Egyptian ICT market will achieve growth rate estimated at $8.95bn in 2016, $10.32bn in 2019: IDC Group vice president

Mohamed Alaa El-Din
10 Min Read
Jyoti Lalchandani, IDC Group Vice President & Managing Director for Middle East, Africa and Turkey Handout to DNE

IDC chose Egypt for their regional research centre because the Egyptian market features strong potential for growth and is a large pool of talent, said Jyoti Lalchandani, IDC Group Vice President & Managing Director for Middle East, Africa and Turkey.

In an interview with Daily News Egypt, Lalchandani said IDC plans to increase cooperation with the Information Technology Industry Development Agency (ITIDA) on more events and in strategic projects.

Can you provide an overview of the CIO summit?

This is the second edition of the CIO summit that IDC is organising in Egypt in partnership with ITIDA. The CIO summit is IDC’s flagship or the main conference that we organise in a very few, select countries across the world.  We hold no more than 10 CIO conferences across the world. Egypt was chosen last year and we hosted the first summit, and this year we are hosting our second summit.

The CIO summit is really a platform to bring together some of the leading CIOs, along with industry representation and government, to discuss the key trends that are shaping the landscape in Egypt. Today, we have brought together over 200 CIOs from various industries; banks, financial services organisations, public services, government administration, retail, distribution, manufacturing, health care, and a wide range of industries.

Leading CIOs will share with us their perspectives on digital transformation, and on their key challenges and priorities. We also brought in representation from the industry; our partners who will present their top leadership in areas around the platform, like Cloud, Analytics, Mobile, and Social, and also talk about IDC’s research on animation accelerators and digital transformation.

So the CIO summit is really IDC’s flagship. It is a very exclusive event, and it is invitation only. So, we decide which CIO should be part of the conference and we decide the best practice sessions. It is a conference that is designed by CIOs for CIOs, so a lot of the content and topics are actually chosen by CIOs as part of IDC’s research process.

How do you see growth in the IT market in Egypt?

Our projection for growth in the IT market this year is that it is going to be moderate, so you are not going to see exceptional growth for multiple reasons. One of the reasons is that there is generally an economic slowdown in many countries, including the Gulf, Africa and, of course, Egypt. We are seeing a more cautious approach, more cautious spending. The second reason is of course the currency fluctuation, which means that in US dollar terms, we expect the market to be impacted because of fluctuation in the currency and shortage in US dollars in the country. We are already seeing some impact of that in the overall ICT landscape. However, we think that the export of IT and ICT services from Egypt to other countries will remain fairly strong in the next few years.

In terms of investment, we are seeing a lot of investment still very much centred on infrastructure. Almost 70% of the overall spending in Egypt is still focused on hardware infrastructure. Spending on areas like software packages and IT services is still quite small, but as the market matures and grows we’ll see the shift from IT hardware to software packages and IT services.

According to IDC’s latest projections, the Egyptian ICT market will achieve a growth rate estimated at $8.95bn in 2016 and a growth of $10.32bn, or 9%, in 2019, which will come mostly as a result of spending on IT and software packages. We also expect the Egyptian economy to achieve strong growth rates as a result of foreign investment under the new government.

Have you the chosen a space for the IDC office?

Yes, we have chosen a rental in Smart Village. Our initial plan was to have 10 people at the start of this year, and we already reached that limit. So we are already now looking for a bigger place as we hope to be between 15 to 20 people by the end of 2016.

Why have you decided to open your centre in Egypt?

For us, Egypt is a very open market for a variety of reasons. First of all, Egypt has some of the best talents in the region, so we could have access to great talent, especially in IT and telecom. Also ITIDA has invested a lot over the past few years, so we have seen a great pool of talented people coming through.

Secondly, we think it is a market we cannot ignore. We are seeing some stability in the country now, and we hope that this will continue. We think it is a market that has strong potential for growth; it has close to 100 million people, it has a great pool of talent, and the penetration of ICT is still quite small, which means there is significant potential for growth in the industry.

Another important reason is that we feel we can leverage Egypt, given its location; we can support a number of business units in the Gulf, Africa, and possibly in Europe. We think we have the right structure and the right backing from the government and ITIDA is supporting us, so we have the right formula for us to expand our operations in Cairo.

Will your office in Egypt be regional?

Yes, it will be a regional centre focused on the Middle East and Africa regions. There will be staff here that will be based in Cairo, but will have a regional role and regional responsibilities.

What is the size of your investments in Egypt after opening the centre?

Our investments here are basically our infrastructure. Basically, that includes the people we have, the office we have, the underlying infrastructure in terms of IT equipment. We do not have machinery, we are in the service business; so we provide research and we provide advice to customers. So, our investments in the country are in terms of human capital. Developing human capital and having human capital on the ground that would support the country and the local economy.

What benefits would Egypt get from IDC?

A lot of benefits. First of all, IDC is a trusted source of information for hundreds and thousands of companies in the IT and telecom industry, so IDC opening a centre here will lead to all the large multinational companies viewing Egypt as a stable market for investment.

Secondly, by being here, IDC will also expand its research coverage. We will provide a lot more coverage of research areas to domestic ICT investors. This means that the domestic ICT industry could expect to get a lot more information on the local market than they used to.

We are also working very closely with the MCIT and ITIDA, and being here on the ground, we believe we can do a lot more together. We can organise more events and more programmes, we can work in many other strategic programmes along with ITIDA. We think that it is a good sign for everybody.

What is your programme with ITIDA for promoting SMEs?

SMEs are definitely one of the most important segments of the population. They represent a significant majority of companies. For SME to expand, flourish and progress, ICT and telecom will play a major role. We are currently collaborating with ITIDA to design a programme that we think will be interesting, but we have not formalised anything yet, so we will wait until we develop it more and then we will make a formal announcement once it is finalised.

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