Outsourcing software development has become popular among startups and enterprises that want to cut costs and focus more on the business than the software. Is Malaysia a good location for software outsourcing? To manage software businesses needed to have a CTO and a team of developers to develop and maintain the software. In countries such as Australia, Japan, Singapore, and the United States it has become common practice for companies to outsource their software development to external companies.
Is Malaysia A Good Location For Software Outsourcing?
If companies worked with a company in their own country, this was called onshore software outsourcing. For example, if a Singaporean bank such as DBS, or OCBC, worked with a software development company in Singapore to manage and maintain their software systems, this would be onshore software outsourcing. This is great as a team of experienced engineers and product managers will now be building the software. This saves time, helps keep companies lean and focused on their primary goals, and leads to improvements in the overall quality of the software.
But as time has gone by, thanks to the internet, video calling, and flights, the world has become a lot smaller. So companies have become comfortable with outsourcing their software development to countries outside of their own. To some, this might sound risky and complicated, but to others, they see cost savings as they move to countries where the cost of developing software is much lower than their own. South America, Eastern Europe, India, Vietnam, China, Malaysia, and Vietnam, are a few popular locations for software outsourcing and they each have their own pros and cons. In this article, we will discuss if outsourcing software development to Malaysia is a good choice, or what alternatives are available.
Reasons To Outsource Software Development To Malaysia
India and China used to be the best places to outsource to in the Asia Pacific region, but due to rising costs, lots of scams, and unpredictable political ruling in China, companies have been looking for new options, and Malaysia is one of the most attractive locations. This is why:
1. Low Cost
Malaysia has a highly skilled and educated workforce, which can provide cost-effective software development services compared to some other countries. Currently, the most common software development being outsourced to Malaysia is web development, mobile app development, and enterprise software development. Mobile and web apps are the easiest way for both startups and enterprises to digitize their businesses and the cost to develop an app in Malaysia is lower than in countries such as Australia, Singapore, Hong Kong, and Japan, making it a very strategic location for outsourcing.
2. Good Location
Malaysia is located in the Asia-Pacific region, which is home to many major markets such as China, India, Singapore, and Australia. This makes it easier for companies to communicate and collaborate with their outsourced software development team. Being in the same time zone makes it easy for teams to collaborate even across borders. People are also more comfortable nearshoring as they subconsciously trust companies that are nearer to their home, culture, and language.
3. No Language Barrier
Malaysia is a culturally diverse country, with a mix of Western and Eastern influences. This can make it easier for companies from different parts of the world to work with software development teams in Malaysia. English is the main language spoken in Malaysia, which happens to be the global business language so companies are easily able to communicate with offshore teams in Malaysia without any misunderstandings. Malaysia also has a large Chinese population so companies that are primarily Chinese from places such as China, Hong Kong, Taiwan, and Singapore, might find it easy to hire Chinese-speaking offshore teams in Malaysia.
4. Great Infrastructure
Malaysia has a well-developed infrastructure, including a modern transportation system, reliable telecommunications, and a stable power supply. This makes it easier for companies to set up and maintain offshore software development operations. This is especially true in big cities such as Kuala Lumpur. The city is modern and advanced and you can access all the same facilities that are available in more developed countries. The country’s economy is also growing fast and further developing its infrastructure.
5. Supportive Government
The Malaysian government has been supportive of the country's software outsourcing industry, providing various incentives and support programs to encourage the growth of the sector. The government knows the benefits IT can have on the growth of the country and is heavily investing in the industry.
Overall, Malaysia's combination of cost-effective labor, proximity to major markets, cultural compatibility, strong infrastructure, and government support make it an attractive location for software outsourcing.
Alternative Locations In Malaysia For Software Outsourcing
While Malaysia is a very attractive option, it seems not to be the most popular. Other options in the region include Thailand, Vietnam, Cambodia, and Myanmar.
Vietnam has become an IT powerhouse. The country has one of the fastest-growing economies in Asia and is on its way to becoming an Asian Tiger. Vietnam has invested heavily in STEM and IT education, which produces thousands of talented software engineers every year. The country also has a low cost of living, which leads to cost savings when it comes to developing software. Large talent pools and cost savings are just some of the reasons why companies outsource their software development to Vietnam.
Thailand has many software outsourcing companies in the northern city, Chiang Mai, where life is more peaceful and the living cost is lower than in the big city. In Bangkok, you can find company offices from well-known companies such as Agoda. Well, Thailand might not be an English-speaking country, but in Bangkok, many educated Thais do speak English well, which does make the city an interesting option for startups and enterprises looking to outsource their software development.
While Cambodia and Myanmar are less developed than Thailand and Vietnam, they do offer great opportunities when it comes to cost savings. But due to political issues in Myanmar, it’s not going to be the most stable place to invest right now. Both of these countries are not as international and also do not have a strong English-speaking community, which also creates an additional barrier.
From all the above-mentioned countries, it’s easy to see why some companies would prefer Malaysia, while others prefer Vietnam or Thailand. Right now Cambodia and Myanmar are not the most feasible but who knows what will happen in the years to come.
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