South East Asia - The Sleeping Outsourcinig Giant?

The 2009 Asia-Pacific Outsourcing Summit

Conference & Exposition

May 12-13, 2009Kuala Lumpur Convention Center

Kuala Lumpur, Malaysia

Produced by: Supported by: Hosted by: Host Partner:

The 2009 Asia-PacificOutsourcing Summit

Rob Cayzer, Director – Business and Market Development, MDeC Malaysia

Rob has worked in ICT, outsourcing, communications and digital media field for over

22 years specialising in economic development, marketing, strategy, MIS management to

software engineering.

He was creator and implementer of MSC Malaysia’s Shared Services and Outsourcing

(SSO) programme and founding co-chairman of Outsourcing Malaysia

Content1. Global Crisis and Sourcing

2. The Six Piston Engine

3. Playground for Giants

4. Question Time: Demand vs Supply

5. Job Migration vs Job Creation

6. Space for Local Players?

7. SEA: A market for demand or supply?

8. Call to Action

Global Crisis and Sourcing


Outsourcing Players are outperforming the market


CSC, IBM: c.200% market performance NASSOM projects creation of 200,000 jobs this year


Outsourcing outperforming most technology players


Google, an exception

The V6 Engine

• GDP: USD 4,200 bil• Market*: USD 250 bil

• GDP: USD 1,300 bil• Market: USD 13 bil• Supply: 130 mil ppl


• GDP: 500 bil• Market: USD 10

bil• Population: 260

mii


• GDP: USD 773 bil• Market: USD 20 bil

*Outsourcing Market est

South East Asia

Similar GDP as India

Similar GDP / capita

as China

Similar population as

Latin America

Multiple Growth Pistons

Resurgentdevelopment

since 90’s

MIPS: 380mil Mainland:

220mil

Indonesia: “Illinois” of SEAResurgent

developmentsince 90’s

1/3 of South East Asia’s Population

Key cities:• Jakarta·Surabaya

• Bali·Bandung

250 mil people

Attracting investment from SEA players

Reinforced democratic

process

IndonesiaJakartaPopulation: 23 milIndustries: Finance, Manuf, Energy, GovEducation: 250 IHLs, 500,000 uni grads paIHL medium is English Graduate Salary: USD 3,000 pa

Surabaya: Port CityPopulation: 7 milIndustries: Transportation, DistributionEducation: 250 IHLs, 200,000 uni grads paGraduate Salary: USD 2,000 pa

IndonesiaBandung: Education cityPopulation: 7 mil (fastest growing city)Industries: Tourism, Edu, Creative, TechEducation: 16+ Unis, 50 IHLs, 250k gradsGraduate Salary: USD 2,000 pa

Medan: Cosmopolitan CityPopulation: 3 mil, multi-ethnicIndustries: Petro-gas, AgricultureEducation: 80 IHLsGraduate Salary: USD 2,000 pa

Malaysia: “Texas” of SEAResurgent

developmentsince 90’s

Strong ICT consumers

and producer

Key cities:• Klang Valley ·Penang• Johor25 mil people

Cross-border investments

into SEA

Strong financial

fundamentals

MalaysiaKlang Valley: Truly AsiaPopulation: 7 mil, Asian culture melting potIndustries: Manuf, Energy, Tech, Fin, GovEducation: 250 IHLs, 100,000+ uni grad paGraduate Salary: USD 6,600 paMajority of demand and supply of services

Penang: Technology HubPopulation: 1.5 milIndustries: Manuf, Tech, DistributionEducation: 30 IHLs, USM country’s largestGraduate Salary: USD 4,000 pa

MalaysiaJohor: ala PhiladelphiaPopulation: 3.5 milIndustries: Ag, Manuf, Tourism, Logistics Education: 10+ IHLs, to be joined by international standard Unis from US / EuGraduate Salary: USD 4,000 pa

