KUALA LUMPUR: Malaysia can differentiate itself from its competitors by establishing itself as the most attractive global outsourcing destination for high-value activities, said the Multimedia Development Corporation (MDeC).

Due to the disparity in population and therefore manpower supply, Malaysia’s overall ranking would expectedly be behind that of India and China, said Rob Cayzer, programme director of MDeC’s shared services and outsourcing industry development division.

He was referring to recent reports by several research firms that rank Malaysia behind those countries, as the world’s top three destinations for outsourcing, global services and offshore activities.

“However, it is more important for Malaysia to become the top destination for high-value outsourcing activities,” he said.

“One of Malaysia’s greatest strengths is the affordability and low attrition rate of its outsourcing workforce, compared to those in India or China,” said Cayzer. “In India, for example, it is common practice to give salary increments to managers every four months.”

“Over there, the aggressive poaching of talents by competitors is a headache for companies,” he added.

According to figures from consulting group Mercer, the outsourcing attrition and salary increase rate is significantly lower in Malaysia at only 5% and 5.5% respectively, compared to India (9.4% and 11.3%) and China (8.9% and 7.7%.).

Cayzer was speaking to reporters during a media briefing on the recently launched Outsourcing Malaysia (OM) initiative that is spearheaded by MDeC, Pikom (the Association of the Computer and Multimedia Industry Malaysia), MDV (Malaysian Debt Ventures), and senior members of the global services industry.

OM is an initiative launched during the 15th World Congress on Information Technology 2006 in Austin, Texas, not long ago to enhance the visibility of Malaysian outsourcing capabilities globally.

“The value proposition for Malaysia lies in our capability to deliver high-value outsourcing services with strong expertise in vertical industries such as energy, technology, logistics, finance and manufacturing,” said David Wong, co-chairman of OM.

“With OM, the industry can play a role to attract foreign companies to the Multimedia Super Corridor Malaysia, and not just leave everything to the Government,” he said.

“We have the cost competitiveness, language and culture, as well as many years of oursourcing experience serving MNCs (multinational corporations),” said Pikom chairman Lee Boon Kok.

“The question is, how can we leverage on our existing resources and competencies to become a strong exporter of software and services?” he said.

Lee said it is ideal to duplicate the “spillover” effect that happened in Penang to the rest of the outsourcing industry.

“When companies like Intel came to Penang, the services industry there flourished. In time, the smaller companies gained competencies learned from the foreigners and matured to become big and independent companies.”

“We should also aim to be a regional leader in outsourcing services, because the local market is too small,” said Lee, adding that this emphasis would help transform Malaysia from a heavy user to a net exporter of ICT services.