a Gross National Income contribution of RM6.86 billion (US$2.19 billion).
 
While the overall numbers look good, Wong admits to being concerned about the ability of the talent pool to take up the job opportunities presented in the sector. “The quality of service we offer is also very important as we are not playing a numbers game here but offering higher-value services as we move into the KPO or Knowledge Process Outsourcing space.”
 
A campaign was also initiated last year to get more youth to consider a career in outsourcing.
 
On the crucial question of helping up-skill and reskill the talent pool in outsourcing, OM has tied up with industry body Pikom (the Association of the Computer and Multimedia Industry of Malaysia) for its Project Leadership Certification, the Certified Outsourcing Professionals Certificate (COPC) which is mainly for the BPO space, and the International Association of Outsourcing Professionals (IAOP).
 
Skills aside, Wong says OM also faces challenges in getting the full participation of local companies to follow OM when it goes overseas to promote Malaysian outsourcing capabilities.

“We tend to get a lot of leads from our missions but we only get between five and 10 companies coming along. We would like to see between 15 and 20 companies following us in future,” he says.
 
Wong questions the hunger of local entrepreneurs to play the global game and sell their products in new markets as he says OM struggles to get outsourcing companies to go along for its overseas visits.
 
The bid to increase the country’s profile as an outsourcing destination also recently saw MDeC and OM participate in the World BPO Forum in June 2012 in New York.  Regional marketing and branding offices will also be set up in certain target countries.