Six hundred personnel at the Shell Information Technology International (SITI) in Cyberjaya are busy providing technical and other sophisticated IT services over the phone to Shell Group’s employees across the globe. What makes SITI Cyberjaya noteworthy is the fact that Kuala Lumpur ‘competitively beat’ eight other locations, including Singapore and Hong Kong, to play host to the oil giant’s global IT center.

Shell isn’t alone. HSBC, a London-based bank, has chosen Cyberjaya as one of five worldwide back-office data-processing centers (besides two each in China and India). And before the first half of 2004 is past, the HSBC data processing center there will be taking on an additional 2500 staff to service internal clients in the U.K., Australia, New Zealand and, later, Taiwan.

Shell and HSBC are only two of the many companies that have realized the benefits of “outsourcing” and “off-shoring” to the Multimedia Super Corridor, at the heart of which is Cyberjaya. World-class companies like Ericsson, Fujitsu, NTT, DHL, British-American Tobacco, Prudential, Standard Chartered Bank, EDS, IBM, Nokia, Western Union, Hewlett-Packard, Intel, Satyam, Unisys and BMW are among the long list of companies that have regional data-processing or customer-service centers in Malaysia, mostly within the MSC. These companies see Cyberjaya as an emerging regional outsourcing center.

Research & Development Centers
The MSC is also attracting technology of an advanced kind. Like Motorola’s Malaysia Software Center, which began operations in mid-1999. The Center’s domain of excellence includes software applications and network management solutions in 2G, 2.5G and 3G Wireless Communication Systems, and embedded test software applications for portable wireless devices as well as for automobiles.

Motorola (Malaysia) employs more than 250 software engineers, of which over 98 per cent are Malaysians. Managing Director S Surya says, “Fifty percent of the engineers we employ have had foreign education. Malaysian engineers graduated from countries like Australia, U.K, and even IITians from India have come to work here.” He adds that the employee turnover is less than 10 percent, which makes it a good proposition to set up R&D base in Malaysia.

Even Japan’s giant NTT is developing software and content for third-generation mobile phones out of its R&D center at Cyberjaya. “90 per cent of the 75 engineers at our development center are Malaysians. By doing product development here we get to the market faster,” says Hiromitsu Honda, President & CEO, NTT MSC.

Apart from R&D work, NTT also provides Internet services, especially to the large pool of Japanese manufacturing companies like Toyota that had already set up their operations in Malaysia.

Considering the economics of operating out of Malaysia, DHL Express has invested $52 million to set up its Asia Pacific Information Center in Cyberjaya. The Malaysian center serves as one of the three IT nerve centers in the DHL global network, along with London and San Francisco. The Malaysian center develops IT solutions to assist customers in handling their logistics needs and bringing better synergies to DHL’s operations in Asia.

Companies like Oracle, Sun Microsystems, Intel and Microsoft have also set up offices at MSC.

Driving Factors
What attracts companies to Malaysia, and the MSC in particular, is the labor costs. Various surveys have indicated that the average cost of employing a person for the ICT industry in Malaysia is a mere one-fifth of that in the United States.

Besides labor costs, companies like Shell have also considered factors such as political and economic stability, and language proficiency of the workforce, before setting up their operations. In fact Shell considered seven other locations to site its global IT service center. “However, what swung in Malaysia’s favor was the existence of the unique MSC. Through the MSC, the group infrastructure, support implementations and the IT mega-centers could access a world-class telecommunications infrastructure and services at competitive rates,” stated company officials during the launch of SITI.

“The cost of developing software in Malaysia is about five per cent of that in America,” says Tim Loving, founder of AccTrak21, a small software firm in Malaysia developing a range of accountancy software. In fact, a PWC analysis points out that the operating costs of companies in Malaysia are lower than in New Delhi or Mumbai.

Added to the cost benefits, the MSC pledges that the state-owned telecom provider will match telecom tariffs anywhere else in the region. It also offers zero corporate tax for a minimum of five years, generous R&D grants, and a guarantee that qualified expatriate staff will get working visas in a maximum of ten days.

“The quality of engineers available in Malaysia is very good. When we wanted to set up operations outside Japan, we found that Malaysia was the best market to offer our services within the ASEAN Region,” says Honda.

Other Incentives
Companies engaged in suitable high-tech services that set up within it are granted “MSC Status”, along with a lavish and coveted package of benefits. Dr Muhammad Ghazie Ismali, Senior Vice President of Multimedia Development Corporation, the government body that manages the development of the MSC, always goes an extra mile to attract companies to Malaysia. “If entrepreneurs setup BPO venture in Malaysia, we will help him get funding,” he says, “The aim is to create 60,000 high-value jobs in the shared services sector by the year 2008.”

In fact the Multimedia Development Corporation (MDC) and Malaysia Debt Ventures (MDV) teamed up in January this year to form the Multimedia Super Corridor (MSC) Shared Services Initiative. Incentives to companies investing in this area include pioneer status for 10 years, low-interest MDV loans, “competitive” telecommunications rates and immigration assistance for foreign knowledge workers.

There is another incentive that promises to have big companies practically thronging at the doorstep of the MDC. The Malaysian government has said that, if these companies recruit fresh graduates, it is ready to meet their salaries over the training period, for the first six months. This, combined with the other advantages, has already seen MDC attract over 800 companies.

With unbeatable incentives in place, Dr. Islami’s hope to create 60,000 jobs in the MSC by 2008 appears to be well on its way to fulfilment. A survey conducted earlier this year by Deloitte Consulting found that two million service jobs in the financial sector could be relocated from developed countries in Europe and America over the next five years. Malaysia has been identified as one of the likely beneficiaries of this shift.

Going Forward
As one lands in the Kuala Lumpur Airport and drives towards the world’s tallest twin towers—Petronas—the signs of Malaysia making quantum leaps into the Information Age are visible. The presence of global IT companies speaks of the resounding success of MSC. Similar to how IT took off in India, the initiative and support of the Malaysian government in developing the MSC as a hi-tech center is quite remarkable.

A corridor, it appears, with several doors invitingly ajar.