MSC Malaysia Supply-Demand Study of the ICT Industry

Introduction
Project Objectives

Aim

To measure and understand the current state as well as the future evolution of the ICT manpower landscape in Malaysia

Demand-Side Analysis

Supply-Side Analysis

Gap Identification

Gap Bridging Strategies

ICT Ecosystem

Overall ICT Ecosystem

Core ICT
Software Software Development Development Networking & Networking & Security Security OS & Server OS & Server Database Database Technologies Technologies Business Business Intelligence Intelligence SAP SAP Hardware Design Hardware Design Multimedia Tools Multimedia Tools

ITES (IT Enabled Services)

ICT industry has evolved into two major segments Core ICT and ITES as depicted above

Demand Analysis - Overall

By Skill Sets
ICT Demand Projection
9.6% AGR C 268,053
220,327 223,278 244,643

2009 Skill Level Split

Creative Multimedia 3% Networking & Security 21% Database 12%

293,703

OS & Server 12%

SAP 5% Hardware Design 3%

BI & Analytics 3%
2008 2009 2010 2011 2012

Software Development 41%

Strong growth expected over the forecast period as economic recovery sets in Software Development and Networking & Security top skill areas

Demand Analysis - Overall

Snapshot of Demand

ICT Employee Strength by Skill Categories

ICT Employees 2008 ICT Employees 2009 ICT Employees 2012 Incremental Demand (20102012)

Skill Category

CAGR 2012

Software Development Networking & Security Database OS & Server BI & Analytics SAP Hardware Design Multimedia Tools

88,799 48,671 25,757 28,743 4,407 8,838 7,704 7,409

91,410 47,174 27,432 27,339 5,233 11,643 5,730 7,318

115,210 67,659 37,573 32,784 6,787 16,144 6,775 10,771

23,800 20,485 10,141 5,445 1,554 4,502 1,045 3,453

8.0% 12.8% 11.1% 6.2% 9.1% 11.5% 5.7% 13.8%

Demand Analysis - MSC Companies

Company Demographics
Core Employee Role

Non ICT 44%

ICT Employees account for more than half of the current employees at MSC companies
Job Roles
ICT 56%

Maintenance & Support 23% Implementation 18%

Pretty even split between the job roles with Maintenance & Support leading at around 25% of the total employees

ICT Management 20% Research & Design 19% Development & Testing 20%

Demand Analysis - MSC Companies

ICT Manpower Profile
Years of Experience
More than 5 years Between 2 and 5 years Between 0 and 2 years No experience 20% % of Respondent Companies 13%

Almost half of ICT workforce > 2 years work experience

32%

Typically degree and above qualification in a Core ICT discipline Interestingly, 6% of ICT employees hail from non-ICT related disciplines

34%

Level of Qualification
SPM 1% Postgraduate 10%

Discipline of Study
Others, 3% Business Studies, Other 3% Engineering, Mathematics, Science (EE, Physics etc), 8%

Bachelors 67%

Diploma 22%

Core ICT Courses, 86%

7

Demand Analysis - MSC Companies

HR Metrics

Change in ICT manpower (Jan08-Dec08)

Decrease 31%

Increase 69%

Even in the face of the tough economic climate, majority of MSC companies increased ICT workforce over 2008

Demand Analysis - MSC Companies

By Company Size

Reasons for Decreasing Manpower (Jan08-Dec08)

Small

Large

26%

40% 23% 30%

13% 5% 2% High Labor Restucturing Outsourcing Outsourcing Cost outside Local Malaysia Lack of Local Manpower High Labor Restucturing Outsourcing Outsourcing Cost outside Local Malaysia Lack of Local Manpower 10% 10% 10%

Outsourcing a common thread among companies that decreased manpower, as they look for ways to streamline business processes and cut costs
Small = Annual Turnover less than RM 5 million. Large = Annual Turnover greater than RM 100 million
9

Demand Analysis - MSC Companies

By Skill Sets
ICT Demand Projection
12.0% CAGR
82,634 73,784 63,895 65,882

2009 Skill Level Split

Networking & Security 28% Creative Multimedia 1%

92,545

Database 15% OS & Server 3%

BI & Analytics 1%

SAP 2% Hardware Design 4%

2008

2009

2010

2011

2012

Software Development 46%

MSC to outperform overall industry in recruitment of ICT workforce over forecast period Software Development and Networking & Security top skill areas
10

Demand Analysis - Non-MSC Companies

By Skill Sets
ICT Demand Projection
8.5% CAGR
156,433 157,396 170,808 185,363

2009 Skill Level Split

Creative Multimedia 4% Database 11% OS & Server 16%

201,158

Networking & Security 18%

SAP 7% Hardware Design 2%

2008

2009

2010

2011

2012

BI & Analytics 3% Software Development 39%

While showing positive growth, Non-MSC companies to lag MSC companies in terms of ICT workforce growth over the forecast period Software Development and Networking & Security top skill areas
11

