Setting Up a Shared Service Centre in Malaysia: A Practical Guide to BPO and Shared Services
Running finance, HR and IT separately in every market is expensive, slow and hard to control.
That is why more regional businesses are turning to BPO and shared services to consolidate their back-office work.
Malaysia has become a popular base for these operations, thanks to lower costs than Singapore and a skilled, English-speaking workforce.
This guide explains what a shared service centre (SSC) is, how it differs from outsourcing, which incentives apply and how to set one up.
That is why more regional businesses are turning to BPO and shared services to consolidate their back-office work.
Malaysia has become a popular base for these operations, thanks to lower costs than Singapore and a skilled, English-speaking workforce.
This guide explains what a shared service centre (SSC) is, how it differs from outsourcing, which incentives apply and how to set one up.
What Are BPO and Shared Services?
A shared service centre is a centralised unit that handles common functions such as finance, HR, IT and compliance for several parts of a group.
ScottMadden describes the model as operating like “a business within a business”, serving internal units through defined processes and tools.
Business process outsourcing (BPO) is different in one key respect: a third-party provider runs the work instead of your own staff.
In practice, the two often overlap. Many groups build an in-house SSC for core processes and outsource selected, non-core tasks to a BPO partner.
A trusted BPO and business advisory partner can help you decide which model suits each function.
ScottMadden describes the model as operating like “a business within a business”, serving internal units through defined processes and tools.
Business process outsourcing (BPO) is different in one key respect: a third-party provider runs the work instead of your own staff.
In practice, the two often overlap. Many groups build an in-house SSC for core processes and outsource selected, non-core tasks to a BPO partner.
A trusted BPO and business advisory partner can help you decide which model suits each function.
Why Malaysia Works for BPO and Shared Services
Malaysia has built a solid track record in global business services (GBS). Several factors make it attractive to regional groups:
For foreign groups new to the country, market entry advisory helps clarify entity structure, licensing and timelines early on.
- Cost and talent: operating costs are lower than in Singapore, with access to English-speaking finance and IT professionals.
- Industry depth: GBS Malaysia reported in 2022 that the sector had grown for 15 consecutive years, with over 250,000 trained talent.
- Location: a central ASEAN position, good infrastructure and time-zone overlap with major Asian markets.
- Government support: agencies such as MIDA and MDEC actively promote Malaysia as a regional services hub.
For foreign groups new to the country, market entry advisory helps clarify entity structure, licensing and timelines early on.
Tax Incentives: The Global Services Hub Scheme
Budget 2024 introduced the Global Services Hub (GS-Hub) incentive, which MIDA describes as an extension of the earlier Principal Hub scheme.
According to PwC’s Malaysia tax summary, the GS-Hub incentive offers:
Applications must be made by 31 December 2027, and approval depends on meeting MIDA’s conditions on spending, staffing and functions.
Because conditions are detailed and change with each budget, early tax advisory support is worth the investment.
According to PwC’s Malaysia tax summary, the GS-Hub incentive offers:
- A 5% or 10% corporate tax rate for up to 10 years for new companies.
- A 5% or 10% rate on value-added income for 5 years for existing companies.
- A 15% personal tax rate for up to three non-citizen key or C-suite staff earning at least RM35,000 a month.
Applications must be made by 31 December 2027, and approval depends on meeting MIDA’s conditions on spending, staffing and functions.
Because conditions are detailed and change with each budget, early tax advisory support is worth the investment.
Step-by-Step: Setting Up a Shared Service Centre in Malaysia
1. Run a feasibility study
Map the processes you want to move, their volumes and current costs. Set clear goals, such as savings, control or scalability.
2. Choose your operating model
Decide between a wholly owned SSC, a BPO arrangement or a hybrid. Smaller groups may start with a managed SSC before building their own.
3. Establish the legal entity
Most in-house centres operate through a Sdn Bhd company registered with the Companies Commission of Malaysia (SSM).
If you plan to apply for GS-Hub, design the entity’s functions and headcount around MIDA’s criteria from the start.
