KUALA LUMPUR: The evolution from business process outsourcing (BPO) to global business services (GBS) signifies a shift from isolated, task-based outsourcing to a more integrated and strategic approach, said an industry executive.
Daythree Digital Bhd founder and managing director Raymond Davadass said BPO focuses on cost-cutting by outsourcing non-core functions, while GBS consolidates multiple business area such as finance, human resource, IT and customer service into a unified strategy that delivers enhanced efficiency, innovation, and value.
"This shift mirrors the transformation of a solo musician into a symphony orchestra, where harmonious integration drives superior results," Davadass said.
Trends Shaping BPO's Future
He noted that the global BPO market was valued at US$245.9 billion in 2021 and is expected to grow to US$343.2 billion by 2025.
The growth reflects a trend where businesses are increasingly prioritizing access to advanced technologies, such as artificial intelligence (AI), automation and data analytics over traditional cost-saving motives, he added.
According to Deloitte, 58 per cent of companies now outsource to gain access to new technologies, making it a key driver of the transition to GBS.
On the key technological enablers driving the shift to GBS, Davadass said AI, automation and data analytics are at the heart of this transformation.
Citing an AI-driven automation, he said it has reduced manual intervention and processing times, as seen in finance operations where processing times dropped by 40 per cent while improving accuracy.
Data analytics and machine learning, meanwhile, offer predictive insights into customer behaviour and market trends, empowering businesses to make informed decisions.
"Tools like IBM Watson exemplify this capability by analysing vast data sets to drive better outcomes," he remarked.
Davadass said companies are using technology not just for innovation but to achieve tangible outcomes like greater efficiency, scalability and service quality.
This has blurred the traditional boundaries between outsourcing and insourcing, with GBS emerging as a hybrid model that integrates technology and services to support business growth.
Lessons Governments Can Learn
Davadass said governments can take inspiration from the private sector's adoption of GBS by leveraging local tech enablers to overcome challenges such as bureaucracy and operational complexity.
"Estonia, for example, partnered with local firms like Nortal to create a digital ID system and e-government services, enabling 99 per cent of public services to go online. This showcases how local expertise can drive transformative outcomes."
Davadass said local technology champions bring agility, specialised knowledge and cost-effective solutions that large multinational corporations may not offer.
"They can deliver targeted, scalable innovations that improve government efficiency and service delivery."
He added that supporting local tech enablers boosts economic resilience by attracting foreign direct investment (FDI), fostering innovation and creating opportunities for service exports.
"For example, Malaysia has drawn multinational tech companies to set up data centres, which, in turn, enable local firms to collaborate and expand their capabilities. This ripple effect strengthens the nation's global competitiveness."
Benefits of Local-Global Partnerships
He said partnerships between foreign investors and local technology startups accelerate expertise development and create shared benefits.
In India, technology giants like Google and Amazon collaborate with local startups, driving innovation and opening new export opportunities, he added. This model can also position nations like Malaysia as global hubs for technology-driven solutions.
Davadass said the World Trade Organisation reported that global ICT service exports totalled US$529 billion in 2020.
This illustrates the immense potential for local tech champions to tap into international markets, boosting economic growth and strengthening a nation's global reputation in technology and innovation.
"At Daythree, we believe in harmonising innovation and efficiency to deliver superior value. By integrating advanced technologies such as AI, automation, and data analytics, we align with the GBS model, offering solutions that transcend traditional outsourcing to drive business and government transformation.
"Our focus on nurturing local tech capabilities echoes our commitment to fostering a vibrant and resilient tech ecosystem," he said.