Demand Analysis - MSC vs. Non-MSC

Key Comparisons from Survey Analysis

Core Employee Role

MSC
Core Employee Role

Non-MSC
C ore E mployee R ole IC T 7%
Non ICT 44%

Non IC T 93%
ICT 56%

Proliferation of ICT employees in MSC companies since ICT is a core business activity for them ICT serves a support role for most Non-MSC companies where core business activities are non-ICT related (Logistics, BFSI, Manufacturing etc)
12

Demand Analysis - MSC vs. Non-MSC

Key Comparisons from Survey Analysis

Level of Qualification for ICT Employees

MSC
Level of Qualification
SPM 1% Postgraduate 10%

Non-MSC
L evel of Qualific ation

B ac helors 31%

S ec ondary & below 23%

Bachelors 67%

Diploma 22%

Diploma 19% P os tg raduate 22%

S PM 5%

Proportion of employees with Degree & Above qualifications is much higher for MSC companies, indicative of the more specialized and qualified requirements for ICT roles in MSC companies vis--vis in Non-MSC companies
13

Demand Analysis - MSC vs. Non-MSC

Key Comparisons from Survey Analysis

Change in ICT Manpower (Jan08-Dec08)

MSC
Change in ICT manpower (Jan08-Dec08)

Non-MSC
Change in ICT manpower (Jan08-Dec08)

Decrease 31% Increase 37% Decrease 63%

Increase 69%

Telling manifestation of the strategic role that ICT plays in MSC companies. Non-MSC companies are more willing to allow hiring freezes or shrinkages in ICT workforce in these testing times
14

Supply Side Analysis Student Demographics

Profile of Students at surveyed institutes
Courses Enrolled

ICT Courses 10.5%

10% of total students across disciplines currently enrolled in ICT courses

Level of qualification
Non-ICT courses 89.5%

Diploma 33%

Total Enrolment at Respondent IHLs: 320,000

Certificate 2%

65% of the current ICT students enrolled in Degree & Above courses

Postgraduate 9% Undergraduate 56%

15

Supply Side Analysis Student Demographics

Profile of Students at surveyed institutes
Local vs. Foreign students

Foreign 20%

A significant 20% of the current ICT cohort is from outside Malaysia

Discipline of Study

Local 80%

Others 22%

Information Technology 39%

Others include such programs as Games Design, eCommerce/Information Systems, Bio-informatics etc.

Multimedia Skills 10%

Computer Engineering 5%

Computer Science 24%

16

Supply Side Analysis Institute Metrics

Curriculum Review
Frequency of curriculum review

38% 21% 14% 7%

19%

Once every six Once every year Once every two months years

Ad-hoc basis based on industry requirements

More than two years

Given the dynamic and evolving nature of the ICT industry, it is disappointing to note that 38% of surveyed IHLs review their ICT curricula in more than 2 years IHLs with a review cycle of 6 months were mostly private institutes

17

Supply Side Analysis Institute Metrics

Curriculum Review
Stakeholders involved during curriculum review

Industry players

23%

Industry associations

44%

Government agencies
% of Institutes

87%

Low interaction with Industry players when reviewing ICT curricula would seemingly explain the perceived gap between industry expectation and graduates competence

18

Supply Side Analysis Supply Projections

Overall
ICT Graduates Projection 2009 Skill Level Split

7.8% CAGR 1 47,169

40,037 33,983 27,428 28,844

SAP 2% BI & Analytics 6% OS & Server 5% Database 5%

Hardware Design 12%

Creative Multimedia 18% Others 9%

2008

2009

2010

2011

2012

Networking & Security 17%

Software Development 26%

Aggressive plans to increase ICT student intake over the forecast period cited by respondent IHLs
Projections based on input provided by respondent IHLs on their plans to increase intake over the forecast period
19

Gap Analysis
Types of Gap

Using the demand side and supply side analysis, we can identify gaps across 2 buckets 1) In the manpower number required to meet the local demand for ICT human capital, and 2) the employability or employer satisfaction of the current ICT manpower

Gap in Manpower Demand & Supply

What is the shortfall of manpower required to meet the demand? Which skill areas are expected to face a manpower crunch in the next 3 years?

Gap in Employer Satisfaction of ICT Manpower

Which skill areas are falling short on employee satisfaction hence requiring more focus on quality of manpower and degree of qualification?

