Global Business Services (GBS)
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Global Business Services (GBS) is an integration of services that make with the best competitive strategy that utilizes Information and Communication Technology (ICT), Finance and Accounting, Human Resources, and Engineering Design and Services. It has become an essential tool in accelerating and complimenting global business services approaches as more companies are leveraging on global business services strategies to align their business objectives and obtain economies of scale.
As part of the Business Services projects of the National Key Economic Areas (NKEA), GBS is an industry that is fast gaining momentum in Malaysia, being one of the focuses in the country’s Economic Transformation Plan. In transforming Malaysia into a “high income” economy, MDEC is the driving force that enhances the Capability, Capacity and the Credibility (3Cs) of this industry to develop a “world-class” GBS hub.
With a vibrant ICT and an international standard service industry, the global management consulting firm, AT Kearney has consecutively ranked Malaysia third in their Global Services Location Index since 2004, which measures financial attractiveness, people skills and availability, and business environment. Malaysia is also ranked Number 18 in World Bank’s Ease of Doing Business Report & Number 14 in IMD World Competitiveness Ranking 2015.
Whether it’s the workforce, competitive cost, outsourcing infrastructure, ICT facilities or world-class business infrastructure, Malaysia has the best resources to accommodate to the demands of enterprises today. To date, there are more than 350 foreign and multinational companies who have set up regional and global shared services and outsourcing centres in Malaysia, bringing along billions of Ringgit worth of investments and thousands of jobs opportunities. These companies are currently performing various GBS activities within these 6 industry verticals:
a) Banking, Financial Services & Insurance (BFSI)
b) Information & Communication Technology (ICT)
c) Pharmaceutical & Health (P&H)
d) Logistics & Transportation (L&T)
e) Energy, Chemical & Resources (ECR) f) Fast Moving Consumer Goods (FMCG)
These GBS activities are categorized into 3:
The bulk of activities conducted in an GBS environment are business processes that can be either the back-end or front –end operations. The activities include consolidation of internal business functions such as human resource, finance and accounting, and customer service that includes call centres and technical support.
- Business Process Outsourcing (BPO)
Transactional-type internal (back-office) business functions such as human resources or finance & accounting and front-office functions which include customer-related services such as marketing and contact center services.
Information Technology Outsourcing (ITO)
Transactional-type IT and IT-related functions such as programming,technical support, desktop and server support, network and security systems etc.
Knowledge Process Outsourcing (KPO)
Value-added processes which are highly complex and require the talent of professionals with widespread educational backing. The profile essentially requires specific and advanced knowledge of a particular domain or specialty. In the KPO context, the emphasis will be far more on talent than on physical infrastructure. Therefore, it will be more knowledge centric rather than capital centric.
HIGH VALUE SERVICES - MOVING UP THE VALUE CHAIN
MDEC is set to drive the industry’s next phase of development and subsequently move Malaysia up the value chain with its focus on the high-yield KPO sector. KPO types of activities and services are highly encouraged with new investments and further develop niche areas such as expanding the Engineering and Design services to Oil and Gas industry, and beyond.
Meanwhile, the cluster is facilitating the growth of local outsources under the Entry Point Projects 2 (EPP2) programme. Incentives and initiatives are provided to allow smaller local players to flourish, and the benchmark for these EPP2 companies is set against the International Association of Outsourcing Professionals (IAOP). Programmes that facilitate market expansion in terms of funding needs such as private equity and venture capitals, as well as to nurture the local companies with respect to growth, market expansion, market access, and the promotion of industry dialogue were formulated and implemented.
The GBS industry has been one of the core focuses in the economic development of Malaysia towards its transformation into a high-income, knowledge-based economy by 2020. Through various policies crafted, government incentives, modern infrastructure access, skilled talent pool and resources in ICT that includes hardware, software, and services, companies are guaranteed to receive support and encouragement to flourish in the sector. Based on the recent study conducted by the International Data Corporation (IDC), these are the key reasons why Malaysia has the potential to be the regional hub for consolidating Finance and Accounting operations. The talent pool and the number of shared services centres had created a conducive ecosystem that will ensure a consistent growth in terms of service value, as well as the maturity and capability of individuals delivering the services.