Emerging: Finance, Media, Health, Edu

Singapore: “NY” of SEAA fully

developed global City

Cross-border investments

into SEA

4.5 mil people

Strong regional player

Strong ICT consumers

and producer

SingaporeIndustries: Manuf, Finance, LogisticsEducation: 150+ IHLs, 30,000+ uni grad paGraduate Salary: USD 16,000 pa

Home (HQ) to many MNCs and capital intensive, high-technology industry

Well-known investment destination

ThailandStrategic hub for mainland

Asia

Large domestic market

Competitive capital

intensive industries

Key cities:• Bangkok

BangkokPopulation: 12+ mil, 44% of national GDPIndustries: Tourism, Manuf, FinanceEducation: 100+ IHLs, 350,000 grad paGraduate Salary: USD 6,000 paGDP/capital: USD 20,000

Over 1,700 MNCs located in Bangkok“Business as usual”

Healthy economic outlook

Philippines: The other LA

Robust democracy

Significant consumer

market

Strong Education

foundations

Key cities:• ManilaCebu96 mil people

PhilippinesMetro Manila:Population: 20 milIndustries: Electronics, Outsource, MiningEducation: 550 IHLs, 350,000+ uni grad paGraduate Salary: USD 4,000 pa

Cebu: The Sea PortPopulation: 3 mil, fastest growing cityIndustries: Manuf, OutsourcingEducation: 40 IHLsGraduate Salary: USD 2,000 pa

Strong competitive

spirit

Vietnam: a Mini-China

FDI lead growth

Centrally organised

Room for further growth

Key cities:• Ho Chi Min Hanoi84 mil people

VietnamHo Chi Min: Commercial capitalPopulation: 10 mil, 20% of national GDP, some chinese speakersIndustries: Manuf, 66% from FDI, TourismEducation: 80 IHLs, 100,000+ uni grad paGraduate Salary: USD 1,200 pa

Hanoi: Centre of CulturePopulation: 3 mil, highest HDI in VietnamIndustries: similar to Ho Chi MinEducation: 2/3 of scientistsGraduate Salary: USD 1,500 pa

SEA: “Playground” for Giants• Traditional supply centre for multinationals in

traditional sectors• Late 1990’s: Shared services and outsourcing

growth centres from MNCs• Early 2000s: Some landmark outsourcing deals

inked by outsourcing players• Late 2000s: Secondary growth from large

outsourcing players

The future: SEA as demand or supply base?

Question

Is offshoring and outsourcing still a major

global economic driver for job creation?

Question: Demand vs Supply

2005 assumption

IT-BPO Analysis 2009• “Access to talent is likely to become

more decisive as workforce demographics indicate a shortfall in the long-term, in all major developed countries”

• Infosys: minimal growth for the next 18 months, at least

• Resilient markets: Healthcare, BRIC

Job Migration vs Job Creation • Job creation: Maturing states

• Job migration: More matured states

Room for Growth forDemand and Supply

Space for SEA Players?• American, Indian firms lead globally• Malaysia players come a distant third• Philippines, as it is for rest of SEA, still

largely an MNC base

• Growth strategy:consolidate demand or supply

Top Demand Consolidators

SEA: A Service Consumer

SEA is:• net service importer• Major services consumer

SEA needs:• Competitive service providers for their market

SEA: A Service Supplier• Countries across SEA produces:

– High levels and high quantities of human capital

– Cost competitive– Indigenously able to serve 80% of the global

population• SEA needs: to enable “MODE-4” for high-

yield outsourcing talent

• Shared Services and Outsourcing enables enterprises to rapidly become competitive

Benchmark and adopt competitive shared services and outsourcing.Consider a Chief Sourcing Officer

Call to Action #1

Call to Action #2• SEA has talent, modern societies in the

cusp of services delivery transformation

Go to the Next Level via COP certificationand accelerate the transformation

Call to Action #3• South East Asia Proposition is Powerful.

But the Brand is not (YET)

Fly the Flag and complete the “V6 Engine”