Malaysia is expected to grow its global business services (GBS) market size from US$1.3 billion in 2019 to US$1.5 billion (RM6.15 billion) by the end of 2024, based on a report from GlobalData Findings, said Malaysia Digital Economy Corp (MDEC) senior VP (investment and brand) and chief marketing officer Raymond Siva.
“On that account, we are in a position of strength to bring more foreign direct investments (FDIs) to this sector. The government’s commitment to improving digital infrastructure and providing a pipeline of digitally-ready workforce allows us to reinvent ourselves as the preferred location for high-value GBS such as robotic process automation (RPA) analysis, artificial intelligence (AI) and data-led processing and cyber security,” he said in a recent statement.
MSC Malaysia currently consists of 579 active GBS companies. Of the total, 57% comprises FDIs.
Some 30% of the foreign GBS include Forbes Global 2000 and Fortune 500 companies such as HSBC Electronic Data Processing (M) Sdn Bhd, Jabil Global Business Services and Dassault Systèmes SE.
GBS is MSC Malaysia’s largest contributor in terms of performance although the active numbers only account for 20% of the total where they add up to investments (50%), exports (66%) and new job opportunities (61%).
Since 2010, the number of GBS centres in the Asean region has increased to 70%.
Malaysia hosts more than a third of these centres followed by the Philippines and Singapore.
The economic slowdown caused by the Covid-19 pandemic has caused many problems to the GBS industry.
However, opportunities such as continuous cost pressure, increasing market volatility, technology-driven disruptions to the globally connected value chains have turned GBS into transformation drivers for organisations.
Siva believed that the role of digital technology and services is evident, especially during the pandemic which has led to further acceleration of digitalisation. In turn, it has accentuated GBS as a key pillar for an organisation’s resilience and agility.
“Many organisations are relying on GBS to help them explore and deliver innovation, automation, advanced services and new ways of working. The scope of GBS now includes finance, information technology, human resource (HR) and procurement, and other functions that can be delivered onshore or offshore,” he added.
The State of the Shared Services Market Report survey revealed that Malaysia’s shared services and outsourcing (SSO)/GBS practitioners stated that the rapid evolution and expansion of the digital economy is a key factor in driving the GBS industry forward.
It added that the integration of digital technology has redefined companies in terms of process excellence, human capital management, data and technology skills development, and digital workforce in the shape of an RPA-enabled workforce.
“The trend is clear in Malaysia; companies are leveraging the GBS model to adopt and accelerate digital transformation, shifting focus from cost arbitrage to value-driven services,” said Siva.
Finance, HR and customer experience are the most popular services, while the top range of services now include intelligent automation and data analytics.
The major factors that encourage more and more companies to outsource their business activities are value add and cost-saving from streamlining and centralising core functions.
Companies also realised the importance of digitalisation as a key enabler where digital-first processes are a prerequisite to enhance customer and employee experience, while the most critical enabling criteria are the availability of skills and expertise in the new digital technologies.
“Malaysia is now home to nearly half of all analytics-based services in Asean. To accelerate this growth, MDEC is engaging the industry to listen to their needs, develop progressive and conducive policy and regulatory framework, and a robust pipeline of digital talents,” Siva explained.
The Malaysia Digital Economy Blueprint would drive the country’s high value-added economy and to become a net exporter of homegrown technologies and digital solutions through various phases until 2030.
These would complement the rest of the national digital economy development initiatives, such as the country’s GBS sector, in the coming years which would go a long way towards boosting investor confidence and for these companies to establish Malaysia as their preferred base to other emerging GBS locations such as India and China.
“MDEC will continue to lead the nation’s digital economy transformation towards the aspiration of Malaysia 5.0, enabling a society that is deeply integrated with IR4.0 technology such as the Internet of Things, data analytics, AI and blockchain. We have embarked on initiatives to empower more digitally-skilled Malaysians, enable digitally-powered businesses and attract more digital investments,” he added.
Meanwhile, Outsourcing Malaysia chair Cheah Kok Hoong said Malaysia has seen its GBS industry sustain during the pandemic as it was supported by a conducive business environment and access to talent, despite the current conditions and challenges.
“Such GBS services provided are important supporting functions for the industry and businesses at large, and we’ll continue to support our members and industry together with the government,” he said.
On the other hand, Contact Centre Association of Malaysia president Raymond Devadass said the global customer management and experience industry is transforming due to process automation, search engine optimisation, AI and machine learning.
“The pace of change is accelerating, fuelled by technology and changes in customer expectations. The industry in Malaysia has already begun to upskill our workforce into higher-value roles, where complex customer interaction meets technology, resulting in enrichment of customer services and experiences,” he said.
This would enable the country to become a location of choice for companies to expand or establish new customer management delivery centres.
Malaysia has launched MSC Malaysia to make the country a global ICT innovation hub where MDEC has ventured into the SSO industry during the mid-2000s.
The efforts have been expanded in 2011 to develop the digital economy by venturing into the GBS sector and its related sectors.
Source: https://themalaysianreserve.com/2021/05/03/malaysias-global-business-services-market-to-grow-to-rm6b-says-mdec/