People problems: The sector faces a growing shortage of human resources

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While Malaysia boasts a growing cohort of tech-savvy consumers, many in the ICT industry see a shortage of skilled labour as one of the primary obstacles to growth in the sector. Malaysia ranked 36th out of 60 countries on the Global Talent Index compiled by the Economist Intelligence Unit in 2009, and it was projected to drop to 39th place by 2015. This fall is driven in significant part by brain drain: the World Bank estimated that the number of tertiary-educated Malaysians living outside the country increased from 184,000 to 276,000 in the 2000-10 period. Many of these were graduates of Chinese ethnicity who have migrated to nearby Singapore, citing Malaysia’s race-based affirmative action policies alongside career prospects and salary as reasons for their departure.

BRINGING UP STANDARDS: Emigration is not the only driver of the talent shortage. The maths and science test scores of Malaysian eighth graders, for example, have dropped over the past decade, even as the international average rises. Meanwhile, none of Malaysia’s universities rank in the Times Higher Education World Rankings, and university-based research and development indicators lag behind those of its neighbours. The shortage of skilled workers particularly affects the ICT sector, where an estimated 81% of the jobs projected for the Communications, Content, and Infrastructure division of the ETP will be for skilled workers. Indeed, three-quarters of manufacturing firms in 2007 told the World Bank that “lack of knowledgeable IT personnel is an important obstacle to introducing/expanding IT use.” There have not been enough graduates able to fill these positions.

“We produce just 30,000 IT grads per year, which is not enough to cater to the growth of the industry. We need to boost this figure, and we also need to upgrade and upscale our current workforce,” Shaifubahrim Saleh, the president of the National ICT Association of Malaysia (PIKOM), told OBG. Indeed, enrolment in ICT programmes at public and private universities has fallen steeply over the past decade, from nearly 120,000 in 2002 to around 75,000 in 2011, according to figures from PIKOM. A study by the Multimedia Development Corporation (MDeC) forecast a 26.6% CAGR in demand for IT workers in the 2011-13 period, alongside a startling 0.6% decrease in supply.

MISMATCH: The fact that many ICT companies cannot find satisfactory workers, while many graduates cannot find satisfactory jobs, points to a mismatch between industry needs and the expectations or preferences of workers. ICT salaries in Malaysia are considerably lower than in richer neighbours, like Hong Kong and Singapore, where salaries are up to three times higher for comparable positions. Thailand’s average salary is 2% higher (despite having just half the per-capita GDP), while the Philippines’ and Indonesia’s salaries are less than half as much. This imbalance may be slowly eroding, however – salaries rose 10.9% on average in 2011 and is forecast to have risen an additional 9% in 2012, according to PIKOM statistics.

QUALIFYING PERSONNEL: Malaysia’s government has responded to the skills shortage with a series of initiatives, including TalentCorp, which was announced in 2010. It runs the Returning Expert Programme, which encourages highly qualified expat Malaysians to return home via tax perks and other incentives. This has seen moderate success, with 680 professionals approved in 2011, and 400 in the first four months of 2012. However, the ICT sector need a major infusion of qualified personnel at all levels.

TalentCorp’s Structured Internship Programme, which offers tax credits to employers who take on Malaysian university students as part-time interns, is one approach. The MyProCert programme partners with companies like Huawei and Oracle to offer discounted certification programmes to Malaysians, increasing the skill level of current employees. Most recently, MDeC announced the Knowledge Workers Development Centre, an RM27.4m ($8.8m) facility in Cyberjaya that will host training facilities for companies including Huawei, IBM, and Agilent Technologies.

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The Report: Malaysia 2012

Telecoms & IT chapter from The Report: Malaysia 2012

The Report

This article is from the Telecoms & IT chapter of The Report: Malaysia 2012. Explore other chapters from this report.

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