ICT industry expects further impetus

The Star Online

Business Thursday August 31, 2006

PETALING JAYA: Malaysia's information and communications technology (ICT) industry has had a good run under the past two national budgets.

In addition, the first half of the year also saw the Ninth Malaysia Plan (9MP) and more recently, the Third Industrial Master Plan (IMP3).

While these initiatives are to further stimulate growth of Malaysia’s economy through areas such as agriculture, manufacturing and services, the Government has also called on these sectors to exploit the use of ICT in raising the bar on its products and competitiveness in the global market.

RAM Consultancy Services chief economist Dr Yeah Kim Leng said the ICT sector was currently enjoying plenty of incentives under the umbrella of the Multimedia Super Corridor (MSC).

Dr Yeah Kim Leng

He believes ICT initiatives under Budget 2007 would mostly tend towards regulatory policies and implementation.

“Given Malaysia's competitive advantage, the push for the ICT sector would be to attract foreign direct investments (FDI),” Yeah toldStarBiz. He added that the investments would likely be targeted at the shared services outsourcing (SSO) sector.

OSK Securities economist Sia Ket Ee said technology companies were already enjoying pioneer status while the SSO sector had seen the establishment of call centres and back-end support operations.

He reckons the Government would likely continue drawing investments into the MSC under Budget 2007.

Local industry players, however, believe that the upcoming budget would closely reflect the objectives of the 9MP.

Basis Bay Group chief executive officer Praba Thiagarajah hopes Budget 2007 will stimulate growth for the ICT and SSO industry, especially to international markets.

Praba Thiagarajah

He believes small and medium enterprises (SME) should be given more incentives and grants to increase their investments in e-commerce and ICT services, especially those related to SSO.

“Tax benefits and waivers could be extended to companies that outsource functions and services to local SSO and MSC organisations,” he said, adding that further incentives could be in the form of product and market development grants.

ISS Consulting (M) Sdn Bhd country manager Sanjay Nair believes that biotechnology and ICT entrepreneurs were likely recipients for added incentives under Budget 2007.

“The productivity, efficiency, income and wealth generating potential of the agricultural sector will be enhanced through the wider application of modern technology and ICT,” he said.

Sanjay pointing out that the Government was gearing up to transform the sector into a modern, dynamic and competitive one.

Nair anticipates that the Government may also nurture areas such as software development, digital content creation, information security and bio informatics under Budget 2007.

Industry leaders such as Intel Malaysia hoped the Government would accelerate the deployment of Worldwide Interoperability for Microwave Access (WiMAX) by approving the standards and reducing procedural challenges for telecommunications companies to deploy the technology.

Abdul Rahman

“WiMAX will complement the rollout of the national MyICMS886 strategy and help the Government meet its target of achieving broadband penetration of 15% of the population in 2010,” assembly and testing managing director K.C. Yoon said in a statement.

Microsoft Malaysia public sector director Abdul Rahman Abu Haniffa expects the Government to roll out additional policies and incentives that will encourage SMEs to embrace ICT as a strategy for operational efficiency.

He believes information technology (IT) professionals and developers need to harness IT to create competitive advantage and fuel business growth within their organisations.

IBM Malaysia managing director Voon Seng Chuan said the Government should leverage on the 9MP to further drive the acceptance and adoption of innovation for corporate Malaysia.

He added that collaboration could be a platform for innovation and the country could accelerate this by bringing in experts with transferable skills and experience not available in the country.

The future skill-sets expectations of IT graduates in Malaysia IT outsourcing industry

Abstract: The issue of IT outsourcing (ITO) impact on IT workforce has been at the forefront agenda of many discussions in many developed countries so much so that the concerns have been tense in that more IT jobs will be transferred to developing countries which provide IT outsourcing services. In addition, with the growth of IT outsourcing and emerging new outsourcing business models such as utility demand, application service provider, business process outsourcing, offshore outsourcing and many more servicing different industry vertical sectors increase the demand for multiple IT skills and capabilities of IT workforce. In this study, we review relevant literature, newspapers and non-academic articles, websites of companies, governments and non-governmental organisations and others. An outsourcing Malaysia (OM) CEO roundtable discussion was also held to hear the practitioners' views on the topic. Further to that, we sought in-depth insights from seven senior executive managements in service provider firms on the skill sets requirements of fresh IT graduates to fulfill the market needs of IT outsourcing in Malaysia. The four-member research team found that technical, soft and problem-solving skills are the main concerns raised by the key informants. This is in line with the literature review and also the present higher education policy concerns by the Malaysia government.

