GIC landscape in Malaysia and trends in offshore GIC market

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Background and Context
The global sourcing market continued to evolve and grow rapidly in 2012 to reach a size of ~US$127 billion. While buyers leveraged different sourcing models as per their objectives and requirements, the in-house model continued to be an integral component of this evolution
The success of the GIC model in India and Philippines led the buyers to explore other locations. While both these countries continue to lead GIC activity, companies also established GICs in other parts of Asia, Central & Eastern Europe, Latin America, and Africa
One of the strongest contenders for the Asian region is Malaysia, with significant GIC presence in the country. Due to its unique value proposition in terms of multi-lingual, multi-cultural capabilities, significant expertise, and supportive government bodies, the country is well established to support voice-based and non-voice work (mainly finance & accounting and application services). The market is also gradually expanding to offer high-end work such as analytics
In the first section of this edition of the biannual GIC report, we analyze the offshore GIC landscape in Malaysia in terms of market size, historical growth, future growth expectations, landscape of GICs, functions supported, and key cities witnessing activity.
The report also provides an update on the global offshore GIC landscape, along with a view of the recent trends (2011 to H1 2013) in the GIC landscape
Scope
This research leverages Everest Group’s proprietary GIC database, the industry’s most comprehensive database on GICs. The analysis is based on GICs providing offshore delivery of global services, and excludes shared service centers that serve domestic operations
• Data from the GIC database and Everest Group’s experience in the GIC segment have been supplemented adequately by interactions with GICs and service providers on key topical themes of the study
• This report is relevant to a broad set of stakeholders – buyers/parent organizations, service providers, GIC organizations, and industry influencers (investors, industry bodies, etc.)
Contents
This report provides an in-depth analysis of the GIC landscape and trends in Malaysia, covering market size and growth, distribution of GIC landscape, and comprehensive information on industry verticals. The report also covers a detailed analysis of the overall offshore GIC market and trends, besides providing detailed profiles of the GIC landscape in six key industry verticals – Banking, Financial Services, and Insurance (BFSI); energy and utilities; healthcare; Manufacturing, Distribution, and Retail (MDR); technology; and telecom. The study concludes with an analysis of the recent trends (2011 to H1 2013) within the GIC landscape.

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GIC landscape in Malaysia and trends in offshore GIC market

  1. 1. Topic: Global In-house Center (GIC) Landscape in Malaysia and Trends in Offshore GIC Market Global Sourcing (GS) Market Report: October 2013 – Preview Deck Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950
  2. 2. Our research offerings for global services Subscription information    1 The full report is included in the following subscription(s) – Global Sourcing (GS) Market Vista Global services tracking across functions, sourcing models, locations, and service providers – industry tracking reports also available BFSI1 information technology BFSI1 business process If you want to learn whether your organization has a subscription agreement or request information on pricing and subscription options, please contact us: – info@everestgrp.com – +1-214-451-3110 Procurement Healthcare information technology Human resources Information technology Recruitment process Cloud Vista Contact center Global sourcing Service provider intelligence PricePoint In addition to published research, a subscription may include analyst inquiry, data cuts, and other services Finance & accounting Transaction Intelligence Custom research capabilities  Benchmarking | Pricing, delivery model, skill portfolio  Peer analysis | Scope, sourcing models, locations  Locations | Cost, skills, sustainability, portfolio  Tracking services | Service providers, locations, risk  Other | Market intelligence, service provider capabilities, technologies, contract assessment Banking, financial services, and insurance Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 2
