Outsourcing to Malaysia
Malaysia has been a world-renowned outsourcing destination for over two decades thanks to the Malaysian government’s strategy to invest in infrastructure and education. Many multinationals – especially in the IT sector, such as Microsoft, Intel, and AMD – have decided to outsource their activity in Malaysia, showing trust in the quality of the Malaysian labor force and the friendliness of the country’s business environment.
The outsourcing services we offer at FMC Group allow clients to benefit from all the advantages of the Malaysian labor force and business environment, giving them great flexibility and a major competitive edge. Thanks to our outsourcing services, clients can fully manage their employees in Malaysia without setting up a local subsidiary, which significantly reduces their labor costs and allows them to easily overcome any potential administrative or legal obstacles.
- Advantages of Outsourcing to Malaysia
- FMC Group’s Outsourcing Approach
- Advantages of Outsourcing with FMC Group
- Labor Laws in Malaysia
- Working Hours
- Annual Paid Leave
- Other Types of Paid Leave
- Minimum Wage
- Social Contributions and Taxes
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Advantages of Outsourcing to Malaysia
- The Malaysian talent pool is highly talented, especially in the fields of IT and electronics. Malaysia has been a privileged destination for IT outsourcing since the early 2000s, with many global IT corporations outsourcing their activity in the country, including Microsoft, Intel, and AMD.
- The Malaysian workforce is very proficient in English. Malaysia is among the “High Proficiency” category according to the 2021 EF English Proficiency Index, ranking third in the Asia-Pacific region and 28th In 2015, the Malaysian government launched a 10-year plan called “English Language Education Reform.” It aims to improve the quality of English teaching in Malaysia starting from preschool and primary school.
- The Malaysian government focuses highly on the promotion of the IT sector, notably through the adoption of strong laws on cybersecurity and intellectual property protection. Moreover, Malaysia is investing heavily in IT infrastructure. One major example of this is the city of Cyberjaya, which is dubbed the “Silicon Valley of Malaysia.” Inaugurated in 2003, this smart city is home to the regional headquarters of many multinationals such as Microsoft, Nokia, and BMW.
- Outsourcing to Malaysia can significantly reduce labor costs. The average monthly salary of IT engineers in Malaysia, for instance, stands at around MYR 3,000 (EUR 644). Employer contributions to social security are also relatively low and range from only 5.95% up to a maximum of 15.95%.
FMC Group’s Outsourcing Approach
- We select the best candidates based on your criteria and conditions;
- We establish hiring reports with candidate resumes and evaluations;
- We conduct job interviews;
- We organize personality tests if requested.
- We let the client make the final recruitment decision based on video interviews;
- We invite successful candidates to work at our local company in Malaysia.
- We allow the client to completely manage the functions and missions of the employees;
- We handle the administrative management of the employees (contracts, payments, etc.);
- We provide the employees with all the necessary infrastructure (office, phone, computer, etc.).
Advantages of Outsourcing with FMC Group
- We look for candidates according to your requirements;
- We adapt job advertisements to the nature of the job and we search for fitting candidates in our growing talent database;
- We help clients reduce the cost and time spent on the hiring process;
- We allow clients to expand into new markets without the need for setting up a local company;
- We give clients the ability to completely manage the functions of their employees.
Labor Laws in Malaysia
- Employees in Malaysia can work up to eight hours per day and 48 hours per week.
- Employers have to pay their employees for overtime work. The hourly overtime rate is 150% of the regular rate on weekdays, 200% on weekly days off and weekends, and 300% on public holidays.
Annual Paid Leave
- Employees in Malaysia earn eight days of yearly paid leave in their first two years of service, 12 days between the third and fifth years, and 16 days after five years.
- Malaysian people celebrate 12 national public holidays, in addition to around 30 holidays that are exclusive to some states.
- Public holidays celebrated across the entire country are:
- Between January and February: Chinese New Year (two days);
- May 1st: Labor Day;
- In May: Vesak;
- In June: Yang di-Pertuan Agong’s Birthday;
- August 31st: Independence Day;
- September 16th: Malaysia Day;
- Between October and November: Deepavali;
- December 25th: Christmas Day;
- Islamic Holidays:
- Islamic New Year;
- Prophet Muhammad’s Birthday;
- Eid al-Fitr (two days);
- Eid al-Adha (two days).
Other Types of Paid Leave
- Maternity Leave: New mothers can take up to 90 days of paid maternity leave, including up to 30 days before birth. They receive their full salary during this period, paid by social security.
- Paternity Leave: Public sector male employees can take seven days of paid paternity leave, but private sector employees are not entitled to paternity leave.
- Sick Leave: Employees can take up to 14 days of paid sick leave per year in their first two years of service, 18 days between the third and fifth years, and 22 days after five years. Employers have to pay their employees full salaries during sick leave.
- The minimum wage in Malaysia varies between MYR 1,100 (EUR 236) in rural areas and MYR 1,200 (EUR 257) in urban areas.
- Salaries in Malaysia are typically paid on the last working day of each month.
- Payment bonuses at the end of the year are very common in Malaysia, but they are not compulsory.
Social Contributions and Taxes
- Employer contributions in Malaysia range between 13.95% and 15.95% of the gross salary for employees under the age of 60 and between 5.95% and 9.45% for employees over 60.
- Employee contributions vary between 9.70% and 11.70% for employees under 60 and between 0.70% and 6.20% for employees over 60.
- The income tax ranges from 0.00% to 30.00% based on the employee’s yearly revenue.
Further Useful Information
- Please see Malaysia Social Security Organization for more information on labor laws in Malaysia.