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Singapore has a great IT infrastructure and has been often used for a regional data center hub. However, the lure of the (twice or three times) cost savings in India, China, eastern Europe and the Philippines (over Singapore) makes business leaders consider those locations first. In addition, Singapore has a limited pool of programming talent. In fact many Singapore companies import workers from India, China or the Philippines or simply outsource it to sub-contractors there.
Malaysia's government is putting some effort into becoming an outsourcing location, but it has had a late start, has a limited pool and has neighbors with terrorist problems -- Indonesia, Philippines and so on. However, I do see Malaysia as an emerging outsourcing location. Additional information about the Malaysian outsourcing future can be found here.
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