Joon Teoh (AGOS) on Malaysia’s leading ranking as a GBS hub

15 April 2021 3 min. read

Global management consulting firm Kearney has released the latest edition of its Global Business Services Location Index, ranking Malaysia as the world’s third most competitive market, behind just powerhouse markets India and China. Joon Teoh, founder of AGOS, reflects on Malaysia’s leading ranking.

The Global Business Services Location Index by Kearney ranks the competitiveness of cities as a location for hosting a global business centre.

“A global business centre (GBS) allows large multinational corporations or organisations to centralise their business operations and activities, such as finance, human resource, information technology and procurement in certain countries to provide shared services,” Joon Teoh, who leads Malaysia-based consultancy AGOS.

Joon Teoh, Agos

“By bundling services together, companies can benefit from specialisation, synergies in scale and standardisation, and better organise their activities from a delivery perspective.”

To rank cities, the researchers looked at 47 different metrics across four major categories: financial attractiveness, people skills and availability, business environment, and digital infrastructure.

Of the top 10 locations, 7 are based in Asia, with India in first place with a score of 7.09, followed by China (6.80) and Malaysia (6.22). “Among the multinationals that have established global business centres in Malaysia are Shell, AstraZeneca, British American Tobacco and BASF,” said Teoh.

Malaysia owes its popularity to a number of factors, said Teoh. In particular, the country scores well in the business environment factor, which builds on a framework of consistent investment by the government.

“The Malaysian government has always emphasised the development of the global business centre sector in the country, including underlining the importance of the sector in the 12th Malaysia Plan (12MP).”

In its strategy to differentiate itself from the much larger markets of India and China, “the Malaysian government is trying to place the sector in a value curve trajectory because it would be impossible for us to compete with China and India in terms of volume and talent.”

Another area where Malaysia punches above its weight is in digital infrastructure, including skills.

Against a backdrop of rapid digitisation, companies are increasingly digitising their operations, with global business centres at the forefront of these activities in the back-office environment. To succeed, global business centres need to be well positioned to adopt principles such as advanced analytics, robotic process automation, data science, and more.

“Being able to meet the requirements in line with the digital transformation is a key success factor for global business centres,” said Teoh, who together with the AGOS team has helped numerous multinationals with establishing such centres in Malaysia and South East Asia.

The firm Teoh founded in 2016, AGOS, specialises in the setup of finance shared services centres and global business services centres.

According to data from the government, multinationals spent RM46.1 billion on global business centre activities in Malaysia last year, accounting for the largest cut of foreign direct investments (FDI) in the country’s services sector.