What is Global Business Services Malaysia?
Global Business Services (GBS) in Malaysia refers to centralizing and consolidating a company’s non-core business functions, such as finance, accounting, human resources, and IT, into a shared services center. This allows companies to improve efficiency, reduce costs, and gain access to a skilled workforce.
Malaysia is rapidly emerging as a preferred location for companies looking to set up their Global Business Services (GBS) centers. There are more than 600 GBS firms in Malaysia, with more than 250,000 staff employed. Malaysia has been ranked number three in terms of GBS position worldwide, with total revenue of over USD8.1 billion per annum (Businesstoday, 2022).
Why is global business services important?
Global Business Services (GBS) is an essential concept for companies looking to improve efficiency, reduce costs, and gain access to a skilled workforce.
Efficiency:
By centralizing and consolidating non-core business functions into a shared services center, companies can streamline their operations and improve efficiency. This allows them to focus on their core competencies and better serve their customers.
Cost-effectiveness:
GBS allows companies to reduce costs by eliminating duplicated efforts and leveraging economies of scale. This can be achieved by standardizing processes, automating tasks, and outsourcing non-core activities to specialized providers.
Access to the skilled workforce:
GBS centers typically require a large number of skilled and educated employees, such as finance, accounting, human resources and IT professionals. Establishing a GBS center in a location with a large pool of skilled and educated workers allows companies to access a wide range of highly qualified employees, which can be critical for the success of their GBS operations.
Globalization:
GBS allows companies to operate globally and benefit from the global economy’s opportunities and challenges. GBS centers can provide companies with a competitive advantage in the global market by providing various services, such as finance, accounting, human resources and IT, to multiple countries and regions.
Innovation:
GBS centers can be vital in driving a company’s creation. They can provide an environment where employees can share best practices, learn new skills, and develop new products and services.
Overall, GBS is a strategic approach that allows companies to improve efficiency, reduce costs, gain access to a skilled workforce, operate globally, and innovate.
Why is Malaysia the preferred location for GBS?
Multicultural, multilingual and digitally skilled talent
One of the main reasons why Malaysia is an attractive location for GBS is its multicultural, multilingual, and digitally skilled talent. Malaysia has a large pool of skilled and educated workers, many of whom speak English, making it easy for companies to find employees who can communicate effectively with their global teams. Additionally, the multicultural and multilingual nature of the workforce in Malaysia allows companies to easily tap into different markets and cultures, making it an ideal location for companies looking to expand their operations in the region.
Competitive location especially due to cost-effectiveness
Another critical advantage of Malaysia as a location for GBS is its competitive cost-effectiveness. Operating costs in Malaysia are relatively low compared to other countries in the region, making it an attractive location for companies looking to reduce their expenses. This cost-effectiveness is particularly beneficial for companies looking to set up shared services centers, as it allows them to centralize and consolidate their non-core business functions while maintaining a high-efficiency level.
Mature technology infrastructure
In addition to its cost-effectiveness, Malaysia has a mature technology infrastructure, enabling companies to operate efficiently. The country’s well-developed transportation, telecommunications, and energy infrastructure allow companies to connect easily with their global teams and customers. This mature technology infrastructure is particularly beneficial for companies looking to set up digital operations, such as digital marketing, e-commerce, and data analytics.
Geographical stability
Geographical stability is another key advantage of Malaysia as a location for GBS. The country’s stable political and economic climate makes it an attractive location for companies looking to set up long-term operations. Also, Malaysia’s strategic location in Southeast Asia makes it an ideal hub for companies looking to expand their regional operations. Malaysia is well-connected to major markets in Asia, making it a convenient location for companies looking to expand their operations in the region.
Malaysia has implemented a number of policies and initiatives to attract foreign direct investment (FDI) in its Global Business Services (GBS) industry.
Key policies and initiatives to attract foreign direct investment (FDI) include:
Tax incentives:
The government of Malaysia offers tax incentives to companies setting up GBS centers in the country, such as Pioneer Status and Investment Tax Allowance, which can reduce a company’s tax liability.
Pioneer Status:
This allows companies to claim a 100% tax exemption on their statutory income for up to five years.
Investment Tax Allowance:
This allows companies to claim a 100% tax allowance on their capital expenditure for up to ten years.
Special Economic Zones:
The government of Malaysia has established special economic zones, such as Iskandar Malaysia, specifically designed to attract foreign investment and provide a conducive environment for companies to establish their GBS centers.
Soft loans:
The government of Malaysia provides soft loans from government-linked financial institutions to finance the setting up and operation of GBS centers. These loans are typically offered at a lower interest rate than commercial loans and have more flexible repayment terms.
These soft loans provide financial assistance to tiny and medium-sized enterprises to help them establish and expand their businesses in Malaysia.
Grants:
The government of Malaysia also provides grants for the training and development of employees and for the purchase of equipment and infrastructure.
These grants are typically provided to support companies in research and development, technology transfer, and innovation.
The grants are provided in the form of cash incentives. They are intended to help companies offset the costs of implementing new technologies and improving the productivity and competitiveness of their operations. Pro-business environment: Malaysia has a pro-business environment with a stable political and economic climate conducive to foreign investment.
Pro-business environment:
Malaysia has a pro-business environment with a stable political and economic climate, which is conducive to foreign investment.
Developed infrastructure:
Malaysia has a well-developed transportation, telecommunications, and energy infrastructure, which enables companies to operate efficiently.
Government agencies and initiatives:
Various government-led agencies and initiatives, such as the Shared Services and Outsourcing Network (SSON), provide support and resources to companies looking to set up GBS centers in Malaysia.
Conclusion
The government of Malaysia has established various agencies and initiatives to support the growth of the GBS industry in the country, such as the Shared Services and Outsourcing Network (SSON), which provides a platform for companies to connect with potential partners and service providers. Additionally, the government has established special economic zones, such as the Iskandar Malaysia, specifically designed to attract foreign investment and provide a conducive environment for companies to establish their GBS centers.
All these factors make Malaysia an ideal choice for companies looking to set up their GBS centers.
The GBS industry in Malaysia has grown significantly in recent years there are more than 600 GBS firms in Malaysia with more than 250,000 staff employed (Businesstoday2022). According to GBS Malaysia, the Malaysian global business services industry’s revenue is expected to hit US$6.7 billion by 2025.
GBS in Malaysia provides a conducive environment for companies to establish and expand their operations, IQI Global as a global real estate company has taken advantage of this environment to set up its business in Malaysia, and as a result, it is able to provide its clients with the best possible service and support as a real estate negotiator.
