Egypt - Outsourcing Destination

Global Services / www.globalservicesmedia.com

When and how did the outsourcing

industry evolve in Egypt?

What infrastructure improvements have

the government made to meet the

demands of this growing industry?

In Egypt, the national Information and

Communication Technology (ICT) industry is

emerging as a role model of deregulation and

privatization as well as a catalyst for reforms

in other sectors. The overall ICT industry has

managed to maintain a growth rate of 20

percent CAGR in 2008, and has attracted local

and foreign investments of more than US$8

billion over the past three years.

The Egyptian ICT sector has managed such a

growth rate mainly due to the quality of its

infrastructure and a strategy that provides an

environment conducive to business. Through

the public-private partnership mode, the

Ministry of Communications and Information

Technology (MCIT) and Information

Technology Industry Development Agency

(ITIDA) launched a strategy in 2006 outlining

how the country should utilize its competitive

advantages to become a destination of

choice for BPO/ITO. The strategy consists of

programs designed to enhance the capacities

of local companies, scale up a talent pool

equipped with needed skill sets, and attract

foreign direct investments.

Egypt has invested in developing world-class

infrastructure facilities, including real estate,

telecommunications and Internet

connectivity. The Smart Village on the

outskirts of Cairo provides a state-of-the-art

home for over 20,000 people working in the

IT industry and has the capacity for a further

60,000. The main ICT infrastructure of the

Smart Village consists of high-speed network

for data, voice and video transmission, Virtual

Private Network (VPN) connection, Voice over

Internet Protocol (VOIP) capabilities and data

center, cable TV and video conferencing

systems, state-of-the-art power network,

and uninterrupted power supply and

standby generators.

Additional Smart Villages are being planned

for Alexandria and Damietta, while the

Maadi Contact Center Park in Cairo will be

up and running in 2012 for 30,000 people

working in business process outsourcing.

The first three buildings in the park were

inaugurated in May 2009. Smart Village and

the Maadi Contact Center Park will

ultimately be home for over 110,000

professionals. Egypt has an electrification

rate of 98 percent and is a net exporter of

electricity providing a secure, continuous

supply of electricity to the industry.

In the past few years, the telecom sector has

been substantially liberalized. There are

three mobile phone operators (Mobinil,

Vodafone Egypt and Etisalat) all of which

have licenses to provide 3G services. Egypt’s

telecommunications infrastructure is very

well-developed, and the international long-

distance rates have been lowered in an

effort to promote the contact center

industry.

The government is investing in the building

of roads, and improving the transport

infrastructure in Cairo. A third Cairo metro

line is under construction.

The government is also planning to have

US$ 2.75 billion of public-private funds to

be injected into the economy for the

development of key infrastructure.

The MCIT and the Ministry of Higher

Education and Scientific Research signed a

What measures is the government taking

to ensure the quality of the talent pool in

the country?

protocol in late 2007 to prepare a large

segment of Egyptian graduates for

BPO/ITO through the EduEgypt

employability skills program. The university

intervention program is aiming at

supplying the market with 10,000

professionals annually by 2012. Now in its

third phase, EduEgypt is being applied in

19 faculties inside nine universities across

the country. The program graduated

around 3000 students so far. Another

finishing schools program is underway to

produce an additional 20,000 professionals

annually by 2012. The ITIDA is actively

involved in the program design as it is

tasked with developing the IT/ITES industry

with the aim of increasing exports.

The program is designed and implemented

by a number of renowned global partners.

Dr. Hazem Y. Abdelazim

Interview of Country RepresentativeAdvertorial

We need to have continued investment to enhance the value of the talent pool

CEO, Information Technology Industry Development Agency (ITIDA)

While the Information Technology Institute,

First Source, IBM Daksh, Infosys BPO are

responsible for the training, Hewitt and

Eduquity are carrying out the testing process.

EduEgypt also listens to industry needs

through a unified industry calibrated

assessment and testing modules to ensure

quality.

EduEgypt aims at providing the talent pool

with the skills required for BPO/ITO and

uses a skills matrix approved by the BPO

industry and endorsed by our global

partners to instill the required set of skills

for BPO/ITO. The program includes Train the

Trainer and Train the Master Trainer

components to help build the national

training industry capacity.

We are also launching an advanced

management and professional training

program in 2010 to provide industry

relevant training to the IT-BPO sector. The

program will be introduced as a proactive

measure to inject middle management into

the market. This will help avoid the lack of

middle management experienced by other

outsourcing destinations.