Introduction
An excerpt from Society for Information Management (SIM) [16] Report, 2006: “Paradigm shifts from rapidly changing technological and business environments dictate that IT professionals adjust their skills and capabilities to effectively support their organization’s mission. Global IT sourcing, the shift from IT services to business process services, pending baby-boomer retirements and declining IT enrollments in U.S. and European universities are prompting fundamental changes in the nature of IT skills and capabilities available to and desired by both vendor and client organizations. The resulting potential for a mismatch of supply and demand is a source of concern for business executives and academics alike.” The study reports of increased IT hiring and also of evolving needs for more business knowledge and project management skills in the US IT workforce. Experts predict that although many entry-level jobs are being moved offshore, there is a looming shortage of technical workers in the US [9] [11] [13].

Recent media reports on the frantic efforts by Malaysia to become the top shared services and outsourcing (SSO) hub in Asia has opened up the issue on IT workforce to complement this noble business move by the government. The global worldwide SSO market is expected to grow at a CAGR of 15 per cent over the next few years, reaching USD1.43 trillion by 2009 as compared to USD930 billion in 2006. “The outsourcing need is growing and we intend to fully leverage on our achievements to meet this need,” said Badlisham of Multimedia Development Corporation (MDec) Chief Executive Officer. He added that ICT services like SSO contributed MYR2.8 billion to the Malaysia Gross Domestic Product of MYR495.6 billion. David Wong, Outsourcing Malaysia and PIKOM chairman, cited that the local SSO industry is currently worth USD300 million growing at a CAGR of 30% year on year, compared with the current global IT outsourcing size of USD24 billion. In 2012, the Malaysian SSO industry is targeted to be worth USD2 billion providing 300,000 jobs.i

Multimedia development Corporation (MDec) is a government arm charging the MSC Malaysia flagship initiatives since 1994. "The MSC Malaysia Initiative was launched as a catalyst to the national ICT agenda and Multimedia Development Corporation (MDeC) was formed to drive the development of the MSC... ", said YAB Dato’ Seri Abdullah Bin Haji Ahmad Badawi, The Prime Minister of Malaysia on 10th MSC Malaysia Anniversary. There are seven flagships being developed under this initiative which includes Telehealth, eGovernment, MyKad and Smart Schools. Thus, MDec has been promoting SSO in different vertical sectors, such as finance, logistics, transportation, energy, technology, manufacturing and healthcare, either domestically or internationally. To ensure high standard of services and capabilities, 60 MSC-status companies, out of a total of 2600 in MSC directory, are from worldclass organizations. In addition, local companies having Capability Maturity Model (CMM) certificates level 2 at least are rising.

Due to high and rising demand for new breed of entry-level IT workforce supporting middle and higher management levels in ITO industry, the government has embarked on many drives and initiatives to enhance the skill-sets and capabilities of new IT graduates through the MDec’s Knowledge Development Institute’s (KDI) programmes for instance. “An ICT Development Institute will be established to increase the supply of K-Workers by providing the skill sets required by the ICT industry, especially shared services and outsourcing companies" said YAB Dato’ Seri Abdullah bin Haji Ahmad Badawi, The Prime Minister of Malaysia in Budget 2006 Speech.

In search for current and future skill sets required for these ITO vertical sectors, we aim to investigate in Malaysia context the following research question:
R1: What are the skill sets of IT graduates required by
the ITO industry in the different vertical sectors?
The study is exploratory-descriptive in nature over a period of two. This report presents the literature review and findings to answer the research question on skill-sets and capabilities of IT graduates.

NB: For more details about the study, please go to here.