By Oxford Business Group
Egypt has long been a cost-competitive destination for offshore services, such as business process outsourcing (BPO), but a spate of new agreements with a number of large investors has given the ICT sector a further boost, with thousands of potential new jobs in the offing.
Egypt’s Information Technology Industry Development Agency (ITIDA) reported on 6 May that 6,000 new jobs would be created in the offshore outsourcing sector following agreements with eight multinationals to expand their presence in Egypt.
Companies such as IBM, Procter & Gamble, HSBC, Nestlé, Axxcelera, Mobinil Contact Services, Teleperformance and EMC² have signed agreements to extend their partnerships with the ITIDA in Egypt, to help service their respective customer bases in markets from the Americas to Asia.
“Egypt can become a multilingual hub in the region for BPO. This is what many international companies are looking for, but the industry has not been fully exploiting this opportunity,” Giorgio Modesti, CEO of Teleperformance Egypt, told OBG.
Still, the wave of new investments represents a strong vote of confidence in Egypt’s export-oriented ICT sector. 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.
Top 10 for outsourcing
The new commitments should help reinforce Egypt’s competitiveness as an off-shoring destination against other countries including India, Mexico and the Philippines. AT Kearney ranked Egypt 10th in the world on its 2014 Global Services Location Index – a drop from fourth place the year previously, but still ahead of regional competitors including the UAE and Jordan.
Egypt’s score was particularly strong on “financial attractiveness”, with AT Kearney commending its assets including favourable costs, strong government support for the sector and proximity to Europe: “Once the country’s political situation stabilises and investors consider it to be a safe destination, we expect Egypt to return as one of the leading locations for both IT and BPO services.”
The calibre of human resources in the sector is also fairly competitive. According to Modesti, Cairo alone sees 200,000 new graduates every year, 10%-15% of them multilingual, although he called for closer ties between the sector and universities, and easier visa requirements to promote the sector.
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 programmes 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 centre 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,” Hassan El-Shawarby, chairman of the outsourcing division of Eitesal, told OBG.
“Executing such initiatives will ensure that the contact centre and BPO sector is well positioned and sustained with the reforms and economical developments currently taking place in Egypt,” added El-Shawarby, who is also the general manager of Etisal International, an outsourcing services company.
The importance for Egypt’s outsourcing sector of attracting investments from multinationals like IBM, Procter & Gamble and HSBC is clear. Currently, roughly 50,000 of the 90,000 jobs in Egypt’s outsourcing and shared services sector are offshore related, according to ITIDA’s CEO, Hussein El-Gueretly.
“The offshore global services industry has doubled in scale over the last four years, resulting directly from the increase in investments in existing service delivery operations by Global In-house Centres as well as by service providers,” he said.
However, while the various initiatives targeting the outsourcing and offshore segments are crucial for maintaining competitiveness and job creation, the country is also looking to encourage long-term development in the ICT sector as a whole, with calls to increase higher value-added services.
“It’s a perfect time to revisit the IT strategy in the country, and we should focus on two sectors, expanding the customer service sector and encouraging large IT companies to have their base here for the region,” Ramy Kato, CEO of IT services company Xceed, told OBG.
“We talk about becoming a hub and while we were on the right path now it’s time to invest in it again, and demonstrate our reliability,” he said. “We need to focus on what areas we want to differentiate ourselves, and enlarge them, and overall develop higher-value added services in IT such as location-based services or helpdesks. The pool of engineers in the country is unique.”