Country has strength in digital infrastructure and the growth of its talent pool.
The Digital Global Business Services (DGBS) industry has reiterated their confidence in Malaysia as an attractive investment hub. While active GBS companies accounts for approximately 20 per cent of total active MSC Malaysia companies, they are the largest contributor to the overall performance of MSC Malaysia, adding up to 50 per cent of investments, 66 per cent of exports, and 61 per cent of jobs created.
There are currently 579 GBS companies within MSC Malaysia, with 57 per cent being foreign direct investments (FDIs). Furthermore, 30 per cent of these foreign-owned GBS are part of the Forbes Global 2000 and Fortune500 companies, including HSBC Electronic Data Processing, Dassault Systèmes and Jabil Global Business Services.
The DGBS industry has grown along with Malaysia’s digital transformation. In the mid-2000s, Malaysia Digital Economy Corporation (MDEC) began placing emphasis into the shared services and outsourcing (SSO) industry, a precursor to GBS. In 2006, Outsourcing Malaysia (OM) was formed to promote Malaysia as a GBS hub.
“MDEC recently launched the ‘Digital Investments Future5 (DIF5) Strategy’, a five-year plan focusing on five key thrusts aimed at attracting investments and advancing Malaysia’s digital economy in line with the Malaysia Digital Economy Blueprint (MyDIGITAL).
Besides targeting the creation of 50,000 high-value jobs, DIF5 places focus on 5 industry sectors and plans attract 50 Fortune500 tech companies to land and expand in Malaysia, with the DGBS industry being one of the focus industries. This validation by global tech titans shows we are on the right trajectory towards firmly establishing Malaysia the Heart of Digital ASEAN,” said Raymond Siva, Senior Vice President of Investment and Brand, MDEC.
This public-private emphasis steered Malaysia into a prime GBS location. According to AT Kearney’s Global Services Location Index, Malaysia ranks third behind India and China as the world’s most competitive GBS locations.
During his keynote address on MTM’21 on “The Rise of Digital Global Business Services”, Dr. Mohan V Avvari, Associate Professor of Strategy and Innovation, Faculty of Social Sciences, University of Nottingham Malaysia, said that Malaysia’s high global ranking is thanks to a thriving GBS ecosystem built by MDEC along with associations like the National Tech Association of Malaysia (PIKOM).
Among Malaysia’s core strengths are its digital infrastructure and the growth of its talent pool. Dr Mohan added that digital talent in Malaysia has evolved to include people with capabilities that are prized in GBS industries.
These strengths are echoed by DGBS mainstays in Malaysia. In his online sharing session during MTM’21, Dr. Matthew Lamont, Managing Director of DownUnder GeoSolutions (DUG), said that they chose Malaysia as a digital hub because they found “great opportunity” here. “It was simple for us to start working in Malaysia – the people were very welcoming and warm, and the bureaucracy is straightforward,” he said.
Malaysia’s geographical location is another strength. DUG’s establishment in Malaysia not only allows them to serve across Southeast Asia, but also to Japan and Korea. Malaysia’s time zone also works in favour with Australia, where DUG is headquartered.
DUG – who designs, owns, and operates one of the largest supercomputer networks in the world, with data centres in Kuala Lumpur, Perth, Houston, and London – manufactures a lot of their own equipment in Malaysia. This includes tanks and heat exchangers, which were made in Kuantan and Selangor respectively.
This illustrates Malaysia’s robust technology and innovation ecosystem, which allows DGBS companies to find support and collaboration in various aspects of their activities.
Other DGBS providers in Malaysia share the same sentiments. During a panel session titled “The Growth of Global Business Services in Malaysia – The Holistic Perspectives”, Arno Kamm, General Manager, Roche Services (APAC) Sdn Bhd, said that they established their GBS centre in Malaysia for its proximity within the APAC region and its multi-lingual talent pool, which proves vital for Roche’s biggest APAC market: China.
Roche Services (APAC) began operations in Malaysia in 2016 and has since expanded to 800 employees, having added 100 positions this year with plans for 100 more by the end of 2021. Kamm said that they have experienced “strong growth” over the past five years, with no signs of stopping.
Kim Chin Kuang, Division Chief Financial Officer & Vice President of GBS Finance, Jabil, said that Malaysia is “still performing really well, from its financial attractiveness, conducive business environment due to the friendly and supportive government; and vibrant lifestyle that is able to retain our key talent.”
Jabil’s GBS operations started in Penang in 2009 with just 200 employees. Today, they have more than 1,100 employees serving 100 sites worldwide.
Meanwhile, TS Koay, General Manager, Senior Director, Dell Technologies Cyberjaya, said that Malaysia is still seen as the best value location for the DGBS industry. “With support from the top leadership, as well as the all the innovation and product ownership locally, I see that we can continue expanding,” he said.
“The Digital Investments week of MTM’21 reflects the continued confidence that the DGBS industry – and, by extension, the global tech industry – has for Malaysia as a hub for investments and innovation. We are continuing our commitment to make Malaysia a stronghold for DGBS. Our DIF5 strategy includes DGBS as a focus industry and provides a clear, comprehensive and concerted strategic plan to attract, support and foster future tech investments,” added Raymond Siva.