Business
Tech giants IBM, Microsoft, and Cisco urged Southeast Asian countries to embrace artificial intelligence (AI) on Monday at the U.S.-ASEAN summit. “The use of the AI technology can help resolve many delivery issues by lowering the cost and being more efficient,” said Malaysian P.M. Najib Razak. “These could include for sectors such as healthcare, traffic management, natural disasters,” he added, but a main obstacle is insufficient STEM (science, tech, engineering, and math) education. Najib called for Malaysia to step up its digital economy and increase the level of commitments for STEM education.
Technology will play an increasingly important role for the economies of Southeast Asia – if they embrace it quickly, that is. A prime case study is the tech outsourcing industry, which is currently dominated by India and China. As a whole, ASEAN is the third largest outsourcing destination; on a per-country basis, Malaysia, Indonesia, Thailand, the Philippines, and Vietnam are in the top 11.
Management consultant A.T. Kearney’s recently-released 2016 Global Services Location Index report concluded that ASEAN will benefit from the technological trends sweeping the outsourcing industry. For example, Malaysia is getting ahead of the curve, and it was praised for its solid performance across the board. “In addition to Kuala Lumpur, where Tech Mahindra is launching a centre of excellence for Google Technologies, Malaysia has developed a major offshoring hub just 160km south of the border with Thailand in Penang, where a new IT and BPO [business process outsourcing] park is being built to house as many as 21,000 jobs by 2020,” the report stated.
Automation will continue to replace workers doing repetitive IT tasks, making many low-level tech jobs obsolete all over the world. However, there’s an even more disruptive force emerging in the industry: business process as a service (BPaaS), in which service providers use a cloud-based standardized interface and process across multiple customers. “On the client or receiver end, BPaaS dramatically lowers the entry barriers to business data management, opening the floodgates to smaller and newer companies,” said Johan Gott, A.T. Kearney principal and a co-author of the study. (BPaaS sales already reached $18 billion in 2014, and market analyst Gartner forecasted they will reach $42 billion this year.)
Gott continued, “Simultaneously, we’re seeing a shift in required job skills that will play to those countries with the most adaptable educational system. As standardization and automation come to dominate the simpler processes, offshorers will demand skills of a more analytic nature.” If ASEAN promotes STEM education now, it can reap the rewards of BPaaS, AI, and other advanced tech industries not too far down the road. But relying on basic outsourcing alone is not sustainable, as automation is inevitable.
It’s also in Washington’s interest to foster ASEAN’s technological growth, since ties, trade, and investment are on an upward trajectory. Thus on Tuesday at the end of the summit, President Obama announced a new initiative called U.S.-ASEAN Connect. It will utilize three hubs in the region -- Singapore, Jakarta, and Bangkok – “to better coordinate our economic engagement and connect more of our entrepreneurs, investors, and businesses with each other,” he said. The initiative’s four pillars are Business, Energy, Innovation, and Policy; all involve technological collaboration.
If ASEAN can keep its labor costs low while improving the technological skills of its workforce, it will be a force to be reckoned with.
