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Study conducted by Canadian-based global ICT research and analyst
firm XMG has shown strong indicators that the ASEAN countries mainly
comprised of Malaysia, Singapore, the Philippines, Indonesia,
Thailand and Vietnam has the potential to be a major contender to
India and China for its share of the
global offshore and outsourcing market. The comprehensive research,
to mark the ASEAN's 40th anniversary since its founding in 1967,
reviews ASEAN as a region state to provide offshoring and
outsourcing service to the global market.
The ASEAN (Association of South-East Asian
Nations) was established to accelerate economic growth, social
progress and cultural development among the ten member countries.
Attainment of this goal is pursued by establishing ASEAN as a single
market and production base, turning the diversity that characterizes
the region into opportunities for business complementation and
making the ASEAN a more dynamic and stronger segment of the global
supply chain. However, according to XMG founder and chief analyst
Lauro Vives, "The ASEAN member countries have mostly tried to
out-compete each other in the global marketplace." Vives adds,
"Intra-ASEAN trade still dwarfs that of trade with non-ASEAN
countries at a ratio of almost 1 to 3indicating that most ASEAN
member countries are more inclined to actively compete with their
neighbors for a slice of the global market".
XMG research showed that there are subtle, but
substantial, differences in ASEAN countries' levels of human
capital, regulatory environments, and strategic values. These
differences were noted to be relevant to the trade in services
through information technology. For the most part, ASEAN countries
have developed or have pursued to develop fairly similar trading
capabilities. In the area of IT-Enabled Services this is
manifested in efforts of most ASEAN countries to develop their own
IT services outsourcing capabilities such as the initiatives on the
Philippines' Cyber-Services Corridor, Malaysia's Multimedia Services
Corridor, Thailand's, Singapore's Next Generation National Broadband
Network, and Thailand's National Spatial Data Infrastructure. The
report states, "As a result, most economic efforts driven by
the ASEAN governments tend to cancel each other out and there are no
emerging complementarities in these efforts that will encourage
regional integration".
The research also pointed out that each of the ASEAN countries have
their own special niches from the perspective of manpower supply
highlighting that infrastructure development and maturity are
relatively the same across countries. The ASEAN countries combined
has a workforce of 223 million people capable of supporting IT, IT-
enabled services and its supporting ecosystem as compared to India's
406 million and China's 768 million. According to XMG Senior Analyst
Benedict Ferrer, "The population figures alone show that each
individual ASEAN country alone cannot compete with India or
China". Ferrer adds however, "If one is to closely look at
the manpower availability alone, combining the manpower of the ASEAN
countries through cooperation to complement each country's unique
capabilities, ASEAN can emerge as a key center for offshore delivery
service matching that of India and China".
According to previous XMG research on global location attractiveness
among ASEAN countries, Malaysia garners the top spot for KPO due to
its highly educated and concentrated workforce, the Philippines
ranks first in call center services due to the significant baseline
of its English proficient call center workforce, Indonesia ranks
first in IT due to its manpower availability, and Thailand and
Vietnam ranks fourth and fifth respectively for BPO readiness. In
2006, all six ASEAN countries made the top 25 amongst 120 countries
for its attractiveness to provision offshore and outsourcing
services. From a geopolitical assessment, the ASEAN countries still
poses a high risk for businesses, particularly amongst multinational
companies. Only Singapore and Malaysia has been given the
green-light for minimal risk. Thailand and Indonesia, on the
other hand, has been highlighted as high risk due to terrorism and
government political instability.
"ASEAN as a region state is a green field site with tremendous
potential to serve the global ICT market and become a stronger
segment of the global supply chain. However, each of these ASEAN
countries must be incented to develop policies for business
complementation and tightly address the geopolitical risks that
tarnish the overall image of the region," concludes Vives.
XMG also saw in its analysis that there is a pattern of distinct
behavior among vendors and captive operations in setting up
operations in the ASEAN countries citing captives such as Citibank,
HSBC and Standard Chartered being much more tolerant to the current
ASEAN business environment. Furthermore, the report mentions that
each ASEAN country will be limited to establishing one or two tier-1
ICT-ready cities that are comparable to Bangalore, India mainly due
to limited access to qualified labor and other geophysical
considerations.
--Tech Times Online
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