Is outsourcing the answer?

Posted on July 1, 1991 
Filed Under Anita, Asia Computer Weekly

Malaysia is projected to have a shortage of about 20,000 IT personnel by 1995. A growing number of Malaysian companies are beginning to look at outsourcing as a viable solution. ANITA DEVASAHAYAM reports…

“EVERYTHING works. Nothing, not even the lights, fail in this building, ” said K B Low, general manager, IBM Malaysia.

And to ensure that all systems go without being interrupted, Big Blue Malaysia is outsourcing to boost its human resource pool and in areas where Low felt it would be difficult to provide meaningful career paths for workers.

He also strongly believes in the following maxim: “Employers must give employees the necessary tools and have respect for the individual,” said Low.

But even this philosophy will not be able to protect IBM against the harsh reality of a manpower shortage. It is an employees’ market in Malaysia and the situation would be felt even more acutely in the next few years.

By 1994, based on present figures, less than half the vacancies available in the IT field are expected to be filled. The Economic Planning Unit estimated that 26,485 people must be trained between 1990 and 1995 in order to alleviate the shortage.

National Computer Training Centre’s (Intan) head of studies Abdul Aziz Yusof revealed that the skills shortage would be 20,000 IT personnel, three times as high in the private sector compared with the public sector.

But these figures will not mean much to the personnel departments of the civil service and tile private sector as more likely than not, both will face the same labour shortage pains. Job mobility and job-hopping will affect both alike.

This situation has led to some employers pinching staff from their competitors even at this stage, resulting in inflated salaries and inefficient use of manpower.

Industry observers believed that once an employee started job-hopping, the result could be that he could he bitten by Industry observers believed that once an employee started job-hopping the result could be that he could be bitten by this bug and swore no loyalty to any company.

The training manager at ICL Malaysia, Parmjit Singh, said that promoting IT personnel for the wrong reasons was dangerous and that this had led to employers being intimidated by employees calling the shots.

Aziz felt this situation had arisen from the lack of skills. He said: “There are enough people in Malaysia but they are not equipped with the necessary skills.”

He added that universities, vocational and training institutions should continue to upgrade and provide continuous manpower training.

He also believed that non-DP professionals should also be given sufficient exposure to computers, especially now with the advent of the PC, which had given rise to the pervasive use of computers at all levels.

Dataprep Malaysia’s group managing director, Robert Teo, felt that these problems, and job-hopping in particular, could be handled more effectively if both employees and employers looked towards achieving long term goals.

It could then be much easier training existing staff, said Teo.

For some companies, offering higher wages was one way of getting round the problem.

A more ingenious way is to outsource so that the company does not bear the burden of carrying all the 11 staff it needs. This practice is gaining popularity in the US.

Aziz said: “The Malaysian government intends to outsource for IT specialists from the private sector to alleviate the skills shortage.”

He said that outsourcing would allow the government to hire IT specialists on a contractual basis, which could save the government millions in pensions.

Low agreed, adding that IBM Malaysia’s move to outsource resources from service companies was cost-effective and helped create an ancillary industry

“We have contracted software development work to Software Alliance Malaysia as we do not have sufficient manpower for everything,” he revealed.

But not all industry analysts agree that outsourcing was the panacea for all ills. One source pointed out that outsourcing also had its-own share of problems.

“Outsourcing is tantamount to a business arrangement and there would be instances where the contractee may have conflicting interest in a particular IT project,” they argued.

Software house Isomas’ general manager, A. Navaselvarajah, said that outsourcing was being practised on an ad hoc basis in the IT industry.

“However, its viability would depend on the parties involved.

“The contractor may want to control every single process,” he cautioned, adding that outsourcing could not be the foolproof way of solving a company’s manpower problems.

What was needed at the end of the day, said Navaselvarajah, was good old-fashioned training.

“We need people with basic communication and computer skills. But at the same time, they must be trainable and be fast learners,” he said.

Even IBM Malaysia’s Low, who is a strong advocate of outsourcing, knows that training is necessary. At IBM, he said, the company stressed greatly on shaping employees, making sure that they worked as a team.

Training is conducted ensure that people work well with one another.

And the government, too, has not discounted training although it is going along the path of outsourcing. “We invest a lot into training at Intan and expect other institutions and t he private sector to do the same,” said Aziz.

The solutions to the manpower shortage problems are manifold.

What the Malaysian IT industry needs ultimately is a pool of hybrid professionals who are well versed in their chosen career paths and are yet IT literate.

Published in Asia Computer Weekly, July 1, 1991


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