Malaysia moves up value chain

Malaysia's positioning as a hub for outsourcing and technology innovation is paying off.

Ranked the world's third most popular outsourcing location after India and China in A.T. Kearney's latest Global Services Location Index, Malaysia is developing into one of Southeast Asia's IT hotspots.

The country has successfully attracted foreign investments from global companies including British American Tobacco, Shell and BASF, which based their shared services in Malaysia supporting operations in other geographies.

Last year, several technology companies including Oracle, IBM and Indian IT services giant Satyam Computer Services, pumped fresh investments into Malaysia.

Indeed, Malaysia's IT job market has been strengthening, and results from ZDNet Asia's IT Salary Benchmark Survey offer a peek into this growth. According to the survey, which attracted 535 Malaysian respondents, the highest-paid IT professionals in Malaysia are those in IT management and project management roles.

The average annual salary for IT management professionals is 92,349 ringgit (US$25,162), 51 percent higher than the overall country average of 61,278 ringgit (US$16,696). The average salary for project management specialists is 67,115 ringgit (US$18,286), the second highest-paid group, followed by systems development.

Ratnesh Sharma, global head of talent management at Satyam Computer Services, told ZDNet Asia that the survey findings are not surprising.

Sharma explained: "There are various micro and macro factors which govern the salary levels in any given country. A country's macroeconomic environment is the primary determinant of its wage rates, not discounting the social, political and cultural characteristics.

"Malaysia is an emerging offshore IT destination in Asia-Pacific. Apart from factors such as inflation, exchange rates, GDP (gross domestic product) and economic growth, it is seeing higher salary levels in the IT space over the other industries--potentially due to industry specific reasons," he said. Sharma listed six key reasons:

• Supply demand equation of IT professionals: Salary growth accelerates if the resources are scarce for a specific competency;
• Global companies setting shop or expanding in the country: Propensity of global companies to pay higher salaries will result in increasing the overall salaries in the industry;
• Process or skill complexity: Industry average salaries tend to increase as complex processes/skills are globalized;
• Presence of captive operations: Captive units typically pay higher salaries than third-party service providers;
• Competitive scenario among, or between, pure offshore companies and global service providers in Malaysia: Trying to integrate the competitors' best resources results in high salary levels; and
• Attrition: High rates of attrition usually lead to rise in salaries. Also, Malaysia is seen and reported as a "candidate dry" country with high rates of attrition.

Rosy prospects
Although job prospects are good, particularly with the country as one of the world's top locations for offshoring, Malaysia faces a severe shortage of key IT skills, and there is still room for local professionals to grow.

Stella Thevarakam, regional HR director for ISS Consulting, which has operations in Malaysia, Thailand, Singapore, Indonesia and China, said: "Many large MNCs (multinational corporations) are venturing into Malaysia. The prospects are [better] for technical skills and less for managerial. The most sought-after technical skills are the new technology areas, such as Java and .Net skills.

"These people are wanted in large numbers especially by organizations that provide outsourcing services," Thevarakam said. "The older skills like mainframe and other specialized skills like CICS and DASD, are very rare and only needed by specific companies."

Noting that "SAP people move around too much", she said specialized skills--in SAP, for instance--are "still very much in demand, but only in the niche market".

She attributed the movement among SAP consultants to "a situation where organizations are losing their people to competitors and sourcing back from the competitors as well".

Robert Lim, vice president of corporate affairs for SMR Technologies, agreed that prospects "are good [for job seekers in Malaysia] with huge demand for IT services and products in 2007".

"However, compared to programmers from India and other countries, our programmers lack communication skills, the ability to code on their own, and a common sense in programming," he said. Malaysian IT workers, he added, are "too theoretical".

To maintain its competitive edge, Malaysia will have to build an IT workforce that is "intelligent and analytical", Lim said. IT professionals in the country could also "work on selling themselves better".

ZDNet Asia's IT Salary Benchmark Survey also showed that IT professionals with more than 10 years' working experience are highly valued and, therefore, command the highest salaries compared to those with fewer years of experience.

Offering a possible explanation for this, Lim said: "If one is looking for fresh graduates to train, there are plenty. But if you are looking for people with some experience, the quality and level of knowledge is poor because people job-hop too often, and even before acquiring enough knowledge and experience."

Ashran Dato Ghazi, CEO of Asiastream Group, also highlighted the shortage of key programming skills.

Ghazi said: "There is a current uptrend demand for [Microsoft's] .Net programmers and good IT project managers. The market could do better with more .Net programmers, while good IT project managers are scarce.

"I think our programmers are not well equipped and exposed to programming tasks while in school, hence it takes time for them to get into the job market," he explained. "With respect to IT project managers, there is a lack of training and exposure. It's the fundamentals that are lacking."

Key findings of ZDNet Asia's IT Salary Benchmark 2006 Survey
To gain insights into Asia's IT workforce and salary trends, ZDNet Asia conducted a survey on the Internet between Aug. 25 and Nov. 6, 2006. The survey drew 5,090 respondents from industry sectors such as government, healthcare, IT, services, telecommunications, legal and finance, across seven Asian countries: Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore and Thailand.

Spotlight: Malaysia
The survey drew 535 respondents across several IT positions, which are broadly categorized into IT management, project development and systems development.

Average annual IT salary in Malaysia Job function Average Annual Salary (Malaysian Ringgit) IT Management 92,349 Project development 67,115 Systems development 51,263 Other IT Professionals 50,195 Overall 61,278 Years of experience   Less than 5 years 36,638 5 to 10 years 63,350 More than 10 years 94,012 Overall 61,278 By industry   IT, Web, telecom 59,089 Government, education, healthcare 78,173 Legal and finance 58,730 Media, marketing, sales 70,305 Mfg, services, others 59,914 Overall 61,278 Type of Experience Technology skills % of Respondents Operating Systems 53 Desktops/Software 52 Servers/Networking 52 Application Development 50 System Administration 47 Database Management 35 Enterprise Applications 32 Infrastructure Management 31 IT Security 31 Web Development 30 IT Outsourcing 25 Data Center 24 Telco/Wireless/Mobile 20 Storage 19 Web Services 17 Quality Assurance Testing 14 Top 5 Certifications (40% of respondents hold at least 1 certification) Certification name % of Respondents with at least 1 certification 1. Microsoft Certified Professional (MCP) 24.9 2. Cisco Certified Network Associate (CCNA) 19.7 3. Microsoft Certified Systems Engineer (MCSE) 16.9 4. Project Management (PMP) 8.9 5. HP certification 8.5     Microsoft Certified System Administrator (MCSA) 8.5

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