Talent and Technology Take Off – How Malaysia Plans to Flex its Scale

SSON Editor

To meet the global appetite for additional shared services and BPO capability, Malaysia is taking a two-pronged approach that includes developing and tapping the nearly 20% of its workforce considered "latent" – and leveraging new RPA solutions to get more performance out of individual FTEs. Find out how the country is adopting "impact sourcing" to develop its talent pool, and what this means for your requirement to "scale"

As the appetite for shared services continues to gather momentum across the world, also gaining popularity in some newly emerging economies, countries across South East Asia are proactively planning for how to meet the expected surge in demand for human resources.

Malaysia, while not necessarily falling into the lowest-cost location category, has long promoted itself as one that can provide the kind of value-adding, knowledge type services that are increasingly in demand – something that sets it apart from many of its regional competitors.

Record growth in Services Delivery Centres

To date, Malaysia is host to 410 centres that support global services operations, and which employ 90,000 full-time employees (this does not include another 200 pure play contact centres that employ an additional 45,000 staff). Over the past year alone, 72 new services centres were set up. Compared to the average of 25 centres a year, the typical growth rate just a few years ago, 2015 marked a record 55% year-on-year jump – the highest growth in shared services and outsourcing centre investment in the two decades that records have been kept.

According to Malaysia’s Multimedia Development Corporation (MDeC), which partners with companies investing in Malaysia, the market for FTEs working in shared services and outsourcing is expected to grow by another 60% – to 160,000 – by 2020. Right now, this 70,000 FTE shortfall is what's preoccupying the country's economic leaders, who have tapped "impact sourcing" as a means of delivering at least 45,000 of those resources.

What's making Malaysia even more attractive these days in the radical drop in its currency, by 25-30% against the US dollar, as the commodities market collapsed last year. For dollar based organizations, Malaysia has become that much more attractive, now comparable to Poland, Costa Rica, India, or the Philippines.

While the currency arbitrage opportunity has not impacted the job market yet, Malaysia's leaders don't want to be caught snoozing. Which brings them to the question of how to manage the necessary supply of talent. Even more importantly, they are asking themselves the question: Do we have the talent to fill these jobs?

"Do we have the talent to fill these jobs?"

MDeC is already piloting multiple initiatives to identify new and additional sources of labour to feed this unprecedented demand. It has identified the "latent" talent hidden throughout the country as key, and is driving a number of projects that can be described as "impact sourcing", as a solution (although in Malaysia’s case it’s absent the philanthropic overtone often associated with this term).

Whereas impact sourcing is generally seen as a means of helping the poor (Africa is a prime example, where salaried jobs have a trickle-down impact on the local community), in Malaysia, a developed country, this is not the key priority. Instead, the focus is on impacting the economic landscape by moving the jobs to where the people are. More specifically, it’s about shifting jobs from Tier 1 cities into the countryside and thereby tapping a hitherto relatively invisible and inactive talent pool.

Impact sourcing – the new opportunity for growth in shared services

"Impact sourcing in Malaysia is not about helping the poor but about bringing jobs to the market," explains Michael Warren, Vice President of MDeC. "We need to come up with a commercially viable solution that will help society by distributing the jobs to those who are not currently available or accessible."

In a country of 30 million people, MDeC estimates that 5 1/2 million constitute this latent workforce. The vast majority of these people are distributed across Tier 2 and Tier 3 cities and are not currently actively engaged in the workforce. The strategy for Malaysia, therefore, is to bring this latent workforce into the fold and leverage it for the new BPO and shared services jobs coming in.

To identify the most effective way of doing so, five pilots are currently running to test different environments. These include:

  • targeting areas with multiple universities close by
  • targeting women or handicapped people that have been precluded from some jobs
  • targeting an economic corridor across four states in the north of the country
  • targeting a supportive state government in the south of the country
  • targeting an economic corridor in close proximity to Singapore

Each pilot has different criteria, which makes it interesting. The idea is to assess the rates of return for each by the end of 2016, in order to determine the best way forward and to identify project will be scaled up in future. According to the plan, this initiative should drive an additional 25,000 people within the next five years that will be available to the BPO and shared services sector.

As part of this strategy, MDeC is working closely with a national university that releases 12,000 graduates a year into the workforce, and which is now offering shared services and BPO related courses that result in degrees primed for these industries. In addition, collaborations with organizations like Dell and IBM offer internships to these students, where they can contribute to real-life projects, and which also act as talent feeders to many of the service providers that currently make up two thirds of the services market.

Later this month, a second university will join this initiative, with the plan to extend the collaboration to 23 public universities within the next 18 months, and 65 private and public colleges thereafter, to create a reliable part-time source of talent through which services centres can tap into students.

Call centre staff also part of solution

Another source of talent are the 45,000 employees currently working in call centres. With attrition rates for these centres around 25%, the government is proactively working on ways to channel these people into shared services careers. This would deliver an additional 10,000 employees, for whom shared services and outsourcing work offers a considerable step up from the mundane work of call centres.

Malaysia is also taking a lead in leveraging the ASEAN economic zone, established in November 2015 and encompassing 10 member countries across Southeast Asia, to leverage an additional 20,000 workers. This partnership is significant because whereas Malaysia has identified 5 1/2 million as its latent workforce, ASEAN, with 650 million people, has a latent workforce of 300 million. Malaysia’s strategy is to target and engage with this talent pool as an additional nearshore resource.

What can shared services and BPOs expect from Malaysia?

The government of Malaysia is actively working on a long-term strategy to develop sustainable talent at the right skill levels to meet the needs of the international services community. While today these pilots are still in an early phase, what is evident is that Malaysia will offer a reliable ability to scale. And that is a capability that every shared services and outsourcing operation is looking for.

In addition, and as an alternative to simply feeding more FTEs into the mix, MDeC is actively piloting robotic process automation, which it sees as a significant opportunity to move up the value chain.

"While today a person is doing only one job, we recognize that by leveraging RPA tools, one person could conceivably carry out two or even three jobs at the same time," explains Michael Warren. "As a country of 30 million people we know that we cannot ever rely simply on numbers alone. But by using automated software we have the capability of scaling exponentially."

One of the pilots currently being run is leveraging this RPA capability in collaboration with some of Asia's largest BPO providers. In combination with impact sourcing, Malaysia is banking heavily on RPA to tap into larger groups of people for automation-enabled work, to provide some of the best and strongest talent pools across the region.

Interested in reading more on this topic? See:

Impact Sourcing in India: A New Opportunity for Growth in a Crowded Market