ICT Services Industry Outlook in Malaysia

Stan Singh

Next Economic Major Thrust: Endogenous Growth through New Transformation Policy

FDI Driven Growth Periods

New Transformation

Policy

Macro Policy Shift: FDI Driven to Innovation Driven Economy

HIGH INCOME – INNOVATION DRIVEN

ECONOMYLand, labour and low skills

Infrastructure, Capital, Factory, Technical Skills and Semi-skilled Workforce

Info-structure (ICT), science, R&D, knowledge capital, innovation skills, XY Generations, entrepreneurship and globalization

GNI Per Capita (USD$)

1970 2009

Korea 260 21,530

Malaysia 380 6,760

Source: DOSM /10th Plan /PIKOM

1995 GNI per capita:RM5,406

1995 Household Income:RM2,020

1980 GNI per capita:RM1,820

1980 Household Income:RM692

UntilMid 90’s

UntilLate 70’s

LOW INCOME – RESOURCE DRIVEN

ECONOMY

2020 Target:USD21,834

10th MP (2011-2015)USD12,139

Developed Economy

Benchmark:USD14,816

MIDDLE INCOME – FACTOR DRIVEN

ECONOMY

2010 GNI per capita:RM26,420 (USD8,256)

2009 Household Income:

RM4,025 (USD1,183)

By 2020 GNI per capita

Towards High Income Services Sector Nation

CAPABILITY MATURITY MODEL INTEGRATION FRAMEWORK

PEOPLE CAPABILITY MATURITY MODEL FRAMEWORK

•Revenue•Growth

•Profitability•Leadership

• Governance

VOICE OF CUSTOMER (VOC)

• Performance• Quality

• Cost• Cycle time• Reliability

VOICE OF BUSINESS (VOB)

• Integrity• Transparent• Responsive

• Accountability• Responsibility

VOICE OF EMPLOYEE (VOE)

PROCESS STRATEGY HUMAN CAPITAL STRATEGY

TRANSCENDING INTO HIGH VALUE AND INCOME

Process and Human Capital Strategy

1970 E&E

KNOWLEDGE / INNOVATIVE WORK FORCE

KN

OW

LE

DG

E/

INN

OV

AT

ION

BA

SE

E

CO

NO

MY

(IDE

/KB

E)

1994 MSC

2011IDE / KBE

ICT ERA INFLEXION PHASE

INDUSTRIAL ECONOMY

INDUSTRIAL WORK FORCE

Electrical & Electronic (E&E) Free Trade Zone

(FTZ)

Multimedia Super Corridor

(MSC)

Innovative Digital

Economy (IDE)

RESOURCE BASED ECONOMY

AGRICULTURAL WORK FORCE

Human Capital Strategy: From Industrial Towards Knowledge Workers

Economic Outlook

Strong Economic Fundamentals1.Strong domestic demand;2.Increased export earnings;3.Stable overnight lending rates;4.Stable public and private consumption ;5.Low inflation rates;6.Low unemployment rates;7.Stimulating ICT / ICTS growths;8. 60% inclined to Asian export earnings9. Post GE election stability

Economic challenges1.Risk aversion by potential investors;2.Slack in ETP ;3.Reducing fiscal deficit;4.Fluctuating commodity based earnings;5.Capital flight arising from erratic foreign exchange fluctuations; 6.Poor quality workforce;7.Over dependent upon unskilled foreign workers;8.Political stability after GE13

GDP 2012 : 5.2%; GDP 2013 : 5.5%, despite 4.1% in Q12013

Year : 2000 Year : 2010

Structural Shift towards ICT Services

ICT Outlook

Potential Growth Areas1.Big data analytics – culling out business insights and intelligence2.Cloud computing – even applicable to SME with reduced cost and maintenance;3.Mobile devices – stimulates anytime and anywhere for consumerization of IT4.Social media - advent of social business;

ICT Challenges1. Declining supply of graduates, not improved;2. Quality of graduates meeting industry demands still remain a challenge;3. Quality and competency standards – less than 1.5% CMMI & PCMM certified;4.Still lack strong R&D, patenting and commercialization culture, despite Government incentives and facilities

Mega projects, corridor developments and transformation programmes attribute ICT Services growth

Share and Structure of ICT Services Outlook

ICT Services Trade: Exports and Imports growing exponentially

Po

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cal

Tra

nsf

orm

atio

n P

og

ram

me

(PT

P) R

ural T

ransfo

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n P

rog

ramm

e (RT

P)

ICT Sector Projected to grow at 11% in 2013

One Malaysia

Economic Transformation

Programme (ETP)

Government Transformation

Programme (GTP)

DigitalTransformation

Programme (DTP)

Iskandar Malaysia

Northern Corridor

Economic Region (NCER)

East Coast Economic

Region (ECER)

Sabah Development

Corridor (SDC)

Sarawak Renewable

Energy (SCORE)

Mega projects : Kajang – Sg. Buluh

Mass Rapid Transit (MRT)

VISION2020

Transformation projects contribute significantly towards ICT Serivices

Average monthly salary of ICT Professionals

Salary increase in 2012: 8.7% from RM6240 to RM6784;Projected growth in 2013: 8.9% to RM7,387

Those in IT Managerial category tend to earn much more than in engineering / technical lines;Senior IT Engineer net 46% higher salary than Junior IT

Salary differential by job functions

Hot ICT Jobs

1. Hot ICT jobs still remain very much similar to recent years; however, predicted fast growing demand for big data analytics requiring inter-disciplinary skills on IT, numeracy, statistical and business intelligence skills;

2. Quality and process improvement skills also poised to fetch higher demand in the near future;

3. Applications like SAP, ERP may lose market share with similar, simplified and cheaper versions appearing in countries like China

In comparison to Malaysia, USA pays 2.08 times ; Singapore pays 1.84 times higher compared to 2.26 time; Hong Kong Australia 1.90 times;Thailand, China and Vietnam paying better remuneration;By 2018 the salary gap is likely to leveled up among booming Asian economies – Singapore, HK, China and Vietnam

Regional benchmarking

Job sentiment index

Job sentiment index still remains high, indeed got better when JECI moved up from 48.8 in 2012 to 49.1 in Q12013

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