If you plan to apply for GS-Hub, design the entity’s functions and headcount around MIDA’s criteria from the start.
4. Standardise and document processes
Agree on common workflows, policies and controls before migration. Moving messy processes simply relocates the problem.
Choose a single finance or ERP platform where possible, so every entity reports in the same format.
Choose a single finance or ERP platform where possible, so every entity reports in the same format.
5. Set intercompany pricing and governance
Service charges between group entities must reflect arm’s length pricing under Malaysia’s transfer pricing rules.
Specialist transfer pricing advisory helps you set defensible cost-plus margins and documentation.
Define service-level agreements (SLAs), KPIs and escalation routes so business units know what to expect.
Specialist transfer pricing advisory helps you set defensible cost-plus margins and documentation.
Define service-level agreements (SLAs), KPIs and escalation routes so business units know what to expect.
6. Migrate, stabilise and optimise
Transfer work in waves, starting with high-volume transactional tasks. Then add automation and analytics as the centre matures.
Robert Walters notes that a full SSC set-up typically takes 9 to 18 months, longer for heavily regulated firms.
Robert Walters notes that a full SSC set-up typically takes 9 to 18 months, longer for heavily regulated firms.
Which Functions Should Your SSC Handle?
Robert Walters groups SSC work into three layers, which offer a sensible roadmap for growth:
Moving up these layers often depends on strong systems. Digital transformation and data analytics support can speed up that shift.
- Transactional: accounts payable, payroll, claims and first-line support. This is usually the fastest route to savings.
- Specialist: financial analysis, regulatory reporting, risk modelling and data analytics.
- Centres of excellence: process design, automation and innovation for the wider group.
Moving up these layers often depends on strong systems. Digital transformation and data analytics support can speed up that shift.
In-House SSC, BPO or Hybrid: Choosing the Right Model
There is no single right answer. The best model depends on your scale, risk appetite and how much control you need.
Whichever route you choose, review the model regularly. What works for five entities may not suit fifteen.
- In-house SSC: gives full control over people, data and processes, but needs more capital, management time and a local entity.
- BPO: offers speed and flexible costs, with less day-to-day control. It suits well-defined, rules-based tasks.
- Hybrid: keeps judgement-heavy work in-house while outsourcing high-volume processing. Many regional groups settle here.
Whichever route you choose, review the model regularly. What works for five entities may not suit fifteen.
Common Pitfalls to Avoid
- Treating the SSC as a pure cost project rather than a long-term capability strategy.
- Underestimating competition for talent and how long hiring takes.
- Weak governance between head office and the Malaysian team.
- Ignoring data protection duties under the Personal Data Protection Act 2010 when handling employee and customer records.
A structured risk and governance advisory review can help you build controls into the centre from day one.
Frequently Asked Questions
1. What is the difference between BPO and shared services?
A shared service centre is owned and run by your own group. BPO means a third-party provider performs the work under contract.
2. How long does it take to set up a shared service centre?
Robert Walters puts a typical in-house set-up at 9 to 18 months. Managed SSC models can be faster, with some providers citing around 3.5 months.
3. Which functions are usually moved to a shared service centre?
Finance and accounting, payroll, HR administration, IT support, procurement and compliance reporting are the most common starting points.
4. Are there tax incentives for shared service centres in Malaysia?
Yes. Qualifying multinationals may apply for the GS-Hub incentive, which offers a 5% or 10% corporate tax rate, subject to MIDA approval.
5. Why choose Malaysia over other locations for an SSC?
Malaysia offers lower costs than Singapore, English-speaking talent, a mature GBS sector and government incentives for regional hubs.
Conclusion
BPO and shared services can give regional businesses tighter control, lower costs and room to scale.
Malaysia’s talent, location and GS-Hub incentive make it a strong base, but success depends on careful planning, pricing and governance.
If you are weighing up a Malaysian SSC, speak to our advisory team to assess the right model for your group.
Malaysia’s talent, location and GS-Hub incentive make it a strong base, but success depends on careful planning, pricing and governance.
If you are weighing up a Malaysian SSC, speak to our advisory team to assess the right model for your group.
