When i2M Ventures spun off from Khazanah Nasional, the Malaysian government’s strategic investment fund, it was given a simple objective: create a global business services (GBS) hub in Iskandar Malaysia, the economic growth corridor in southern Johor. The man given the mandate to make this a reality was Zulfiqar Zainuddin, the subsidiary’s managing director.
Iskandar Malaysia, which encompasses an area of 2,217sq km, is part of the Malaysian government’s transformation agenda to develop a world-class metropolis in southern Johor, with Khazanah a key player in its development.
The scale of the challenge was enormous for the fledgling team at i2M. Johor had no previous track record in either GBS or shared services and outsourcing (SSO), and the location was a vast stretch of undeveloped land.
‘At that time, it was just trees and nothing else,’ Zulfiqar says. ‘We had to take four-wheel drive vehicles and even a helicopter to survey the area!’
Khazanah recruited Zulfiqar in 2010 to head its business services unit and tasked him with developing its GBS project in Iskandar Puteri, one of five flagship zones of Iskandar Malaysia. This unit became Khazanah subsidiary i2M in 2013.
‘Malaysia has been blessed with talent, especially in the areas of finance and accounting and information technology’
Despite the challenges of creating a GBS hub in a greenfield location, Zulfiqar was unfazed. ‘It required us to understand the unique challenges and things we needed to do,’ he explains.
Eight years on, the results are impressive, with 19 companies involved in GBS activities now operating in Iskandar Puteri. These cover a range of services including customer and technical support, finance and accounting, tax audit, advisory, corporate services, software development and artificial intelligence. ‘The latest ones include companies involved in mobile games development, and block chain software development,’ says Zulfiqar.
Of these, he says the two biggest business segments are finance and accounting and information technology, (IT) with each accounting for 40% of activity.
A major coup for i2M has been the arrival of KPMG and EY. ‘KPMG has already commenced its tax, audit and advisory activities there, while EY is expected to start in October,’ Zulfiqar says.
In total, resident companies have committed investments of RM2.4bn over a five-year period. ‘When we launched the programme in 2016, we set a target of creating 14,000 jobs within the GBS industry over the next five years. Currently, about 5,260 jobs have been committed by these companies,’ Zulfiqar explains.
Malaysia is consistently ranked as the world’s third most attractive SSO destination, after India and China, by global management consulting fim AT Kearney. The country is already home to hundreds of SSO companies, including both major local players and multinational corporations, located in Cyberjaya, Kuala Lumpur and Penang.
The country’s attractiveness as a GBS location is, Zulfiqar says, due to its very competitive cost structure, business-friendly environment and availability of the right talent and skillsets.
‘Malaysia has been blessed with talent, especially in the areas of finance and accounting and information technology,’ he says. ‘They were not organically developed for the GBS industry but today they serve a very important purpose in filling up the necessary industry knowledge required to service GBS activities worldwide.’
In addition to its low-cost structure, available talent and pro-business environment, Johor has, Zulfiqar says, strategic advantage over Malaysia’s other GBS locations due to its close proximity to Singapore, a major financial and business centre in the region. In recent years many companies in Singapore – especially multinationals – have been under growing cost pressure to move some of their back-office operations outside the island state.
‘Previously the viable option for them was to move to Kuala Lumpur or other locations like Manila or India to save costs,’ Zulfiqar says. ‘Now, they can operate from Iskandar Puteri, which is about 45 minutes’ drive from downtown Singapore.’
Zulfiqar reveals that several Malaysian and international companies servicing Singapore clients have set up their GBS operations in Iskandar Puteri, and he expects this number to grow.
To transform Iskandar Malaysia into a GBS hub, i2M recognises it is imperative to not only attract the right talent but also develop a steady flow into the industry. In Johor, the GBS sector is new to the workforce, so there is a need to educate them on what these jobs entail and the potential rewards available. It also needs to develop the necessary human capital to take up the thousands of GBS-related jobs that will be created in the coming years.
‘We are seeking to address three core components: talent attraction, talent development and talent retention,’ says Zulfiqar.
In the area of talent development, i2M has sought out partnerships with local institutions of higher learning and professional bodies such as ACCA under its GBS Iskandar Campus Connect programme.
‘This addresses the gap that GBS companies often tell us about, which is that university students need to undergo a certain level of industry exposure to make them ready for the workforce,’ Zulfiqar explains.
Under the programme, companies specify the kinds of skillsets required and i2M will identify a partner university to undertake such training. ‘Typically, the university will select 40 to 50 final-year students to undergo industry training – both classroom and on-the-job,’ Zulfiqar says. ‘Successful candidates will be offered jobs or placements in the organisation that initiated the training programme.’
In addition, in late 2017, i2M and ACCA sealed a strategic partnership to create a ready pool of GBS-skilled talents among final-year university students and to promote Iskandar Puteri as a GBS hub. This involves a sponsorship of up to 200 ACCA GBS Diploma students by i2M, and is targeted at final-year finance and accounting students in local universities within Iskandar Malaysia. The course will entail one month of lectures and two months of on-the-job training with the companies under the programme.
‘At the end of the course, they will get a certification from ACCA and successful candidates will be offered employment with these companies,’ says Zulfiqar, who expects to see the first graduates coming through later this year.
i2M selected ACCA as a strategic partner thanks to its established track record in promoting GBS. ACCA is, Zulfiqar says, one of the few accountancy bodies to recognise GBS’s potential for career development. ACCA has invested in extensive research and insight programmes, while its GBS qualifications – the certificate, diploma and advanced diploma – developed in consultation with more than 50 major employers across 15 countries, are specifically tailored for the sector and the first dedicated to finance and accounting.
Given that finance and accounting is one of the key activities of GBS companies in Iskandar Puteri, Zulfiqar believes that ACCA will continue to play a vital role in addressing demand. ‘One of the things we managed to leverage on is ACCA’s experience in terms of providing a certain level of understanding within the GBS industry for finance and accounting talent,’ he says.
‘For example, talent may come from the banking and insurance industry but they often don’t understand what GBS is about. ACCA plays that bridging role in helping them understand the GBS industry, its potential and the kind of skillsets needed. That’s why we have a very strong partnership with ACCA.
‘ACCA also helps us understand what is going on within the GBS industry and what kind of jobs we should be targeting in terms of the availability of talent within Malaysia and the region.’