Outsourcing Malaysia (OM), an initiative under the national ICT association of Malaysia (Pikom), expects Malaysia’s global business services (GBS) industry to generate US$3.4 billion (RM14.39 billion) revenue in 2017.
The figure is based on a 15% compounded annual growth rate (CAGR) year-on-year against US$2.2 billion revenue recorded in 2014.
OM chairman David Wong Nan Fay said the growth rate shows a significantly steady upward trend on the back of average of 5% in CAGR per annum in the whole AsiaPacific (APAC) region.
“With APAC taking 36%, the largest share of the industry out of the global total of US$670 billion, there is room for Malaysia to grow,” Wong told reporters at the OM’s GBS outlook report 2015 in Kuala Lumpur yesterday.
Wong said the growth performance was also driven by the country’s ability to provide cost savings measure to few key industries such as banking and financial services, manufacturing, telecommunication and the government who has continuously been seeking ways to reduce cost of operation.
GBS industry, formerly known as shared services and outsourcing industry, covers four areas namely IT management, business process management, software services and infrastructure management services.
“Demand from banking and financial service segment is expected to arise as they face pressure to reduce operational costs, offer seamless customer service and replace their latency systems due to tighten margins.
“The government sector is expected to grow faster due to the increase of IT penetration and adoption across government-based services in different countries,” said Wong.
According to Wong, Malaysia’s GBS industry will also benefit from the weaker ringgit as overseas buyers would seek opportunities to invest capital, purchase assets or hire talents for GBS operation in Malaysia.
“Weaker ringgit climate will definitely benefit our GBS industry in general as we offer more competitive price in our service and human talents, and be able to generate more revenue in US dollar globally.
“But this is also a factor for us to be able to maintain our talents here and not lose them to our neighbouring countries,” said Wong.
Further, Wong said the GBS industry will also be able to tap into retail and hospitality or tourism industries.
For Budget 2016 wishlist, Pikom chairman Cheah Kok Hoong hopes the government will relook into the lack of talents in GBS industries.
“We have only 77,000 workers right now in our industry but we need to double them up by 2017 to achieve the revenue target.
“So we will need the government’s intervention to facilitate the talent production,” said Cheah.