A Burgeoning Market
The shared services market in Malaysia has continued the steady growth it first experienced around 2000 and Malaysia has, for the last eight years, been the third most popular SSC destination outside of China and India, according to AT Kearney Offshore Location Attractiveness Index. Now with around 221 SSCs, investments continue to pour in, encouraged by the country’s advantages – namely language skills, location, workforce capabilities and cost effectiveness. There is also strong government support; the creation of the Multimedia Super Corridor (MSC) by the Malaysia Digital Economy Corporation (MDeC) was a KPI under Vision 2020, while the creation of Science, Technology, Engineering and Mathematics (STEM) centres has become a key driver for TN50.
Global Blue Chips
Malaysia has successfully attracted SSCs for banking, financial services, insurance, energy and transport and logistics companies such as HSBC, Standard Chartered, ExxonMobil, GSK, AIA Group, Fonterra Co-operative Group, Hitachi Systems and Sunway Technology. IBM has invested heavily in Malaysia; the firm’s Global Delivery Centre in Cyberjaya provides IT services round-the-clock to its clients all over the world involved in industries including financial services, healthcare, retail, real estate and technology. BP operates its accounting and finance support activities while Hewlett Packard and Dell provide their Global IT Services from the peninsular.
Rising High Value Services
According to Barbara Hodge of SSON, the market is still predominantly driven by transactional processes, with only 5% of SSCs offering high value processes alone (treasury, R&D, analytics, human capital management, etc). However, nearly a third of centres offer a mixture of both.
Just this year, AXA insurance announced it is setting up its IT hub in Malaysia, creating around 200 jobs. This will later stand as a central hub of actuarial expertise, serving as a centre of excellence in technical subjects including actuarial product pricing and valuation; providing guidance to its Asia entities on improvements to processes and methodologies.
The Value in SSO Experience
With so many firms operating SSCs out of Malaysia, there’s no shortage of positions in this sector (especially within the Klang Valley and Penang). But until recently, SSCs had something of an image problem when it came to careers. If we look at finance as a case study, there has been a tendency for the ‘retained’ commercial part of firms to view the shared service function as transactional. CFOs, for example, have traditionally been those ‘good with the numbers’ as opposed to those ‘sorting out the organisation’s back end’. However, this is changing.
A survey conducted by the ACCA last year, looking at whether FSSOs were an ‘opportunity or an end game’, found the same opportunity for enhanced finance skills development in shared services as in other parts of finance. But also, broader business, and particularly soft skills (influencing, communicating, change management and a keen sense of the customer) are of paramount importance – and indeed can only be honed through time spent in a consolidated finance function.
Separately, finance leaders on the ACCA finance transformation advisory board concurred that the adoption of shared service and outsourcing models has completely changed finance career trajectories. With over 80% of the Fortune 500 consolidating transactional finance processes in SSCs, the traditional vertical finance operations model has been dismantled.
Key Skills for Senior Roles
If one considers senior finance roles as doubled-sided – one focused on strategy, investor relations, the other on operational leadership with an internal focus - then time spent in shared services really benefits the latter half of the role, learning to lead and motivate people and run operations effectively. Shared services also tend to promote quickly on a meritocratic on-the-job basis (rather than academic background) and the senior SSO positions, by their nature, provide direct access to the firm’s C-suite and the network of geographically dispersed leaders.
As Lexmark’s Budapest Competence Centre MD & GM, Peter Csucska, recently commented online, “It is great to literally tour the world during the morning coffee: one can speak to a Hungarian, a Brazilian, a Croatian and a French person well within the first 15 minutes of your day, then get a call from your Swiss boss, and attend a virtual meeting with American and Filipino colleagues”
So perhaps not all your time should be spent in shared services, but as time progresses, it appears that some time spent in SSCs is becoming essential.