KUALA LUMPUR: Malaysia’s Global Business Services (GBS) industry is set to post 15% compound annual growth rate (CAGR) with revenue hitting US$3.4 billion in 2017, as compared with US$1.7 billion in 2012.
The GBS industry, formerly known as the shared services & outsourcing (SSO) industry, will be driven by the country’s continued ability to provide cost savings for buyers and capacity to serve the global market.
With Asia Pacific accounting for the largest share of 36% of the industry out of the global total of US$670 billion, there is room for Malaysia to grow, Outsourcing Malaysia (OM) Chairman David Wong Nan Fay said today.
OM is an initiative under the National ICT Association of Malaysia (PIKOM).
“Given Malaysia’s strong position as a leading GBS location, the weaker ringgit could work in favour as overseas buyers look to invest capital, purchase assets or hire talent for GBS operations here.
“Major GBS customers will continue to be from the developed economies, namely the USA, the United Kingdom and Japan, but demand will also come from within APEC,” Wong told reporters at the launch of the ‘Global Business Services Outlook Report 2015: the Buyer’s Perspective’ today. The report surveyed respondents in 15 key countries.
He said demand that fuels overall GBS growth is expected to stem from the banking and financial services (BFSI), the government and the retail and hospitality/tourism industries.
“Demand from the BFSI segment is expected to come from banks as they face pressure to reduce operational costs, offer seamless customer service and replace legacy systems.
“The government sector is expected to grow faster due to increase of information and communications technology (ICT) penetration and adoption across government-based services in different countries,” he said.
The retail and hospitality industry will see growth fuelled by the rise of e-commerce and increasing adoption of ICT, he said.
Wong said OM needs to make significant improvements in talent management, funding and opportunities to penetrate the international market.
PIKOM chairman Cheah Kok Hoong said he hoped the government could relook the goods and services tax (GST) rate to make the GBS industry more competitive, especially in the Asean market.
“With the Asean Economic Community (AEC) coming up soon, we will lose our competitiveness if we cannot get more business outside. Perhaps there can be collaboration like regional mergers, acquisitions, joint ventures and so on, in at least three or four countries,” said Cheah. – Bernama, September 17, 2015.