As of Q4 2009, we started a European

language program, to enhance the multi-

lingual skills of the entry-level talent base.

The program started for French and

German languages and will include Spanish

and Italian in the coming stage. Its design

resembles that of EduEgypt but tackles

languages specifically and it is

implemented in cooperation with leading

global cultural and language centers.

The Information Technology Institute (ITI) is

also offering several training programs

which include a nine-month diploma

offered by the Combined Software

Application Program, Knowledge Transfer

Partnership Program, and more than 20

customized IT training programs.

Several programs are currently under

preparation that will enhance the technical

capabilities of the students in a broad range

of IT service lines (from package

implementation to remote infrastructure

management). These will increase the

suitability of the talent pool in IT-specific

areas.

There has been an Egyptian Education

Initiative set up to improve ICT education in

Are there any industry initiatives to

foster the development of this talent

pool?

the country, supported by leading ICT

companies such as Cisco, HP, IBM, Microsoft

and Intel. The Egyptian Information,

Telecommunications, Electronics and

Software Alliance (EITESAL), which focuses

on bridging the gap between academia

and the ICT industry, helps young talent

develop practical and industrial skills

within educational programs. ITIDA has

also recently launched a program to

promote industry and university

collaboration, linking academic research

with industry and market needs. The above

as well as the EduEgypt program depend

heavily on the participation of the industry

to ensure equipping fresh graduates with

the right skill sets.

In order to anticipate and adapt to

changed industry realities, government

bodies constantly revisit their talent and

infrastructure initiatives as well as

government support to potential investors.

A major focus in the future will be the

implementation of more comprehensive

talent programs as well as making tier II

cities more conducive for investment.

What measures need to be taken to

sustain the current competitive edge in

the global market?

Interview of Country RepresentativeAdvertorial


Egypt is fast moving beyond traditional outdated stereotypes to emerge as one of the most developed economies of the Middle East and North Africa. Located at the crossroads of Europe, the Middle East and Africa, Egypt has

continued to gain recognition in the outsourcing industry in the past year.

There are numerous reasons behind the success story of Egypt as a preferred outsourcing

destination. The core reason behind the rapid development of Egypt is a talent base of skilled

multi-lingual graduates. Many graduates are fluent in French, German, Italian and Spanish as well

as English. Largely as a result of its strong talent base and strong government backing Egypt has

emerged as the sixth most attractive offshore destination according to the 2009 AT Kearney Global

Services Location Index. A large talent pool of nearly 330,000 graduates, many of them in the areas

of commerce, science and engineering, provide support to the growing Business Process

Outsourcing (BPO) industry in the country. The well-concerted efforts by the Egyptian government

to maintain this steady supply of well-trained graduates have gone a long way in attracting

foreign investment from leading international organizations.

Egypt boasts world-class infrastructure in terms of real estate, telecom and Internet connectivity.

The ‘Smart Village’ concept of a technology park with state-of-the-art infrastructure has caught on

well with call centers and exported IT services. Strong government backing of the Information

Technology Industry Development Agency (ITIDA) and the General Authority for Investment

(GAFI) has helped to develop the BPO industry in the country.

The strategic location of Egypt is an added advantage, as it allows easy access and connectivity to

several international submarine cables. All these factors, coupled with the cost-effectiveness of

services in the country, go to providing a safe, modern business environment to the industry.

Currency: Egyptian pound (EGP)

Main industries: Textiles, food processing, tourism, chemicals, cement, metals, construction, BPO

Literacy rate: 57.7%

Languages spoken: Arabic (official), English, French, Italian and Spanish

International airport: Cairo, Luxor, Ophira, El Arish, Hurghada

GDP growth (World Bank): 7.1% (2008 figures)

IT-BPO sector growth

Total number of employees: Over 15,000 directly employed in IT-BPO & over 45,000 indirectly supported by the industry

at a glanceCountries that outsource business to Egypt: Europe, Middle East, North Africa, Australia, New Zealand, India, North America

Key verticals: Banking, healthcare, business solutions, telecommunications

Some big players: Oracle, IBM, Cisco, Vodafone, HSBC, Google, Xceed, Microsoft, Wipro, Allied Soft, Stream Global Services, Teleperformance, Valeo, SQS, Raya, Etisal, Orange, EMC, MahindraSatyam, HP-EDS

Key competitive advantages: Infrastructure and connectivity, multi-lingual talent pool, cost-competitiveness, strategic geographic location and supportive environment

Main cities: Cairo with its Smart Village and Maadi Park (under construction)

Emerging locations: Alexandria, El Mansoura, Assuit


Advertorial The Egypt Factfile

The efforts taken to promote the outsourcing industry in the country have proved successful. A recent report by

the Commonwealth Business Council ranks Egypt as the number one outsourcing destination in Africa and the

growth of the industry has in turn contributed to the socio-economic development of the country as a whole.

