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ICT Services Industry Outlook in Malaysia Stan Singh Macro Policy Shift: FDI Driven to Innovation Driven Economy Next Economic Major Thrust: New Transformation Endogenous Growth through New Transformation Policy Policy FDI Driven Growth Periods Towards High Income Services Sector Nation GNI Per Capita (USD$) 1970 2009 2010 GNI per capita: RM26,420 (USD8,256) Korea 260 21,530 2009 Household Income: RM4,025 (USD1,183) Malaysia 380 6,760 1995 GNI per capita: RM5,406 Until Mid 90’s 1995 Household Income: RM2,020 1980 GNI per capita: RM1,820 10th MP (2011-2015) USD12,139 Info-structure (ICT), science, R&D, knowledge capital, innovation skills, XY Generations, entrepreneurship and globalization 1980 Household Income: RM692 LOW INCOME – RESOURCE DRIVEN ECONOMY 2020 Target: USD21,834 Developed Economy Benchmark: USD14,816 Until Late 70’s Land, labour and low skills By 2020 GNI per capita Infrastructure, Capital, Factory, Technical Skills and Semi-skilled Workforce MIDDLE INCOME – FACTOR DRIVEN ECONOMY HIGH INCOME – INNOVATION DRIVEN ECONOMY Source: DOSM /10th Plan /PIKOM Process and Human Capital Strategy TRANSCENDING INTO HIGH VALUE AND INCOME CAPABILITY MATURITY MODEL INTEGRATION FRAMEWORK PEOPLE CAPABILITY MATURITY MODEL FRAMEWORK VOICE OF BUSINESS (VOB) VOICE OF CUSTOMER (VOC) VOICE OF EMPLOYEE (VOE) •Revenue •Growth •Profitability •Leadership • Governance • Performance • Quality • Cost • Cycle time • Reliability • Integrity • Transparent • Responsive • Accountability • Responsibility PROCESS STRATEGY HUMAN CAPITAL STRATEGY Human Capital Strategy: From Industrial Towards Knowledge Workers 1994 MSC 1970 E&E ICT ERA KNOWLEDGE/ INNOVATION BASE ECONOMY(IDE /KBE) 2011 IDE / KBE Innovative Digital Economy (IDE) Multimedia Super Corridor (MSC) KNOWLEDGE / INNOVATIVE WORK FORCE Electrical & Electronic (E&E) Free Trade Zone (FTZ) INFLEXION PHASE INDUSTRIAL ECONOMY RESOURCE BASED ECONOMY INDUSTRIAL WORK FORCE AGRICULTURAL WORK FORCE Economic Outlook Strong Economic Fundamentals 1. 2. 3. 4. 5. 6. 7. 8. 9. Strong domestic demand; Increased export earnings; Stable overnight lending rates; Stable public and private consumption ; Low inflation rates; Low unemployment rates; Stimulating ICT / ICTS growths; 60% inclined to Asian export earnings Post GE election stability Economic challenges 1. 2. 3. 4. 5. GDP 2012 : 5.2%; GDP 2013 : 5.5%, despite 4.1% in Q12013 Risk aversion by potential investors; Slack in ETP ; Reducing fiscal deficit; Fluctuating commodity based earnings; Capital flight arising from erratic foreign exchange fluctuations; 6. Poor quality workforce; 7. Over dependent upon unskilled foreign workers; 8. Political stability after GE13 Structural Shift towards ICT Services Year : 2000 Year : 2010 ICT Outlook Potential Growth Areas 1. Big data analytics – culling out business insights and intelligence 2. Cloud computing – even applicable to SME with reduced cost and maintenance; 3. Mobile devices – stimulates anytime and anywhere for consumerization of IT 4. Social media - advent of social business; ICT Challenges 1. Mega projects, corridor developments and transformation programmes attribute ICT Services growth Declining supply of graduates, not improved; 2. Quality of graduates meeting industry demands still remain a challenge; 3. Quality and competency standards – less than 1.5% CMMI & PCMM certified; 4. Still lack strong R&D, patenting and commercialization culture, despite Government incentives and facilities Share and Structure of ICT Services Outlook ICT Services Trade: Exports and Imports growing exponentially Transformation projects contribute significantly towards ICT Serivices VISION2020 One Malaysia Iskandar Malaysia East Coast Economic Region (ECER) Economic Transformation Programme (ETP) Northern Corridor Economic Region (NCER) Government Transformation Programme (GTP) Digital Transformation Programme (DTP) Sabah Development Corridor (SDC) Mega projects : Kajang – Sg. Buluh Mass Rapid Transit (MRT) Sarawak Renewable Energy (SCORE) Rural Transformation Programme (RTP) Political Transformation Pogramme (PTP) ICT Sector Projected to grow at 11% in 2013 Average monthly salary of ICT Professionals Salary increase in 2012: 8.7% from RM6240 to RM6784; Projected growth in 2013: 8.9% to RM7,387 Salary differential by job functions Those in IT Managerial category tend to earn much more than in engineering / technical lines; Senior IT Engineer net 46% higher salary than Junior IT Hot ICT Jobs 1. Hot ICT jobs still remain very much similar to recent years; however, predicted fast growing demand for big data analytics requiring inter-disciplinary skills on IT, numeracy, statistical and business intelligence skills; 2. Quality and process improvement skills also poised to fetch higher demand in the near future; 3. Applications like SAP, ERP may lose market share with similar, simplified and cheaper versions appearing in countries like China Regional benchmarking In comparison to Malaysia, USA pays 2.08 times ; Singapore pays 1.84 times higher compared to 2.26 time; Hong Kong Australia 1.90 times; Thailand, China and Vietnam paying better remuneration; By 2018 the salary gap is likely to leveled up among booming Asian economies – Singapore, HK, China and Vietnam Job sentiment index Job sentiment index still remains high, indeed got better when JECI moved up from 48.8 in 2012 to 49.1 in Q12013 Thank You