Survey reveals RPO making greater inroads into one of Asia’s thriving economies.

by Angelena Cala

In today’s highly competitive global environment, the battle for talent knows no geographic boundaries. Last year, Korn/Ferry International, the parent company for outsourced recruitment firm Futurestep, surveyed 185 CEOs across Asia and found that 33 percent of those surveyed in Southeast Asia felt

Malaysia has the best growth potential during the next five years. Its plans will be bolstered by the government’s recent “five-year plan.”
Malaysia has become a regional hub for shared services and begun to attract more significant levels of foreign investment. In this context, the unique human capital challenges facing companies in Malaysia will be critical to its socio-economic health.

Indeed, the enthusiasm about Malaysia’s prospects is tempered by the growing need to attract and retain top talent. The country has always been a key exporter of talent, providing people with strong language and multicultural skills. That fact continues to pose issues for local companies as multinationals woo workers away.

Further compounding the situation are hundreds of locally owned recruitment and staffing agencies that have created a highly fractured approach to talent acquisition in this market. In Malaysia, the phrase “recruitment services” has typically referred to the business of mass hiring low- to mid-level positions for blue collar or temporary workers and is farmed out to multiple agencies at a time. Traditionally, business process outsourcing (BPO) here has included compensation and benefits and other HR-related functions. However, even in this BPO hub, the idea of specifically outsourcing recruitment to one company in a more strategic and efficient way is relatively new.

Unfortunately, many Malaysian recruitment practices are outdated, with the same methods and technologies popular a decade ago still common. For example, many HR managers rely on fax machines to send job descriptions to agencies. Too often, companies exclusively seek outside talent, overlooking the fact that they potentially already have someone within the organization that fits the bill. Frequently, there is no system in place to match needs with the best candidates. Furthermore, many organizations still believe that their name and prestige is enough to attract top-notch professionals, an attitude that can be naïve in today’s labor market.

Futurestep’s survey clearly showed the impact this is having. Those who took the survey indicated an inability to find attractive positions. While 60 percent said they have updated their CV in the past six months (with 80 percent of those who have not intending to do so this year), 36 percent said they are still with their current employer only because they have not seen a vacancy that interests them in recent months. There is growing recognition that a skilled talent provider can offer expertise in executing successful employer branding campaigns that reach the most sought-after candidates while also fostering a sense of loyalty among current employees.

This is just one of the ways that Malaysia’s maturing business landscape is forcing HR departments to reevaluate their thinking. As a result, recruitment process outsourcing (RPO) is embraced slowly, especially by companies building new local business operations or setting up shared services. Here is a short list of other factors driving RPO in Malaysia today:

• Continued Growth of Shared Services. In 2004, A.T. Kearney ranked Malaysia as the third most attractive off-shoring location (behind India and China) for BPO services needed by companies across Asia. The Government’s incentive programs and the shift from manufacturing to a service-oriented center have resulted in a rebound in consulting positions, supported by the continued growth of the Multi-Media Corridor.
• Expansion of GLCs. Government-Linked Companies such as Telecom Malaysia are expanding to the Middle East, India, and other ASEAN countries, thereby increasing the need to find talent across borders and creating a very dynamic talent flow. Additionally, they are now focused on performance-driven growth to compete with leading global companies. As a result, these organizations are seeking new management teams to drive this growth and require talent partners with global reach to help them build teams quickly.
• Changing Expectations of Job Seekers. The Korn/Ferry survey indicated that more than 60 percent of CEOs in Southeast Asia think that offering adequate compensation is the best way to gain and retain talent, followed by offering constant motivation and stimulating professional growth and development (58 percent each). Indeed, Futurestep’s subsequent survey showed that Malaysia’s future executives are seeking such opportunities. When asked what the most significant thing a potential employer could do to make them leave their current company was, offering a promotion came in second (18 percent) behind investing in their professional growth and development (40 percent).