Currently, IT outsourcing services in Malaysia have a greater share of the overall outsourcing market, followed by BPO services though knowledge services outsourcing, still in its nascent stage has a smaller share.

Factors that have given boost to the growth of the Malaysian outsourcing industry are Government support, domain knowledge and industry expertise in BFSI, oil & gas and logistics. Also, Malaysia’s multi-cultural and multi-lingual capability is attracting business from markets like China, Japan, South East Asia and the Middle East.

Malaysia has been recognized as one of the preferred destinations for outsourcing, however it faces some challenges. One of the major challenges for the Malaysian outsourcing industry is to overcome constraints with regards to scalability. One of the key concerns for the outsourcing industry in Malaysia is the need to move up the value chain to offer high value services as opposed to highly commoditized services in IT or BPO.

Finding its own niche will be critical for the Malaysian outsourcing industry to sustain its growth. For example, a majority of the local Malaysian service providers serve the Asian and the Middle East markets. Malaysian companies have started focussing on delivering business value to their clients through packaging of ITO, BPO and KPO.