Malaysia Moves up with Shared Service Centres

While shared service centres (SSC) and regional treasury centres (RTC) in Hong Kong or Singapore have received plenty of attention, until recently markets such as Malaysia had not been as prominent. Indeed, management consultancy Everest Group wrote recently that Malaysia may be the emerging Asian tiger for global shared services, noting that the country has positioned itself as a destination for high-value services on the back of strong government support, a skilled talent pool, sectoral expertise, first world infrastructure, and ease of travel.

“I think the reason is the language capabilities; here we speak many languages” Sui-Wei, senior general manager of Felda Global Ventures Shared Services, said in response to gtnews’ follow-up to find out more about the situation in Malaysia, adding that cost and talent are other essential factors to attract business to the region.

Indeed, Malaysia is more economical and has lower wages than Hong Kong or Singapore. “The more other countries face economic downturns, the more they need to reduce cost and move to lower cost areas,” said Sui-Wei. The Malaysian government has also been a factor in the cost equation; in addition to ensuring that infrastructure such as fiber optics is in place it also gives tax rebates. The government’s Multimedia Development Corporation (MDeC) says that SSCs are one of its 12 designated national key economic area (NKEAs) and the government has crafted incentives, infrastructure access, skilled talent and resources in information and communications technology (ICT) to support the sector.

Skilled staff are also more readily available than they were until quite recently, as the trend towards more companies setting up SSCs in Malaysia results in a greater availability of experienced staff, with many employees now having 10-20 years’ experience working in SSCs. Companies such as Shell, BP, Kraft, Google, HSBC and Standard Chartered Bank, for example, have set up SSCs in the country, and agribusiness group Wilmar recently established an SSC on the island of Penang.


Attracting and Retaining Talent

Malaysia has also made a concerted effort to improve education standards. “Malaysia’s education level has been on an uptrend over the last 10 years,” Sui-Wei said, and most workers within the SSCs have a university degree or at least a diploma. Many of the companies take in fresh graduates and train them, she added. “I don’t see an issue on talent. We can pick up people without SSC experience and train them.”

A major challenge for the SSCs, however, is retaining that same talent. With the greater demand, staff regularly receive calls from headhunters and can be tempted to move. Companies are responding by offering benefits targeted at Generation Y staffers such as sports clubs, while offering other benefits to retain more senior staff.

Echoing Law’s comments, Jardine Lloyd Thompson Asia chief executive (CEO) Duncan Howorth told
The Borneo Post
earlier this year, after the insurance broker set up its second SSC in the country, that “Malaysia was an obvious choice for many reasons – the availability of a highly skilled talent pool, robust infrastructures, a progressive establishment, as well as diverse language capabilities – all of which are crucial for a service facility such as this.”

Sui-Wei said that while companies might not provide strategic treasury services at their SSCs in Malaysia at this point, they manage transactional, payroll, HR, procurement and other services. It would not be surprising to see new processes such treasury and procurement added in the near future. With Malaysia being both Asian and having a Muslim majority, some companies handle both Asia and the Middle East operations out of Malaysia. Along with SSCs handling regional functions, some handle services globally for corporates as well.

The Philippines is a key competitor to Malaysia, as both locations offer the language skills and lower costs that employers want. While the Philippines has long been known for the strength of its call centre outsourcing, companies and the government are both working hard to grow the SSC business as well. Organisations as varied as Chevron and the UK Foreign Office have set up SSCs in the Philippines. Law said some companies look at India as well.

While competition abounds and companies may ultimately choose other parts of the world, Malaysia is growing rapidly and increasingly offers enticing opportunities for companies considering moving their SSC to another location.

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