S'pore, M'sia IT groups ink outsourcing pact

update Singapore's SITF and SBF sign outsourcing partnership with Malaysia's Pikom to boost business value of participating companies.

update SINGAPORE--Three trade associations from Singapore and Malaysia have announced an outsourcing collaboration pact to address the regional and global markets together.

Announced at a joint press briefing Thursday, the National ICT Association of Malaysia (Pikom), Singapore Infocomm Technology Federation (SITF) and Singapore Business Federation (SBF), said the new initiative aims to help boost the business value of participating companies to regional and global customers.

The program has garnered a group of 50 small and midsize businesses (SMBs) from both countries, according to executives at the briefing.

Pikom chairman David Wong, said the initiative aims to "matchmake" various SMBs from both countries to help them win larger contracts overseas, through the collaboration of their various competencies.

"We feel a good investment to make in these trying times is to establish partnerships with other outsourcing providers, be it locally or across borders.

"We don't see a lot of collaboration happening [in the industry] yet, so we have to have [such] platforms" to encourage networking, said Wong.

Charles Fan, SITF's sourcing chairman, said an additional opportunity participating SMBs may uncover is the possibility of near-shore expansions to lower operational cost.

Fan said a Singapore company could set up a branch in Malaysia's Klang Valley, for example, and enjoy the latter's tax incentives while still being close enough to rely on its back office operations in Singapore.

A company could place specific capabilities such as its contact center or monitoring facilities in a near-shore location, said Fan.

Bobby Varanasi, head, marketing and branding, Outsourcing Malaysia, said the initiative also helps preserve the value of the two countries' service offerings.

"We don't want to get caught up in a cost-chasing game. We don't want to be the cheapest of destinations. Today's service is tomorrow's commodity," said Varanasi.

He said SMBs should leverage their "high technology" and "high value" services. Unlike China and India, which can handle high volumes of bulk orders, "we need to present real high value to global customers", he noted.

According to Pikom, the outsourcing markets in Singapore and Malaysia are worth US$1 billion and US$350 million respectively, with 75 percent of each market dominated by global multinational customers.

A Gartner study published late last year ranked China and India as the global outsourcing leaders. The 30 top destinations, including countries in the Asia-Pacific region--Malaysia, Pakistan, the Philippines, Thailand and Vietnam--were also chosen for their attractive costs.

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