OUTSOURCING: THINKING BEYOND
THE FOUR WALLS
by
Mr
Laurent Junique
CEO of Teledirect
Telecommerce Sdn Bhd
Think
‘outsourcing’ and ‘IT support desk’ immediately springs to mind.
You wouldn’t be wrong, either: the service call centre is
outsourcing’s most visible instance. But you would be mistaken if
you thought it was the only thing that the industry has to offer.
The outsourcing and
shared services industry (OSS) can be applied to virtually any
aspect of a business from backroom operations to supply chain
management to front-line customer relations. Even functions that
are conventionally kept in-house such as financial services, human
resource and research activities can be channelled to a provider,
whether located onshore in the same country or offshore, without
any negative effects to a company’s balance sheet.
In fact, the very
definition of outsourcing should ring in dollars and cents in any
business
owner’s reckoning.
To outsource is to tap into another person’s area of expertise to
your advantage. To outsource is to be able to focus on your core
business while ensuring that your other operations are
well-managed and effective. To outsource is to take advantage of
economies of scale for positive and tangible ROI.
These are facts that are slowly but surely beginning
to appeal to the sensibilities of local CEOs and businessowners. As the
domestic economic body develops horizontally as well as vertically, the trend
has been to regionalise operations as an alternative method of achieving more
efficient workflow and cleaner balance sheets. As businesses try to strike this
balance between cost expended and value received, outsourcing thus emerges as
an option on many business models.
In Malaysia, telecommerce is the most common experience of outsourcing for the simple fact that its benefits are
quantifiable and somewhat immediate. A provider specialising in telecommerce
provides a large ready sales force, trained and capable, at your disposal with
the tools and know-how to make selling effective without extensive investments.
One saves on time and effort, and, on the same score, gains in expertise and,
most importantly, revenue growth.
TeleDirect Malaysia (TDM) is an instance of a telecommerce
outsource provider that is expanding due to growing appreciation for the value
of their service. TDM is a specialist in sales acceleration, a concept that
combines manpower, expertise and the right tools for the objective of achieving
a client’s sales targets quicker and more effectively. The Company has created
a niche for itself in distributing products that fall in the area between
face-to-face selling and mass distribution. This includes activities such as sales
of credit cards, insurance and telecommunications products and services.
TDM has two primary business areas – telesales and
customer services – and also consults in the setting up, implementation and
development of inhouse centres. Operating since 1995, the Company is today
present in more than seven countries across Asia.
The Malaysian piece of the puzzle
Outsourcing boomed when call costs collapsed globally,
an incident precipitated by MCI Worldwide’s network of communication cables.
Buoyed further by the country’s huge pool of skilled labour and cheap
infrastructure, India spearheaded the way, focusing initially on software
development and other IT services.
Seeing the willingness of developed nations to go
offshore as an alternative to rising land and labour cost, Indian companies further
capitalised on the shift by offering other services. With about 20 years to
hone its systems, the country remains as the leader in offshore outsource
destinations. China follows closely behind, with a talented workforce that
is poised to challenge even India’s expertise.
These developments have changed the way the global economy works.
More so in recent years, analysts note a global exodus to offshore outsource services.
This trend (or phenomenon!), along with its obvious benefits, has not gone unnoticed by
Malaysia’s government or private sector entrepreneurs. Indeed, the country possesses all the necessary
factors to be a high-competency and competitive outsource destination: a growing talent pool
(40% of the population is below the age of 25[1])
of great diversity, a healthy economy and enormous government
support through tax incentives and initiatives such as the
non-profit organisation Outsourcing Malaysia (a consortium set up
by MDC and PIKOM).
In a report put out by Deloitte Consulting (Southeast
Asia) which assesses attractive offshore destinations by seven criteria
including fiscal and political environment, infrastructure, cultural
adaptability and cost, Malaysia is recorded as being ‘well positioned to be a
shared services haven when compared to other Asia Pacific nations.[2]
The report holds Malaysia up against giants
such as India and concludes that we, Kuala Lumpur in particular, are
more competitive in terms of physical resources and socio-economic factors.
In another report by A.T. Kearney entitled ‘Making Offshore
Decisions’ (2004), key findings state that ‘Malaysia is a rising
alternative to India and China, benefiting from a well-developed,
low-cost infrastructure and strong government support.[3]
For companies
seeking to outsource, these are prime decision-making factors.
To adopt a machine
of growth with such worldwide impact will shift us into high gear
in terms of establishing Malaysia as an economic stronghold on a
global scale. In view of this, OSS has been earmarked as one of
the country’s high-growth sectors.
The time is ripe
OSS is more than a
trend. It is a direction. The A.T. Kearney report forecasts that
the industry will continue to gain momentum
and, locally, the figure posted is 9%.
Megacorporations and
industry leaders such as General Electric, Glaxo SmithKline, IBM
and Microsoft have long gone the outsourcing way, channelling out
various aspects of their massive operations to centres around the
world. Even companies with traditionally conservative outlooks
have begun to adopt outsourcing as part of their global strategy.
Another trend that
is beginning to materialise is the centralising of outsourced
operations into regional hubs. So, rather than locate centres in
Philippines, Singapore and China, a centre in Malaysia, for
example, is equipped to manage all Asian communications, hence
providing greater control and efficiency.
As more and more businesses realise the viability and good sense
of the move, the sector will only heat up. The sector of
telecommerce is particularly bullish as advances in the field of
telecommunications such as VOIP (Voice Over IP Protocol)
supplement conventional call lines with its cheaper call rates.
Here the direct relationship between distance and cost (the
greater the distance,
the higher the cost)
is reduced, making the idea of offshore call centres more
attractive than ever.
In order to fully
engage our potential and encourage long term investment both
domestically and from foreign sources, however, we need to face up
to certain challenges. While Malaysia is slowly making a name for
itself as a strategic destination, we are still, states the A.T.
Kearney report, ‘often overlooked’ in favour of more established
centres such as Philippines and Singapore. Steps need to be taken
to promote our expertise, a move that has become the primary goal
of organisations like Outsourcing Malaysia and which is further
encouraged by Malaysia’s hosting of the 2007 WCIPT conference.
At the same time, as
Asia becomes an outsource hub for the rest of the world, we will
face fierce competition from regional neighbours who present
equally attractive indexes on boardroom spreadsheets. The
challenge is discover our niche and competitive edge in an economy
with increasingly homogenous players. We need to differentiate
ourselves by building up our talent pool, enhancing the quality of
our services and embracing national infrastructure development
while maintaining strict cost control measures.
With our multiracial
population, we have the advantage of being familiar and highly
adaptable to the varied cultures around us. This is a trait that
can make Malaysia an invaluable bridge between Western
corporations and their Asian customers.
The world is
shrinking. Labour and knowledge are more mobile than ever. With
the lines of geographical boundaries increasingly blurred, the
global OSS industry is slated to continue expanding exponentially.
Malaysia already has one leg in the bandwagon: with further
support from both public and private sectors, the country has all
the right ingredients to be a leading global hub by 2010.
[1]
Making Offshore Decisions’ A.T. Kearney’s 2004 Offshore Location Attractiveness Index.
[2]
See note 1.
[3] The Asian Advantage in the
Outsourcing Revolution’ Ravindran Devagunam, Deloitte
Consulting Southeast Asia, 7th June 2005.