Outsourcing guide: Malaysia

The Malaysian government aspires to build the country of 22 million people in the image of Singapore's exceptional technology success. It has invested US$10 billion in two high-tech parks — Cyberjaya and Putrajaya — as part of its Multimedia Super Corridor project to attract international business.

Motorola plans to move its 4-year-old Malaysian software development centre from Kuala Lumpur to the Cyberjaya park next year, now that the infrastructure is ready.

"So far, (Malaysia) has worked wonders for us," says S. Surya, managing director of Motorola's Malaysia software centre. The centre develops software for Motorola's wireless networks, as well as embedded applications for cell phones; it also does process consulting work for several Malaysian banks.

Surya says his team of software engineers has turned out to be world-class. Experienced software engineers in the country earn about $30,000 annually.

By 2011, local officials expect the high-tech corridor to be supporting a working population of approximately 50,000 and a resident population of more than 120,000. But the sluggish economy has slowed the country's technology momentum, and it continues to struggle with a small workforce.

"Malaysia is still an emerging player in the outsourcing space," says Partha Iyengar, a Gartner analyst in Pune, India. But the country is still forging ahead. Construction of the high-tech parks includes a state-of-the-art fiber-optic network, new roads, and new office and living spaces. The government is also considering a set of laws promoting e-commerce.

The critical shortage of skilled IT workers, however, remains the country's biggest concern. "The pool of capable programmers is small. They import a lot of talent from India and China," says Atul Vashistha, CEO of NeoIT , an offshore outsourcing advisory firm in San Ramon, California.

Surya says that Malaysian workers today are competent in English and well trained for data centre and business process outsourcing jobs, where "you don't need a top-notch computer scientist to do the job." But for cutting-edge software product development, the talent pool gets smaller.

To combat the problem, the Malaysian government has established "smart schools" that have the staff and equipment to train a large IT workforce.

Today, U.S.-based companies such as IBM have set up IT and shared services operations in the country, and Computer Sciences is active in outsourcing for local companies there. Electronic Data Systems and messaging systems vendor Tecnomen , based in Finland, have set up shop in Malaysia's Cyberjaya park. But there's room for many more.

Vashistha says he expects outsourcing prospects in Malaysia to improve by 2008. "They just have to market (the region) much better. It will grow as more people discover it as a high-tech manufacturing centre. With that will come more IT workers."

Collett is a freelance writer in Sterling, Virginia Contact her at stcollett@aol.com.

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