Malaysia's GBS Evolution: From Transactional Work

What H1 2026 tells us about the direction of Malaysia's Global Business Services market

Spend enough time in the Global Business Services (GBS) market at the moment and you'll hear two completely different stories.

One leader will tell you they are reducing headcount, centralising work into India and tightening budgets. Another will tell you they are expanding, bringing new scope into Malaysia and hiring aggressively for skills they simply cannot find fast enough.

The truth is that both perspectives are valid. Based on conversations with leaders across more than 100 GBS centres during H1 2026, the clearest conclusion is that Malaysia's GBS market isn't shrinking - it's evolving.

Some functions are moving out to lower-cost locations, while others are expanding or being established for the first time. Looking at only one side of that equation risks missing what is actually happening across the wider market.

The old Malaysia story is changing

For the last two decades, Malaysia has built its reputation as one of Asia's leading GBS locations.

Finance and accounting, customer service, IT support and transactional processing formed the backbone of many centres. Those functions helped establish Malaysia as a stable, multilingual and reliable delivery location.

That foundation remains important, but parts of that work are now moving elsewhere.

We've seen multiple organisations either transfer transactional finance activities to India or introduce India-based teams into their operating model. In some cases, these are significant moves involving hundreds of positions over multi-year periods.

One client is actively transferring a substantial portion of finance activity into a South Asian hub as part of a long-term operating model redesign. Another has outsourced functions to a global BPO provider, with work ultimately moving into China and India. We've also seen customer support activity migrate towards the Philippines, where scale and cost advantages remain compelling.

Viewed in isolation, this might suggest Malaysia is losing relevance as a GBS destination. The reality is quite different.

At the same time, new functions are moving into Malaysia

While some transactional work is leaving, higher-value functions are arriving.

Supply Chain is one of the clearest examples. One organisation is currently building a supply chain operation in Malaysia involving roughly 300 headcounts transferred from Greater China. Others are establishing procurement centres, vendor management capabilities and regional logistics teams to support increasingly complex operations.

HR is also becoming a much bigger part of the GBS story than many people realise.

Several organisations have either established new HR shared services teams in Malaysia or significantly expanded existing ones over the last 12 months. The work is no longer limited to administration. We're seeing centres responsible for talent management, regional HR operations, global payroll and employee experience initiatives.

At the same time, existing centres are moving further up the value chain.

Demand is increasingly concentrated around FP&A, business partnering, controllership, regulatory affairs, global payroll, transformation, data and analytics, digital automation, and AI-related capabilities.

In other words, the conversation is becoming less about processing transactions and more about creating business value.

That's a very different positioning for Malaysia than the one many global headquarters still have in mind.

Why Malaysia's multilingual advantage remains difficult to replicate

One of the most consistent themes from our conversations this year has been the continued importance of language capability.

Japanese, Korean, German, Thai, Mandarin and a range of other language combinations continue to be actively hired across finance, procurement, HR, customer operations and specialist functions.

However, the real differentiator is not language alone. Its language combined with functional depth.

A Japanese-speaking accountant. A Korean-speaking procurement professional. A German-speaking finance specialist. A Mandarin-speaking collections lead.

That combination remains extremely difficult to replicate at scale elsewhere in the region.

While other markets may compete more effectively on cost, Malaysia continues to compete strongly when organisations need both linguistic capability and functional expertise within the same team. For many organisations, that remains one of Malaysia's most compelling competitive advantages.

The biggest challenge isn't finding talent. It's keeping it.

One question we get asked regularly is whether Malaysia has a talent shortage.

The answer is more nuanced than a simple yes or no.

Most organisations can generate applicants. The real challenge is finding people with the right combination of technical expertise, stakeholder management capability and leadership potential, then retaining them once they've been hired.

We're seeing this challenge play out across a wide range of disciplines, including Azure integration, data architecture, cybersecurity, ServiceNow, SAP transformation, advanced FP&A, senior supply chain leadership and regulatory affairs. High-performing team leaders remain particularly difficult to hire because demand consistently outstrips supply.

In one recent search, more than twenty candidates were interviewed for a specialist technology role before the organisation ultimately paused the requirement.

The issue wasn't volume. It was depth.

At the same time, retention pressures remain significant.

Candidates can often secure salary increases of 15% to 20% by changing employers. Most organisations simply cannot match that through annual increment cycles alone, which is why pay is no longer the most important retention lever.

Scope has become the new currency

Perhaps the most interesting trend we've seen this year is that compensation is no longer the primary reason many professionals are changing jobs. Increasingly, the deciding factor is scope.

Candidates are actively seeking regional responsibility, transformation exposure, AI and automation projects, global stakeholder interaction, clearer progression pathways and opportunities to build new capabilities.

Managers often assume someone has left because another employer offered more money.

In reality, many candidates leave because they cannot see what comes next.

When talented individuals feel they have reached a ceiling, they begin looking elsewhere regardless of how comfortable they are in their current role.

The best-performing organisations are responding by creating more visible career pathways and exposing employees to transformation initiatives rather than purely operational delivery. They're giving people opportunities to grow alongside the evolution of the GBS function itself.

As centres move further into higher-value work, the organisations that provide meaningful scope and development opportunities will increasingly have an advantage in attracting and retaining talent.

What does this mean for GBS leaders?

Three themes stand out.

First, Malaysia's GBS sector is evolving, not declining. Transactional work may continue moving to lower-cost locations, but higher-value work is simultaneously moving into the country.

Second, the competition is increasingly about capability rather than cost. Organisations that continue positioning Malaysia as a low-cost option may struggle to justify future investment. The stronger argument is around language capability, functional depth and execution quality.

Third, talent strategy and business strategy are now inseparable. Career progression, leadership quality, hiring experience and opportunities to work on strategic initiatives all influence whether organisations attract and retain the talent required to support more sophisticated operations.

The centres that succeed over the next five years will not necessarily be the cheapest. They will be the organisations that create the strongest combination of opportunity, capability and employee experience while continuing to move up the value chain.

If H1 2026 has shown us anything, it's that Malaysia's future as a GBS destination will be defined less by cost arbitrage and more by the quality of talent, the sophistication of work being performed, and the value centres are able to create for the businesses they support.