Egypt’s outsourcing sector still going strong

DNE
DNE
5 Min Read

CAIRO: Egypt’s outsourcing industry reached its goal of $1.1 billion in ICT export revenue, according to the Information Technology Industry Development Agency (ITIDA).

“Egypt enjoys several advantages, given our location,” Ahmed Reda, head of public relations at ITIDA, told Daily News Egypt.

The country’s ICT sector has seen 17 new investments by multinational companies in the past two years along with a number of major deals over the past 12 months, Yasser ElKady, CEO of ITIDA, said in a statement.

“The sector has recorded strong and consistent growth this year with a 12 percent increase in the number of ICT companies in Egypt,” the agency said.

Despite the economic turmoil Egypt is facing due to the political unrest after the January uprising, the number of people employed in the sector has surged nearly 10 percent.

“We are able to serve several time zones, we have a tremendous talent pool full of qualified youth, we offer several packages that include training opportunities and that is why we are seeing this amount of outsourcing,” Reda added.

The ICT sector has surpassed its goal of $1 billion, setting itself up for its next “wave” of growth, this time aiming for $10 billion by 2020.

In February 2011, A.T. Kearney released its annual Global Services Location Index, naming Egypt the fourth most attractive location in the world for offshore services outsourcing. In 2010, Egypt was ranked sixth, up from 13th the previous year.

Despite the unfortunate timing, the firm did not revise its rating of Egypt. The index ranks 50 countries based on financial attractiveness, people skills and availability and business environment. India once again took the top spot.

“IT companies are now hiring, this is one sector not being affected by what is happening in the country,” said Reda.

Earlier this year, Motorola expanded its presence in the region with a new office, as well as a new regional center in Cairo, which is set up to be a focal office for the company’s Middle East and North Africa (MENA) region.

HSBC, Sutherland, Orange Business Services, and Stream International have all expanded business in Egypt, with Sutherland increasing its staff this year by 146 percent to about 460 people, according to ITIDA.

Companies like Valeo, the French automotive supplier has also increased the number of newly graduated Egyptian engineers this year, from 278 in December 2010 to 420 in December 2011. The company also expects to increase staff further to 540 in the next two years.

"We will continue to position Egypt as one of the key outsourcing destinations and it is evident we have already seen significant positive results,” said ElKady, referring to ITIDA’s vision for the upcoming year.

“We want to continue to extend all the necessary support to Egyptian and multi-national companies and we are positive that training and supporting the talent pool along with other initiatives will have considerable impact in 2012 and beyond."

Egypt has the third-largest talent pool in the EMEA region, largely due to the country’s rich pool of young talent who boast an aptitude in various European languages, which gives it a competitive edge. It’s proximity to Europe in time zone also supports the sector’s growth, as is the lower labor cost.

In terms of infrastructure, Smart Village was initially established to serve as a concentration of businesses specializing in information technology, yet due to its strong success it quickly became a headquarters for a variety of multi-national corporations.

Following its example, the new IT Maadi Park, which was scheduled to be ready for operation in 2012, is slated to house approximately 300,000 employees in over 40 buildings.

In its efforts to promote the sector, ITIDA is planning to make Egypt a “leading hub for high end ICT-based innovation, with potential themes like engineering services, product R&D, mobile applications (including gaming), and clinical research.”

It also plans to “catalyze injection of IT into government/private entities” by improving the quality and productivity of services through IT enablement/outsourcing in domestic economy. This entails pursuing cloud computing, healthcare and education.

Egypt’s graduating pool of around 330,000 students is one of the largest among low cost offshoring destinations, according to ITIDA, which should make it’s plans for the sector a feasible target.

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