Global Services Epicentre: Greater KL’s Talent Drives $6.7B Market Surge

Global Services (GS) refers to a wide range of services on a global scale by a company, both within their organisations and to external clients. There are five types of GS hubs, namely:

Malaysia made its bones as a GS location by providing basic essential administrative functions, such as accounting and customer service. However, today, many GS centres in Malaysia have diversified their offerings to include more complex services, such as finance, IT, and engineering, aligned with Malaysia’s strategic investment aspiration to attract Foreign Direct Investment (FDI) that creates high-quality jobs and knowledge-technology intensive.

The level of complexity and types of talents needed differ based on the type of GS hub, as follows:

According to the GBS Malaysia Strategy 2022-2027, there are over 600 GBS companies in Malaysia and it is estimated that the Malaysian GBS sector will grow at a five-year compound annual growth rate (CAGR) of 6.2% to achieve US$6.7 billion by 2025.

The shift towards more tech-enabled services is supported by Government policies including the New Industrial Master Plan 2030 (NIMP 2030), National 4IR Policy, Malaysia Digital Economy Blueprint (MyDIGITAL), with overarching guidance by the MADANI Economy Framework, which focuses on boosting the economy and providing the people with better quality of life,

As of 4Q 2021, Malaysia boasted 261,077 digital talents – of which the majority were located in Greater KL – putting it on track of reaching 500,000 digital talents by 2025 as outlined in MyDIGITAL.

  • 3rd in Asia in English proficiency, according to the 2023 EF English Proficiency Index
  • 7th in Asia Pacific in the Digital Agility Index 2022
  • 1st in Emerging Southeast Asia for Foreign Investments, according to the 2022 Milken Institute Global Opportunity Index
  • 2nd in Southeast Asia and 26th globally in the Economist Intelligence Unit’s Business Environment Rankings 2023
  • 1st fastest median 5G speed in Southeast Asia, according to Ookla’s Speedtest Intelligence data in Q3 2023
  • 1st among the world’s global cities for expats, according to Preply’s Global Expat Index 2023
  • The Principal Hub tax incentives of up to 10% for corporates and up to 15% for select skilled foreign talents

Tax Incentives for Investors and C-Suite Employees

Malaysia’s Principal Hub incentive offers attractive income tax at a rate of 0%, 5% and 10% subject upon specific conditions. These include meeting minimum annual business expenditure and ensuring full-time employment opportunities for high-value roles. In Budget 2024, the incentives were enhanced into an outcome-based Global Services Hub tax incentive as follows:

In addition, Budget 2024 proposed a reduced income tax rate of 15% for three consecutive years to three non-citizen individuals in key/C-Suite positions, earning a minimum monthly salary of RM35,000. This incentive is applicable to new companies approved under the Global Services Hub tax incentive.

These incentives, together with Greater KL’s robust talent pool and strong digital and physical infrastructure, drew several high-tech and innovation-driven MNCs to set up GBS hubs in the city in 2023:

Demant’s first tech hub outside Europe embraces 4IR

In August 2023, Demant, a leading hearing healthcare and audio technology group listed on Nasdaq Copenhagen, launched its first technology hub outside Europe in Greater KL. Christian Daugbjerg, General Manager & Vice President, IT - Asia Pacific, said “Greater KL will be our biggest IT and Diagnostics hub outside of Europe, housing a significant portion of our global team of engineers and specialists who will lead in developing software solutions incorporating the latest technologies including AI.”

Cognizant’s regional innovation hub strengthens global delivery network

In May 2023, US IT consulting firm Cognizant opened its regional hub, spanning over 70,000 sq. ft. It houses the company’s first Innovation Experience Lab and Centres of Excellence in ASEAN, and 17 offshore development centres to design cutting-edge services and innovative solutions for offshore and in-market clients. From 32 employees in 2010, Cognizant now employs over 2,000 in Malaysia with plan to expand to 5,000 by 2026.

Zimmer Biomet opens APAC GBS Centre

In June 2023, US medtech leader Zimmer Biomet unveiled its new office and APAC GBS centre in Greater KL. Azlinda Ab Kasim, Associate Director, Global Business Services APAC, said the resilience of the city’s multilingual talent pool and established GBS market as key factors in choosing Greater KL. The centre complements Zimmer Biomet’s existing GBS Centre in Poland and Colombia.

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