Thomas White Global Investing
Egypt Stamp
June 7, 2010
A Postcard from Africa
Egypt: The New Outsourcing Hub

Woman at call center

Egypt is developing a dedicated IT infrastructure and with almost 30,000 engineering students graduating each year, the country is developing an integrated infrastructure and labor asset.

The teeming Indian city of Bangalore is so known for its outsourcing industry that being “Bangalored,” has become part of the lexicon of everyday life as well as industry folklore. In Asia, Bangalore and several cities in India, the Philippines, China and Malaysia are among the most well known back office processing or BPO destinations in the world. Recently, Poland has earned the BPO title of the European Union. Now, those countries may have to prepare for another new and fast growing entrant in the market from another region: Egypt.

It may seem improbable that the Land of Pyramids and the Pharaohs would now also strive to be king in outsourcing. But Egypt is getting there. In 2009, ITIDA, (Egypt’s Information Technology Industry Development Agency), won the prestigious Offshoring Destination of the Year award by the National Outsourcing Association, an award that it also won in 2008. On the A.T. Kearney Index of 2009, the country ranks sixth as a global offshoring destination ahead of competitors like Morocco, Israel and Jordan.

These kinds of awards and rankings are indicative of the type of progress that Egypt has made in becoming a premier outsourcing hub. Egypt is dreaming big. The global outsourcing industry is estimated to generate revenues of $30 billion a year, and Egypt is hoping to capture a large chunk of that. The government expects the outsourcing industry in Egypt to earn $1.1 billion this year and double that by 2013. Companies like Microsoft, Teleperformance, Google, Vodafone, Xceed, ECCO and E Group have already established contact centers in Egypt.

And the Egyptian government is playing its part. ITIDA, which is affiliated with Egypt’s Ministry of Communications and Information Technology, has been aggressive in promoting Egypt as an outsourcing destination. Not only does it train 3,000 students every year as call center representatives, but ITIDA is offering to match the difference if any other market offers lower costs. Egypt is also rapidly developing its information infrastructure. High-tech business parks like the Smart Village, set up in 2003 on the outskirts of Cairo, can employ nearly 35,000 workers. Also coming up is the Maadi Contact Center Park, which can seat 60,000 workers.

So why has Egypt become a hot BPO destination? The advantages are many. Egypt has proved that it can make costs just as competitive as those, for example, in India or the Philippines. In addition, it boasts of a multi-lingual workforce fluent in Arabic, English, German, Spanish and Italian. As well, the country is just four hours away by flight to many places in Europe, and its time zone overlaps European business hours better than India or the Philippines. What’s more, Egypt works on Saturdays and Sundays, offering quality outsourcing even on those traditionally weaker days. (Egypt’s ‘weekend’ falls on Thursday and Friday). These are the sort of competitive advantages that should be giving governments in India and the Philippines sleepless nights.

Of late, the Middle East seems to be popping up with surprises. Last year, we wrote about Israel’s status as the country with the largest number of high-tech startups after the U.S. Now, Egypt is giving India a run for its money. With extensive government backing, it may not be too long before ‘Cairoed” becomes part of the outsourcing lexicon.

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