More multinational corporations and large companies are expected to outsource their operations to Malaysia in the coming months as the government steps up efforts to market itself as a global outsourcing hub. The spin-offs are tremendous for the country's small and medium-scale companies. We take a look at Scicom (MSC) Bhd and Teledirect Telecommerce Sdn Bhd, the two service providers that are enjoying strong growth and reaping the profits barely 10 years into the business.
Scicom — homegrown and thriving
"Nobody was here at the time," Leo Ariyanayakam recalls when he decided to set up a contact centre in Malaysia in 1997. At that time, Singapore, Hong Kong and Australia were the major outsourcing centres.
The focal point of play has shifted since then. Today, other call centres have sprung up in Malaysia and competition has become very keen. However, Leo's company — Scicom (MSC) Bhd — has succeeded in beating off the competition and is today one of the largest contact centres in the region, boasting a clientele that includes Astro, Hewlett-Packard, Hilton Group and Nokia and a workforce of some 800. And the number is growing. The number of employees would have been closer to 1,500 had it not lost Celcom a couple of years ago; the mobile phone operator went back to Telekom Malaysia Bhd and is now served in-house by VADS, a subsidiary of Telekom. Be that as it may, Scicom, whose major shareholder is AKN Capital, has grown by such great leaps and bounds the company is ready for a listing on the local stock market some time soon. As an indication, Scicom's revenue has been recording a compound annual growth rate (CAGR) of 45% year-on-year. "We have been profitable from day one, we have no borrowings," Leo says proudly.
Still, listing isn't a topic that he wants to dwell on too much. "You know, some information is sensitive at this point," he says, preferring to talk about Scicom's growth.
Indeed, Scicom's story is a sexy one — it is a home-grown company which has managed to expand from just two employees in the beginning to more than 800 today, and is providing its services to an increasing number of multinational corporations or MNCs. Last year, it set up a call centre in Bangalore, which provided employment for 200 people.
So, what is the story behind Scicom's success? Leo, just 41 years old, believes in a conservative strategy that focuses on premier customer care, tactical help desks and associated back-office fulfilment. "We then went out and sought the MNCs that wanted a good competitive base in Asia to handle their customers," he says.
"We know where we want to go and focused our energy on this," he adds, and along the way, the company has specialised in certain verticals which include telecommunications, banking and finance, high technology, oil and gas as well as transport.
"What we found was, we needed to understand all these businesses to take care of our customers, so, we grew with our clients," Leo says. Along the way, Scicom offered more services, which included consulting as well as an academy to train personnel in contact centre management. Scicom Academy Sdn Bhd, set up in 2002, has become a lucrative venture, providing training for outsiders, such as personnel from Shell and Astro. Leo, a Sri Lankan who has been here since 1988, is proud of the fact that Scicom has become the breeding ground for the industry. "You can find Scicom people in almost every call centre in Malaysia," he says.
Teledirect — making Malaysia its regional hub
Laurent Junique beams when he talks about Teledirect Telecommerce Sdn Bhd. And why not? Four years after setting up the call centre in Kuala Lumpur to focus on telecommerce, it has grown rapidly to become the largest in its network of call centres located in other outsourcing hubs in the region — Hong Kong, Thailand and Taiwan. In Malaysia, Teledirect employs about 400 workers.
Junique expects Teledirect to chalk up a revenue growth of 70% this year. In the last two years, growth had averaged more than 100%.
Teledirect was founded by Junique, a Frenchman, when he set up the first call centre in Singapore in 1995. He was just 29 years old then. Junique says he started with a low budget, taking things one step at a time. His previous experience with call centres in France came in very useful, he says. Prior to setting up Teledirect, Junique worked for Unilever in France as well as for a few call centres as a telemarketer. "So, I was on the phone myself, making the tough calls," he says.
The turning point for Teledirect came in 1996, when the WPP Group acquired a 40% in the company. According to Junique, WPP's entry into Teledirect was the catalyst that led to its expansion across the region. Junique believes that Teledirect, which focuses on sales acceleration for its clients that includes both foreign and local banking groups, telecommunication and IT companies, still does not have much competition to date.
This is because telemarketing, or sales acceleration, as Junique likes to call it, is still relatively an uncluttered niche in Malaysia. Sales acceleration, put simply, means making sales for its clients via the telephone, fax, e-mail, web or SMS.
"We don't have much competition because we are very focused, we don't want to be everything to everyone… and because we have defined the niche, our competition is very limited," says Junique.
Which perhaps explains why Teledirect has been able to chalk up such phenomenal growth since setting up base in Malaysia. Some 70% of the company's business comes from the financial sector while 25% is from IT.
Why did Junique choose Malaysia as a regional base? He cites three reasons.
First, he sees interesting local market opportunities in Malaysia — there were not that many players and it had an interesting geography (it was wide enough for companies operating here to require telecommerce services).
Second, Malaysia was becoming a regional destination for outsourcing, which meant more opportunities.
Last but not least, its multilingual labour force was a big advantage over major hubs such as China and India.
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