REGIONAL CHANNELS
Available skilled resources, low cost
driving Egyptian outsourcing industry
The Egyptian business process outsourcing industry is making steady
progress by securing global contracts for translation, human resources,
finance, legal practice, research, engineering and software development.
T
he Egyptian government’s
Ministry of Communications and
Information Technology, and the IT
Industry Development Agency, have taken
active roles in developing ICT capabilities
within the country and positioning ICT as
a cornerstone of economic development
and foreign investment. Investments in
IT, including IT services, are likely to be
central to the success of the many ongoing
transformation projects that the Egyptian
government is undertaking to restore
the country’s economy. Two prominent
national projects in which IT will play a
crucial development role are the Suez Canal
expansion and the Golden Triangle project.
“The Egyptian Ministry of
Communications and Information
Technology’s overriding ICT strategy for
2014–2020 is the main driver for onshore
IT investment wave, which aims to achieve
a digital economy through ICT, to provide
prosperity, freedom and social equity for
all,” according to Jyoti Lalchandani, Group
Vice President and Regional Managing
Director Middle East, Turkey and Africa,
IDC. “In addition, the government has
stated that IT is an important factor
in its plans to transform the country’s
education, healthcare, justice, culture and
tourism sectors.”
Key areas for investment have included
ICT infrastructure, legislative reform
and IT industry programmes aimed at
boosting knowledge and business process
outsourcing, electronics manufacturing
and R&D, and cloud computing. The
government’s goal of increasing IT-related
contributions to over 8% of GDP by 2020
is viewed as ambitious but attainable with
sustained investment. “According to IDC,
Egypt’s overall IT and ITeS revenues are
expected to expand to $1.8 billion in 2017,
and reach $2.6 billion by 2019, growing at a
CAGR of 12.9%. Cloud and BPO services will
be the most significant contributors to the
28
ITeS growth in 2017, expanding at 34.8%
and 14.0% respectively,” says Lalchandani.
Ongoing investment in high-speed
broadband infrastructure has accelerated
the development and adoption of ICT
services. In October 2016 the long-awaited
allocation of 4G licences to telecom
providers, with the promise of faster
mobile connectivity was completed.
The widespread penetration of mobile
devices in the Egyptian market, with
approximately 40% of all Internet users
using mobile Internet, positions the
country well to take advantage of new data
services enabled by 4G technologies and
cloud computing.
Initiatives such as Silicon Waha’s
technology parks across Egypt follow
international best practices in providing
a business environment conducive to ICT
organisations, particularly international
firms looking to establish a regional
presence. Egypt has successfully attracted
numerous leading American and European
technology companies, offering a
combination of high-quality infrastructure,
local skills availability and competitive
costs compared to other parts of the region.
Education is a significant factor in the
success of Egypt’s IT industry; the country
produces nearly half a million graduates a
year, with 10% of those in IT-related fields,
and other fields relevant to business or
knowledge process outsourcing.
ITIDA’s training and graduate
placement programmes and
entrepreneurial support are key initiatives
in this field taking the outsourcing capacity
from almost 61,000 in 2016 to around
70,000 in 2017, with more than 55,000
FTEs catering to the offshore demand.
Outsourcing has become a major
growth industry in Egypt, driven by the
successful contact center services like
translation, human resources, finance
and legal practice, and other high value
Jyoti Lalchandani,
Group VP and
Regional MD Middle
East, Turkey and
Africa, IDC.
services such as research, engineering
and software development. Egypt has
achieved significant success in establishing
itself as a regional hub for contact centre
outsourcing, with numerous small and
large firms expected to operate more than
66,000 seats in the country by 2017.
The outsourcing sector, providing
IT and ICT services from Egypt to
international customers, is expected to
remain strong over the coming years. The
business process outsourcing market in
Egypt is particularly healthy, estimated
at $1.3 billion in 2016, expanding to
approximately $2 billion by the end of
2019 at CAGR 13.4%.
Egypt has become well regarded
on the international stage as a leading
destination for outsourcing, culminating
in being named as Outsourcing
Destination of the Year 2016, at the
Global Sourcing Association European
Awards with more than 67% of the
business process outsourcing revenues
coming from offshore service delivery
and more than 86% of the revenue
contribution from North America,
Europe, the Asia Pacific.
Egypt has a broad base of skilled
labour, who are multilingual across
English, German, French and Arabic.
This base makes Egypt an attractive and
a cost-effective market with minimal
communication barriers to provide
outsourced services to Western, Asian and
Middle Eastern markets.
Egypt’s continued success in
producing skilled graduates, particularly
in the technology and engineering
fields, will increase its ability to deliver
outsourced research and development,
and engineering services. Outsourced
back-office services including human
resources, procurement, are also growing
segments and thus require a steady
supply of skilled workers.
Issue 14
INTELLIGENT TECH CHANNELS