The global business services (GBS) sector in Malaysia is expected to post a compound annual growth rate (CAGR) of 10% to 15% over the next five years, said Outsourcing Malaysia.
Outsourcing Malaysia’s chairman Cheah Kok Hoong said based on its GBS Outlook 2015 Report, Malaysia is among the four selected markets in the Asia-Pacific (APAC) region to experience the expected growth.
“Looking at our Global Business Services Outlook 2015 Report, which is the first ever industry report to provide a detailed analysis of the buyer’s perspective, from 2016-2019, GBS is expected to grow steadily with APAC recording an average CAGR of 5% per annum.
“However, four selected markets — India, South Korea, Malaysia and Singapore, in particular, will record higher CAGR of 10%-15% over the next five years,” said Cheah in a press release yesterday.
GBS is a more integrated and mature evolution of the shared services model.
GBS provides services beyond transactional functions and has a wider remit and expertise to deliver higher value functions, such as consulting and business.
Cheah said that overall demand will stem from the banking and financial services, government, retail a nd hospit a l it y/tou r i sm industries.
However, Cheah said the sector still has much room for growth, as the global GBS industry stood at US$670 billion (RM2.85 trillion) in 2014 with APAC accounting for the largest share of 36% at US$240 billion and Malaysia’s share of the pie is comparatively small at US$4 billion.
“However, there are also various challenges that need to be addressed. Aside from talent, which there is an acute shortage, funding is also an issue
“Presently, the financial ecosystem is very much focused on startups and entrepreneurial ventures compared to GBS operations.
“While GBS may appear as less ‘sexy’, the prospects and potential are just as illuminating if not more,” he said.
According to Outsourcing Malaysia, the implementation of the Asean Economic Community as well as forecasted growth in global demand for GBS services also provide strong indication for a robust 2016.
Outsourcing Malaysia is an initiative of the outsourcing industry and a chapter of the National ICT Association of Malaysia — the country’s national information and communications technology (ICT) industry association to promote and develop Malaysia’s outsourcing services industry as a global hub for high-value outsourcing.