IT Outsourcing in Malaysia Team 6

Policy on Information Industry The National Science & Technical Vision –To become a nation that is competent, confident and innovative in harnessing, utilizing and advancing S&T towards achieving the goals of vision 2020 (Excerpt from “Malaysia’s S&T Policy For The 21st Century”) IP protection, Data Security & Information Privacy –Special Copyright Task Force as the enforcement arm –a member of the World Intellectual Property Organization (WIPO), Paris Convention, Berne Convention –signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) Business Environment Malaysia ranked very high in terms of an enabling business environment, even better than the largest services markets of India and China (source: AT Kearney Global Rankings 2005)

IT Financing R&D Grant Scheme The R&D Grant Scheme helps you finance all your research and development endeavors with your ICT products for your company. IP Grant Scheme The IP Grant Scheme ensures that you have the finances available to protect you or your company's intellectual property. Pre-Seed Fund The Pre-Seed Funds is for technoprenuers who are looking to fund their business ideas. The Government established a RM500 m ICT Fund in 2000 to provide financing to high-technology and ICT based firms. MSC Venture Corporation was set up in 1999(as a wholly-owned subsidiary of the MDC). Provided funds to business at start-up, growth, and pre-initial public offer stages of development. Malaysian Exchange of Securities Dealing and Automated Quotation (MESDEC) was established to provide an alternative avenue of fund raising for technology and high-growth companies without a tract record as well as start-up companies.

IT Industry in Malaysia Hardware – Integrated electronic hardware industry. – Malaysia's Super Corridor project is envisioned to be Asia's version of Silicon Valley. (US Department of State, 2005) – Attract companies like Motorola, IBM, Ericsson,DHL and so on. – Overall hardware spending was estimated at around US$2.3bn in 2007, and is expected to rise to more than US$2.5bn in Software – For 2007, software sales were calculated by BMI at US$686mn. – Revenues are expected to grow to US$770mn in Software CAGR from should be in the region of 9%. -Typical vendors: Software International Corp., Leap Frog Technologies, Cyber Logic IT (java) Market overview – The Malaysian IT market is projected by BMI to grow at a CAGR of 9% over the period. – More flexible financing is also encouraging spending on software and hardware. – The IT market is expected to be worth more than US$6bn by 2012.

IT Workforce Rich professional IT human resource: In 2005, the country will produce 93,000 graduates in the IT. Multicultural talents: Malaysia has a multi-cultural and multi-religious population of 25 million. Talents with globalization outlook: About one million foreign-educated Malaysians in the workforce today. Reasonable HR cost: low wage inflation 5 percent, and attrition 8 percent rate compared to many other top Asian countries.

IT Geography & Infrastructure World Class IT Infrastructure o How?  Tax breaks  Duty free import  Governmental R&D grants Multimedia Super Corridor (MSC) o High Speed Network connecting Malaysia to the world o Malaysian initiative for the global ICT industry. o Both domestic and large multi-national companies o MSC Status gives companies benefits from Malaysian government o Purpose: Quality access to global information as easily and quickly as possible Cybercities o Physical locations to nurture the growth of ICT industries

IT outsourcing status –Malaysia is ranked among the most attractive IT outsourcing destinations in the world. –More and more multi-national companies outsourced in Malaysia. –EDS leads the pack in the outsourcing revenue ranked in 2003 with approximately USD50 million (RM190 million). –The market research firm said that outsourcing in Malaysian companies will rise at a compound annual growth rate of 27.2% over the next five years. –Outsourcing Malaysia 2008 kicked off with a loud bang and a resounding success last November as partnership deals were sealed.

MalaysiaSingapor e IndiaChina LanguageGoodExcellentGoodFair Government SupportGood Excellent Labor PoolGood InfrastructureGood Educational SystemGoodExcellentGood CostGoodBadGood Political & Economic Environment GoodExcellentFairGood Cultural CompatibilityGoodExcellentFair Global & Legal MaturityGoodExcellentFairBad Data & Intellectual Property security & privacy FairExcellentGoodBad Comparison with other nations

Achievements and Advantages & Disadvantages Demographics of Malaysia 50.4% Malays, 23.7% Chinese Origins, 7.1% Indians means Malaysia enjoys a good cultural diversity. Its education system ensures that 88% of its population is literate and speaks at least 2 languages. Malaysia is one of the top 30 IT off-shoring options in this world. Its 3 strongest competitor in the Asia-Pacific Region are Singapore, India, and China. The table below summarizes the comparison of these 3 countries based on a report published by Gartner in Based on the table above, Malaysia stands out as a balanced destination for off- shoring, enjoying a rating of good in 9 out of 10 areas. Although the country is 60.4% Islamic, radical Islam is not known to exist hence the risk of terrorist attacks on foreign businesses is virtually non-existent. Its main threats comes from China as local businesses receive strong support from the Government and since China ’ s entry into WTO it ’ s government has worked very hard to improve its legal system and intellectual property protection. The rising cost in India means it has lost some of its competitiveness with regard to Malaysia.

Reference 1."Malaysia Information Technology Report Q3 2008", Business Monitor International. 2."Outsourcing Practices In Malaysia: A SWOT Analysis On The ICT Industry",Universiti Teknologi MARA, Malaysia. 3."IT Outsourcing Trends in Malaysia: An Insight",Ainin Sulaiman, PhD;Faculty of Business and Accountancy. 4."International IT Outsourcing : A Comparison of Malaysia and the Philippines" by J. Mark Munoz and Dianne H.B. Welsh