Malaysia: The next offshoring Mecca?

* Does Malaysia have what it takes to be an offshore outsourcing provider?

A reader friend has been e-mailing me regarding Malaysia as a great country for technical offshoring activities.

I love geography, but to be honest with you, my sense of where Malaysia is on the earth wasn't very keen. I knew it was an Asian country, but had no perspective of where it was in Asia. For those of you equally as geography challenged, here's a pretty good map: http://www.travel.com.hk/region/asiamap.htm. Oh, but I do remember that the (currently) world's tallest buildings are in Malaysia. The Petronas Towers are in Kuala Lumpur: http://www.geographia.com/malaysia/kualalumpur.html. Aren't those the same towers that James Bond and a female companion jumped out of?

I get a lot of e-mail like this. "You should look at South Shoeville-it's the next big thing in offshoring!" And to be honest, without solid information to go on, I don't get enthusiastic, especially with exotic places I'm only faintly aware of, like Malaysia. So I wrote my friend back and said, "It's great that you think this way. Can you send me data that proves your allegations?"

He was kind enough to send along this quote, which I'm sure you'll find quite fascinating. The quote is from an address by U.S. Ambassador Marie T. Huhtala in an AMCHAM Dateline publication on Malaysia's business climate:

"A Deloitte Consulting survey conducted earlier this year revealed that two million service jobs in the financial sector alone could be relocated from developed countries in the U.S. and Europe over the next five years, with Malaysia identified as one of the likely beneficiaries of this $250 billion shift.

"Malaysia is well positioned to utilize its educated multi-lingual work force to benefit from the global shift in services jobs. In addition to its central location in Southeast Asia, Malaysia's costs are relatively low and the country remains one of the most stable in the region. A number of foreign firms are already benefiting from lower cost alternatives by basing service call centers, back office operations and overseas headquarters in Malaysia."

So there are a couple of things to note in these very interesting paragraphs:

* Deloitte Consulting is a consulting company. And we all know that surveys can be trained to go pretty much anywhere you'd like them to - depending on the skill of your question crafters. What's the old saying? Sixty-nine percent of all statistics are made up on the fly? But, ask yourself - why would Deloitte lie about Malaysia? It doesn't have anything to gain, unless it's taking governmental kickbacks-and that's pretty nasty for business. Seems like this survey may be legitimate.

* Two MILLION jobs in the financial sector alone might leave the "developed countries" in the U.S. and Europe (are there any undeveloped U.S. countries?) to go to Malaysia and elsewhere - and along with them, $250 BILLION.

This truly is startling information. Those taking it seriously should think about the strategic implications of such a large shift. What kind of impact will that have on financial services workers in the U.S., U.K., France and elsewhere? Will Malaysia's infrastructure be able to handle such an onslaught? What's next after financial services? How will this affect Indian offshoring? What do the U.S. and European countries have to offer in return for a balance with Malaysia?

My friend also tells me Malaysia is "...politically stable and the country actively participates in most economic forums. That somehow proves the Malaysian government practices open door policy in its economic activities."

I'd be interested in hearing your thoughts about this fascinating subject. And if anyone from Malaysia is reading - I'd love to visit the Petronas Towers - spot me a ticket and a room?

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