  3. 3. Background and scope of research Background of the research  The global sourcing market continues to evolve and grow rapidly in 2012 to reach a size of ~US$127 billion. While buyers leverage different sourcing models as per their objectives and requirements, the in-house model continues to be an integral component of this evolution  The success of the GIC model in India and Philippines led the buyers to explore other locations. While both these countries continue to lead GIC activity, companies also established GICs in other parts of Asia, Central and Eastern Europe, Latin America, and Africa  One of the strongest contenders for Asian region is Malaysia, with significant GIC presence in the country. Due to its unique value proposition in terms of multi-lingual, multi-cultural capabilities, significant expertise, and supportive government bodies, the country is well established to support voice-based and non-voice work (mainly finance & accounting and application services). The market is also gradually expanding to offer high-end work such as analytics The scope and methodology of this report include:  In the first section of this edition of the biannual GIC report, we analyze the offshore GIC landscape in Malaysia in terms of market size, historical growth, future growth expectations, landscape of GIC parents, functions supported, and key cities witnessing activity  The report also provides an update on the global offshore GIC landscape, along with a view of the recent trends (2011 to H1 2013) in the GIC landscape  This report is based on Everest Group’s proprietary GIC database that is updated quarterly with new set-up activity, expansion/contraction of existing GICs, divestures, and capability additions Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 3
  4. 4. Terminology | Global In-house Center (GIC) replacing “captive” What has changed Context    Historically, the term “captive” has referred to service delivery operations in lower cost geographies, which are owned and operated by the same company receiving the services (i.e., not third-party outsourcing) Although, the term has become widely used, it has a perceived negative tone and is not self-explanatory, causing confusion for those new to the global services space Furthermore, many organizations, for which captive is intended to describe, do not use the term themselves  Everest Group adopted “Global In-house Center” or “GIC” as the preferred term to replace “captive”  This will appear in all of our reports and content beginning in July 2012 Growing industry-wide shift Both NASSCOM (India) and BPAP (Philippines) are championing the change in terminology Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 4
  5. 5. Table of contents (page 1 of 2) Topic Page no. Background and scope 6 Summary of key messages 8 Section I: Focus geography: GIC landscape in Malaysia  Summary  Malaysia global services market  Malaysia GIC industry split by: – Size and scale – Parent revenue – Parent geography – Industry vertical – Functions supported – Locations  Deep-dive into key industry verticals 12 13 14 Section II: Overview of the GIC landscape  Summary  Global offshore services and GIC market: Size and growth  Distribution of the global offshore GIC landscape by: – Parent revenue – Parent geography – Industry vertical – Functions supported – Offshore delivery locations 31 32 33 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 16 19 20 21 22 23 25 36 37 38 39 41 5
  6. 6. Table of contents (page 2 of 2) Topic Page no. Section III: Deep-dive into key industry verticals  Banking, Financial Services, and Insurance (BFSI)  Energy and Utilities (E&U)  Healthcare  Manufacturing, Distribution, and Retail (MDR)  Technology  Telecom 44 46 49 52 55 58 61 Section IV: Recent trends in the GIC landscape (2011 to H1 2013)  Summary  Recent trends in GIC set-ups and divestitures  Recent trends in offshore GIC landscape (2011 to H1 2013) by: – Parent revenue – Parent geography – Industry verticals – Functions supported – Key GIC locations  Overview and list of offshore GIC divestitures (2011 to H1 2013) 64 65 66 Appendix  Recent offshore GIC set-ups (H2 2012 and H1 2013)  Glossary of key terms  GS research calendar  References 82 83 94 95 96 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 67 68 69 70 71 76 6
  7. 7. This research leverages Everest Group’s proprietary GIC database that tracks offshore GICs of leading companies Everest Group’s proprietary GIC database Unique characteristics Key dimensions tracked    Scale (FTE range)  Industry verticals Tracks GICs of leading firms (e.g., Forbes 2000 and Fortune 500 companies)  Functions offered (e.g., IT, BP, and ES/R&D) Parent geographies   Industry’s most comprehensive database of offshore GICs located across India, Rest of Asia, Europe, Latin America, and Africa   Parent size (revenue range)  Location of delivery centers Database covers more than 1,600 GICs Focus on GICs providing offshore delivery of global services – excludes shared services centers serving the domestic market Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 7
  8. 8. This report provides an in-depth analysis of the GIC landscape and trends in Malaysia Offshore GICs by headcount – range of FTEs H1 2013; Number of GICs Malaysian IT-BPO industry size US$ billion 100% = 2,001-5,000 1,001-2,000 500-1,000 2009 <500 2013 E Offshore GICs by parent geography H1 2013; Number of GICs Offshore GICs by functions H1 2013; Number of GICs 100% = N= RoW BP APAC U.S. IT UK ES/R&D RoE Source: Everest Group (2013) Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 8
