Malta’s outsourcing sector is finding growth opportunities in niches rather than mass markets. While the island’s small size and higher cost base compared to locations in Eastern Europe limit its capability to take on volume-driven outsourcing projects, Malta has established itself as a powerful outsourcing partner that is increasingly winning high-value deals and offering knowledge-based solutions. Evolving from its traditional role as a call centre location, Malta today provides highly specialised services in financial services, IT and performance marketing. Gone are the days when Business Process Outsourcing or the acronym BPO was synonymous with cost-cutting or labour arbitrage. Today, it is about quality of services and delivering real value, too. As companies are turning to third-parties for back- and increasingly middle-office support such as risk management and compliance, the choice of partner becomes all the more critical. The fact that Malta belongs to the European Union provides a degree of regulatory certainty that companies appreciate. Malta is today considered a prime location for functions involving sensitive customer data and requiring specialised skills.
The Emergence of Nearshoring
Malta has benefitted from recent ‘nearshoring’ and ‘rightshoring’ trends of businesses westwards from Asia – with the search for higher quality eroding the traditional global offshore dominance of India, the Philippines and China. One example was Malta’s 2006 success in edging out India in the bid to host HSBC’s global call centre for English-language calls. Call and contact centres remained a prominent theme in Malta’s outsourcing offering given that English is an official language, although the focus today is on email, chat support and social media rather than phone calls. However, Malta soon recognised that the future lay in the provision of higher value-added services, and over a relatively short period the island’s outsourcing sector evolved. The growth of Malta as an international business and finance centre has encouraged companies to offer their services as independent outsourcers. The island also proves fertile ground for shared services centres that are responsible for the handling of specific functions and supporting a group’s global operations in areas such as marketing, HR, finance and IT.
The Right Location
Many Maltese firms now offer so-called Knowledge Process Outsourcing (KPO) functions, in which more skilled professionals can assist in knowledge-based areas of work on behalf of finance, insurance or banking companies. While developing economies have struggled to acquire investments from client nations, Malta has continued to show signs of evolution and maturity. A large number of companies offer customer management, including sales, marketing and customer care, or enterprise services such as HR, finance and accounting. The key markets for Malta’s outsourcing firms are accounts based in the UK, France and Germany; though the next few years are expected to herald a period of interest in what the island has to offer. Research has revealed that the drivers motivating companies to outsource are changing fast; while cutting costs is still important, accessing new digital technologies and improving the end-customer experience are becoming equally important.
The largest BPO providers in Malta today are the Swedish company Besedo (specialising in content moderation and media management) and Centrecom, an international call and contact centre. Boasting large numbers of accounting firms, including boutique practices and the ‘Big Four’, accountancy is the biggest outsourcing sector. Companies are also offering foreign clients back-office services, such as the processing and recording of invoices and sales transactions, accounts management and information reporting. In the area of shared services, Malta is differentiating itself from traditional outsourcing locations by viewing shared services as a high-performance business, and many entities are now expanding to deliver high-value services, including business analysis, risk management and decision support to their parent companies, in areas such as finance and accounting, IT, HR, customer service, procurement, payroll, real estate and marketing.
In recent years, Malta’s outsourcing industry has diversified, now delivering services in a wide range of sectors and industries, including financial, and software services, as well as for investment, insurance and shipping firms. A specialist service offered from Malta is performance marketing, and a number of firms that were traditionally assisting Malta’s iGaming companies with lead generation have expanded into financial services.
In the face of global competition, Maltese companies focus on providing high-end analytical services, as most organisations today are outsourcing not only business processes but also knowledge ones, including market research and financial analysis. In particular, its pool of professionals with degrees in finance, banking or insurance has made the island attractive for the outsourcing of activities that are analytical or skills-intensive. With strong data protection legislation and risk-management frameworks, Malta is recognised as a safer location than other outsourcing destinations for the holding of customer information. Specialist risk management firms already offer their services to asset management companies, while the outsourcing of compliance functions is a high growth area due to the ever-increasing regulatory requirements.
In the face of global competition, Maltese companies focus on providing high-end analytical services, as most organisations today are outsourcing not only business processes but also knowledge ones, including market research and financial analysis.
Competitive Skills & Costs
The island’s close cultural affinity with the UK and the rest of Europe, combined with its strong work ethic, gives it a significant advantage across many sectors. While costs may be higher than in Asia, many European companies that outsource work to Malta comment that it offers better all-round value for money: the workforce is highly educated and wages are reasonable, and employee turnover is relatively low, resulting in reduced training costs and better quality of service. The island also boasts an excellent ICT infrastructure. The robustness of the IT and telecoms infrastructure, coupled with the good language skills of the Maltese workforce, as well as an attractive business and living environment, will further drive Malta’s outsourcing and shared services success.
An Attractive Package
In particular, the international finance centre is expected to create further growth for the industry, which could undertake routine or administrative tasks, such as filling in online data entry forms and processing insurance claims, or repetitive administrative work involved in fund administration. For international companies looking at setting up shared services centres, Malta not only offers a gateway to the European Union, but is equipped to provide both basic business support and best-of-breed services for knowledge-intensive functions. Malta’s task for the future is to continue to increase efficiency and proficiency in order to compete with other European destinations and to create broader awareness of what Malta has to offer. As the outsourcing market matures, Malta will offer clients an attractive package: industry expertise and insight, analytics and innovation – at a competitive price.