20

Gap Analysis
Shortfall of Manpower Overall (Scenario 1)

Overall Manpower Shortfall

42,318
Gap
ear he y t for pply u

2009 Incremental Demand

19,655 jobs

26,152
r th d fo an em

2012 Incremental Demand

MSC 44%

MSC 67%

23,202 jobs

Gap

Non-MSC 33%

r yea

22,663

Non-MSC 56%

2,950
2009 Demand Supply 2012

Note: Gap = Supply - Demand

Scenario 1
Supply includes ALL ICT graduates and forecasted based on growth estimates provided by the respondent IHLs
21

Gap Analysis
Shortfall of Manpower Overall (Scenario 2)

Overall Manpower Shortfall

r the Supply fo year

29,957
Gap

26,152
2009 Incremental Demand

7,294 jobs

Gap

22,663
or df an em D ar ye the

2012 Incremental Demand

MSC 44%

Non-MSC 33% MSC 67%

23,202 jobs

Non-MSC 56%

2,950
2009 Demand Supply 2012

Note: Gap = Supply - Demand

Scenario 2
Supply includes ALL ICT graduates and forecasted based on historical growth of ICT graduates from local IHLs over 2005-2007
22

Gap Analysis
Shortfall of Manpower Overall (Scenario 3)

Overall Manpower Shortfall

22,663
2009 Incremental Demand

17,000
Gap

) ree & above Supply (Deg for the year

ar ye e

Gap

3,191 jobs
2012 Incremental Demand
MSC 44%

19,472

Non-MSC 33% MSC 67%

14,050 jobs

d an m De

h rt fo

Non-MSC 56%

2,950
2009 Demand Supply 2012

Note: Gap = Supply - Demand

Scenario 3
Supply includes ICT students graduating with at least Degree and forecasted based on historical growth of ICT graduates from local IHLs over 2005-2007
23

Gap Analysis
Shortfall of Manpower Overall (Scenario 4)
Employability ~60%

Overall Manpower Shortfall

22,663
Gap

9,065 jobs
2012 Incremental Demand
MSC 44%

2009 Incremental Demand

MSC 67%

Gap

Non-MSC 33%

) ree & above Supply (Deg for the year 10,200 ar ye he rt fo 7,250 jobs d an em D

13,598

Non-MSC 56%

2,950
2009 Demand Supply 2012

Note: Gap = Supply - Demand

Scenario 4
Supply includes ICT students graduating with at least Degree, forecasted based on historical growth of ICT graduates over 2005-2007, and modified to factor in employability
24

Gap Analysis
Employer Satisfaction with ICT Employee Skills

Employer Satisfaction Gaps by ICT Skill Categories

Skill Category
1

Gap in Employer Satisfaction

Rating 2 3 Gap 4 5

Software Development Networking & Security Database OS & Server BI & Analytics SAP Hardware Design Creative Multimedia
1 2

3.9 3.4 3.1 3.4 3.0 2.8 2.9 3.0

3 4

0.1 0.6 0.9 0.6 1.0 1.2 1.1 1.0

5

Unemployable Poor

Acceptable Desired Excellent

25

MSC Analysis
Total Employees ICT + ITES employees

MSC Employees ICT

Addition in 2009 = 1,987
2.0% CAGR 1
82,634 73,784 63,895 65,882

MSC Employees ITES

Addition in 2009 = 4,754

92,545

2.0% CAGR 2
42,453 34,798

51,793

28,523 23,769

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

In the light of the tough economic climate over the last year, the MSC cluster performed impressively, creating 6,741 fresh jobs over 2008-2009. As the economy recovers, the MSC growth story is poised to continue
26

MSC Analysis
Total Employees ICT + ITES employees

MSC Employees (ICT+ITES)

15.2% CAGR

Addition in 2009 = 6,741

144,338

125,087 108,582

87,664

94,405

2008

2009

2010

2011

2012

In the light of the tough economic climate over the last year, the MSC cluster performed impressively, creating 6,741 fresh jobs over 2008-2009. As the economy recovers, the MSC growth story is poised to continue
27

Demand Analysis MSC Companies

Snapshot of Demand
ICT Employee Strength by Skill Categories
Incremental Demand (20102012)

Skill Category

ICT Employees 2008

ICT Employees 2009

ICT Employees 2012

CAGR 2012

Software Development Networking & Security Database OS & Server BI & Analytics SAP Hardware Design Multimedia Tools IT-Enabled Services

32,553 16,772 6,813 2,573 631 506 3,082 964 23,769

30,006 18,046 10,069 2,147 808 1,112 2,817 877 28,523

41,037 26,736 14,146 2,781 1,135 1,782 3,451 1,477 51,793

11,031 8,690 4,077 634 327 669 634 601 23,270

11.0% 14.0% 12.0% 9.0% 12.0% 17.0% 7.0% 19.0% 22.0%

28

Key Takeaways

Certain scenarios for the demand and supply situation in Malaysia bring up an over-supply of ICT graduates. This over-supply however should be considered in the light of the fact that employers deem graduates from local IHLs to be lacking in quality and not all employable Curricula in local IHLs are perceived by employers to not be aligned with the requirements of the industry

As ICT is transcending its role from just a support function to a business enabler, there is an increasing and as yet unmet demand for ICT graduates that are well-equipped in business/communication skills

The MSC cluster has performed impressively in the light of the tough economic times over the last year, with SSO as the chief growth engine

The MSC cluster is poised to add 50,000 new knowledge workers over the next three years (2010-2012)

29

Global Growth Consulting Company

30