Time for outsourcing players to collaborate

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It’s time that Malaysian outsourcing players look to collaborations to achieve much-needed scalability (photo credit: www.freegreatpicture.com)It’s time that Malaysian outsourcing players look to collaborations to achieve much-needed scalability (photo credit: www.freegreatpicture.com)

By Sharmila Ganapathy

The idea behind starting a business is to have a level of autonomy you couldn’t have as an employee of a corporation. This is why many entrepreneurs leave their full-time jobs—so they can have more control over their work and life.

This pursuit is noble when you’re starting out. However, once you’re more established and part of an entrepreneurial ecosystem, it isn’t long before the realisation hits you that, if you’re not willing to network and build partnerships, you won’t be able to achieve the scalability you need to serve your customers.

“Malaysia’s Global Business Services Outlook”, a report by research firm ValueNotes, suggests that outsourcing providers in the Malaysian market look to collaborations to get ahead globally. According to the report, there are currently over 200 Malaysian outsourcing providers in the market. The global outsourcing market itself was worth an estimated USD 450 billion (RM1.4 trillion) last year.

The sheer size of the global outsourcing market, with powerhouses such as India and China, presents Malaysian providers with opportunities for collaboration.

It is no wonder then that ValueNotes recommends in its report that outsourcing companies in Malaysia “look for business partners offering outsourcing services in India and other countries with whom they could form joint ventures or partnerships that will help Malaysian companies in gaining global presence and technical knowhow.”

ValueNotes also suggests that Malaysian companies seek small global niche players or captives to acquire. The idea here is to gain these players’ knowledge and client base, to help these companies penetrate the international market and quickly scale up service capabilities.

The report also recommends that service providers in Malaysia try creating partnerships and joint-ventures with large domestic corporations. “The idea is to create offshore centers that can act as dedicated outsourcing service units. This will help initially and later transform to third party providers. Given that large corporations have deep domain knowledge, this is crucial. If outsourcing companies can attract large corporations by offering them a stake it could translate into a win-win situation. The backing of such companies will also provide much needed investment to scale.

“One such example is of an India-based leading business processing outsourcing company called Aegis and Saudi Telecom Company (STC) which came together to create a joint-venture called Contact Centre Company (CCC) based in the Middle East. It was primarily created to support STC processes, but eventually evolved into becoming a successful third party service provider. Another example is of a Thailand-based conglomerate, Siam Cement Group, and Accenture creating a joint-venture called ITone. ITone has become one of the successful outsourcing companies in Thailand.”

The issue of talent and human resources has also been highlighted in the ValueNotes report. In its report, ValueNotes encourages local service providers to acquire talented and experienced resources or other third party service providers who have expertise in offering world class services to improve capabilities.

“Most Malaysian companies have started recruiting expats but there still needs to be a significant increase in recruitment efforts. Hiring expats from countries like India, Sri Lanka, Vietnam, China etc. can help in bringing in senior-level managerial talent,” says ValueNotes in the report.

Another weakness highlighted by the report is that the Malaysian outsourcing industry is not very well integrated with related buyer communities. “A high involvement of buyers in the outsourcing communities helps in building a strong bond between suppliers and buyers and helps in bridging the gap between customer demand and supplier capabilities. Buyers should be actively invited to service provider summits where they can share their expectations and challenges directly to the service providers.”

In addition, captives and shared services outsourcing (SSO) centres should also be welcomed to the outsourcing community, says the ValueNotes report. “Most captives/SSO centers believe that their involvement with the outsourcing community is not as fruitful to them as it is to the third party service providers and thus they do not actively participate. Captives and SSO centers should be educated on the benefits of knowledge sharing and the results of gaining knowledge will entice them to become active members of associations.”

Last but not least, to build a unified community, the report recommends that stakeholders in the outsourcing industry such as colleges, universities and training institutes which indirectly help the outsourcing industry should be actively engaged so that they can play an integral role in the development of the Malaysian outsourcing industry.

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