Egypt, an Emerging ICT Outsourcing Hub

Egypt, an Emerging ICT Outsourcing Hub

The IT outsourcing market is shifting rapidly. The growing globalization with all the new emerging locations, such as Mexico, Philippines, China, Malaysia and Poland, are replacing the typical India-centric onshore-offshore model.

Egypt is ranked 10^th global outsourcing destination worldwide on A.T. Kearney 2014 Global Services Location Index (down from 4^th in 2011). This puts the country ahead of competitors in the region, including UAE (ranked 19^th) and Jordan (ranked 20^th)

Hence, Egypt is considered a strong regional player, which has scored well over the years on account of solid fundamentals, including proximity to Europe, favorable costs, and good universities.

Proximity to major markets and suppliers

Companies are seeking proximity to overcome challenges such as time zone and cultural differences, as well as operational difficulties.

Egypt’s location makes it an attractive nearshore possibility. It is geographically convenient for the United States, Europe, Asia, and Africa, as it is closer to major CIT consumers there than is India or the Philippines.

In addition, Egypt is close to suppliers. All CIT components are available locally and Egypt is very close to major CIT component providers in Europe and Asia. The country is home to a broad network of skilled service providers.

A Skilled Multilingual Workforce at reasonable costs

Annually, more than 22 thousand students graduate with European language skills, including English, French, German, Spanish, and Italian, and over 90 thousand students graduate with degrees in commerce, engineering and IT. This provides investors with a large potential pool with language skills to contribute all levels of the value chain, from call center operators, to senior researchers at offshore development centers for multinational companies, and the skills set necessary to succeed in CIT.

Moreover, skilled labor is available at reasonable prices that are comparable to India. For instance, programmers earn an average of USD 10-20 per hour. And, wages are stable — growing only 5% annually.

A robust Infrastructure

An existing IT infrastructure eases start-up costs, and enhances day-to-day productivity. In Egypt, all landlines have dial-up access and high-speed broadband and wireless networks are in place in major urban areas throughout the country.

In addition, Egypt is a key communications node, hosting submarine fiber-optic cables that link it to Southeast Asia, the Middle East and Europe.

A Pro-Business Government and Regulatory

Nevertheless, the political instability, with near-term obstacles such as high inflation rates and rising public discontent, have been overshadowing Egypt’s attractive IT outsourcing capabilities.

Yet, Egypt’s Information Technology Industry Development Agency (ITIDA) reported on May 6, 2015 that 6,000 new jobs would be created in the offshore outsourcing sector following agreements with eight multinational companies to expand their presence in Egypt.

Companies such as IBM, HSBC, Nestlé, EMC, Procter & Gamble, Axxcelera, Mobinil Contact Services, and Teleperformance have signed agreements to extend their partnerships with ITIDA in Egypt, to help service their respective customer bases in markets from the Americas to Asia.

New investments represent a strong vote of confidence in Egypt’s export-oriented ICT sector and should help reinforce Egypt’s competitiveness as an off-shoring destination against other countries including India, Mexico and the Philippines.

It also coincided with a report by management consultancy Everest Group, which said that Egypt’s offshore global services industry is growing at 7.5% annually amid renewed political stability under President Abdel Fattah Al-Sisi.

Moreover, the Egyptian Information, Telecommunications, Electronics, and Software Alliance (Eitesal), a private sector, non-profit entity formed by ICTE companies operating in the country, is working on a series of programs to attract offshore projects to Egypt and facilitate government regulations on telecoms infrastructure use. It is currently rolling out a service provider’s portal to position Egypt as a top global outsourcing destination.

The initiatives will focus on the quality of the contact center and BPO providers, conducting global matchmaking events along with other awareness campaigns to attract offshore projects to Egypt and finally facilitating government regulations for telecom infrastructure usage.

Executing such initiatives will ensure that the contact center and BPO sector is well positioned and sustained with the reforms and economic developments currently taking place in Egypt,” says Hassan El-Shawarby, chairman of the outsourcing division of Eitesal and the general manager of Etisal International, an outsourcing services company (Oxford Business Group – Egypt gains momentum in ICT outsourcing).

Once the country’s political situation stabilizes and investors again consider it to be a safe destination, Egypt is expected to return as one of the leading locations for both IT and BPO services.

Youssra ISMAIL, Analyst, Infomineo

Sources:

Ministry of Communication and Information Technology in Egypt

A. T. Kearny

Chamber of Information Technology and Telecommunication in Egypt

Oxford Business Group – Egypt gains momentum in ICT outsourcing

Information Technology Industry Development Agency (ITIDA)