Malaysia’s GBS sector urged to expand beyond Klang Valley through state specialisation

• Industry urges state-specific GBS hubs to unlock new growth beyond Klang Valley
• Sector shifts from cost efficiency to higher-value services driven by AI, data and talent

Malaysia’s Global Business Services (GBS) industry should expand beyond its traditional hubs by developing state-specific service centres that leverage local strengths, according to industry leaders.

While the sector has grown steadily over the past decade, it remains heavily concentrated in the Klang Valley and Penang. The GBS Malaysia Strategy 2022–2027 Mid-Term Report found that Selangor and Kuala Lumpur accounted for about 87% of new GBS companies established between 2021 and mid-2025, highlighting the region’s continued dominance. Penang remains another major hub for multinational service centres.

However, industry stakeholders say the next phase of growth may depend on expanding into other states while allowing each location to build specialised capabilities.

Raymond Davadass (pic), chair of the Digital Global Business Services Council Malaysia (GBS Malaysia), said several states, including Johor, Perak, Sabah and Sarawak, are exploring opportunities to establish GBS centres. He added that this reflects growing interest in the sector.

But rather than replicating existing hubs, he said the industry should focus on developing location-specific niches.

“If you want customer service, maybe you should be going to Sabah. If you’re looking at oil and gas-related work, maybe you should be going to Sarawak. If you’re looking at analytics work, maybe you should be looking at Klang Valley,” he said during the (Y)OURSPACE MY Edition talk on March 2.

“Together with the government, we are looking at how the industry can expand further beyond its current concentration in Klang Valley,” he added.

Malaysia’s GBS industry refers to shared services centres that centralise functions such as finance, human resources, IT and analytics, enabling companies to support regional or global operations from a single location.

The country has become an attractive destination for such operations due to its multilingual workforce, digital infrastructure and business-friendly environment.

According to the mid-term strategy report, the sector is projected to generate US$7 billion (RM28 billion) in revenue by 2025, with approximately 750 companies currently operating within Malaysia’s GBS ecosystem.

Davadass said the industry is shifting from cutting costs to creating value, driven by data, automation and AI. He called knowledge, technology and skilled people the “holy trinity” for sustaining growth.

Organisations, he added, “will also need to redesign workflows and upskill their workforce to remain competitive, beyond adopting new technologies.”

Looking ahead, Davadass said industry players are working with the government on initiatives such as a national digital sandbox, faster employment pass approvals and pilot grants for digital innovation and workforce upskilling, as Malaysia aims to further strengthen its position as a regional GBS hub.