  9. 9. The research also covers a detailed analysis of the GIC landscape and trends Number of leading offshore GICs xx xx xx Offshore GICs by industry vertical 2013; Number of GICs xx xx 100% = xx Others Energy & utilities Healthcare Technology Telecom BFSI 2008 2009 2010 2011 2012 Offshore GICs by delivery location 2013; Number of GICs MDR H1 2013 GIC activity | Market activity heatmap No major activity (<10 centers) Nascent location (10-50 centers) Emerging location (50-100 centers) 100% = Mature location (>100 centers) Middle East and Africa Russia Estonia Slovakia Latin America Lithuania Czech Republic Hungary Poland Ukraine Romania Serbia Morocco Europe India Turkey Israel Jordan Bulgaria Mexico Guatemala Costa Rica India Bahrain S.Korea China Egypt UAE Taiwan Hongkong Thailand Republic of Panama Colombia Philippines Kenya Sri Lanka Malaysia Peru Brazil Vietnam Singapore Mauritius Chile Uruguay Rest of Asia Source: South Africa Argentina Everest Group (2013) Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 9
  10. 10. The report analyzes the GIC market across six key industry verticals BFSI Energy and Utilities (E&U) Telecom Key industry verticals Technology Healthcare MDR Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 10
  11. 11. This study also provides an analysis of the recent trend (2011 to H1 2013) within the GIC landscape Number of offshore GIC divestures Offshore GICs by parent geography Percentage 100% = RoW APAC RoE UK U.S. Up to H1 2013 2011 2012 2011 H1 2013 2012 H1 2013 New GIC set-ups Offshore GICs by industry verticals Percentage Offshore GICs by functions Up to H1 2013; Percentage 100% = 100% = 2011; Percentage 2012; Percentage H1 2013; Percentage 100% = 100% = 100% = Others E&U Telecom Healthcare IT BFSI MDR ES/R&D Technology Up to H1 2013 2011 2012 H1 2013 BP New GIC set-ups Source: Everest Group (2013) Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 11
  12. 12. GS research calendar Published Topic Current Release date Global In-house Center (GIC) Landscape in Costa Rica and Trends in Offshore GIC Market April-2013 Driving Impact through Collaboration: Collaboration in the GIC-Parent, GIC-Vendor, and GIC-GIC Ecosystem April-2013 The Classic Sourcing Model Conundrum – Global In-house Center (GIC) vs. Third-party Provider May-2013 Delivering Value Beyond Savings in the GIC Model – A Survey of Organizations with GIC Operations June-2013 Two Sides, One Story – Value Beyond Savings from Global In-house Centers (GICs) July-2013 Outsourcing and Offshoring Trends in the Oil and Gas Sector September-2013 Global In-house Center (GIC) Landscape in Malaysia and Trends in Offshore GIC Market September-2013 De-mythifying” Location Concentration Risk: Realities Behind Common Myths of Location Concentration Risk Q4-2013 Global Locations Compass: Poland Q4-2013 Global Locations Compass – Mexico Q4-2013 Viewpoint (Hallmarks of mature GICs – Learnings to stay ahead) Q4-2013 Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 12
  13. 13. Appendix: Additional research recommendations The following documents are recommended for additional insight into the topic covered in this research. The recommended documents either provide additional details on the topic or complementary content that may be of interest 1. Global In-house Center (GIC) Landscape in Costa Rica and Trends in Offshore GIC Market (EGR-2013-2-R-0863); 2013. This report provides a deep-dive into the GIC landscape in Costa Rica. The research also provides an in-depth analysis of the overall offshore GIC landscape, focused coverage on key industry verticals, and insights into trends of the last three years (2010-2012) 2. Global Offshore Global In-house Center (GIC) Landscape and Trends: Focus Geography – Poland (EGR-2012-2-R-0747); 2012: This report analyzes the global offshore GIC landscape and key trends for the last 30 months (2010 – H1 2012). The report also provides a deep-dive analysis of the offshore GIC landscape in Poland covering market size and growth, distribution of GIC landscape, and indepth exploration of industry verticals 3. Global Offshore Captive Landscape and Trends: Focus Geography – The Philippines (EGR-2012-2-R-0661); 2012. This report analyzes the global offshore GIC landscape and key trends for the last three years (2009-2011). The report also provides a deep-dive analysis of the offshore GIC landscape in the Philippines, covering market size and growth and distribution of GIC landscape, and indepth exploration of industry verticals For more information on this and other research published by Everest Group, please contact us: Salil Dani, Practice Director: Anurag Srivastava, Practice Director: Ritika Dhingra, Knowledge Associate: salil.dani@everestgrp.com anurag.srivastava@everestgrp.com ritika.dhingra@everestgrp.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240 +1-214-451-3110 info@everestgrp.com Copyright © 2013, Everest Global, Inc. EGR-2013-2-PD-0950 Phone: E-mail: 13
  14. 14. At a glance  With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of the next generation of global services  Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches  Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories Dallas (Headquarters) info@everestgrp.com +1-214-451-3000 New York info@everestgrp.com +1-646-805-4000 Toronto canada@everestgrp.com +1-647-557-3475 London unitedkingdom@everestgrp.com +44-207-129-1318 Stay connected Websites www.everestgrp.com research.everestgrp.com Twitter @EverestGroup @Everest_Cloud Blogs Delhi india@everestgrp.com +91-124-284-1000 www.sherpasinblueshirts.com www.gainingaltitudeinthecloud.com

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