Social and political stability in Egypt are among the main factors attracting international investment in Egypt and

a high growth rate is expected in the coming years.

Dr. Hazem Y. AbdelazimCEO, Information Technology Industry Development Agency (ITIDA)

Advertorial Opportunities and Future Potentials

In recent years, the Egyptian government has

accelerated the pace of reforms in the

country with emphasis laid on the IT-BPO

sector. Key initiatives have been launched in

the form of tax reforms, customs reforms,

financial sector reforms and intellectual

property protection reforms to aid the

growth and development of the industry.

Enormous strides have been made in

intellectual property protection and the

piracy rate in Egypt has dropped to about 60

percent, which is one percent less than the

international rate. This proves the country's

keenness to attract multinational companies

and its concern to protect intellectual

property rights. Egypt is targeting a US$1

billion outsourcing industry exports by 2010.

By the end of 2009, over 15,000 jobs are

directly based on the IT-BPO sector and over

45,000 jobs are indirectly supported by the

industry. The Commonwealth Business

Council report further described the Egyptian

Government strategy of raising ICT exports as

being positive, especially that it takes into

account global changes. Other industry

support sectors, such as telecommunications,

education and training, banking and

transportation, have also developed with the

growth in the IT-BPO sector.

IT-BPO operations in the country have so far

focused around the Smart Village in Cairo. The

government is now developing Smart City II

or Maadi Park as it is also known in Cairo, to

meet the demands of the growing industry.

The park is expected to be fully operational

by 2012. The Egyptian telecommunications

infrastructure is also engineered to provide

substantial services and to absorb the rapidly

growing ICT industry. With its current

infrastructure, and the large number of

international and regional fiber optic cables

that pass through Egypt, the country has

international and national links and reliable

connectivity to the rest of the world. In this

way, Egypt has excellent components for an

emerging call center hub.

The overall perception in Egypt towards a

career in IT is extremely positive and is

reflected by the choices many young

Egyptians make when choosing a course at

university. Of the 330,000 students that

graduate in the country every year, around

100,000 study subjects directly applicable

to the IT industry. The future of the industry

in the country looks promising with

continued investments and infrastructure,

government support and international

quality resources.


looking ahead

http://www.itida.gov.eg

What our patrons say Advertorial Client Testimonials

IBM Egypt

Eng. Amr Ghoneim General Manager, IBM Egypt

IBM's choice to establish a center in Egypt recognizes Egypt’s high-value services delivery, geographical location and the availability of a

skilled talent pool. These are key factors contribute to Egypt’s successful experience in this industry. We are pleased to partner with the

Egyptian government on focused projects that confirm Egypt’s competitiveness.

Cisco

Angel MendezSenior Vice President, Customer Value Chain Management, Cisco

In considering locations, Cisco specifically chose Egypt because it has many unique advantages for a contact center destination. Additionally,

Egypt aligns with Cisco's focus to partner with emerging countries in order to create innovative and inclusive business models enabled by

technology.

Stream

Scott Murray Chairman and CEO, Stream

Following the recent opening of our 1000-seat Cairo solutions center, we are seeing tremendous opportunity to offer a highly skilled,

technical workforce to support our growing global client base. We believe that Egypt is fast becoming the next ‘go-to’ location for offshore

services for both our North American and our European global accounts. We are thrilled to be working with ITIDA to ensure that we quickly

and effectively ramp up training and support efforts in Cairo for these clients.

Vodafone

Richard Daly CEO, Vodafone

I think (Egypt’s) geographical factor is important. I really do think of Egypt as right in the middle of the action. For the whole of the European

operations, it is just an easy option. And even when you have the complete opposite—like Australia and New Zealand—it is even better for us

because we run the UK during the day and in the same seats, we run Australia and New Zealand at night, so the efficiency of the building is

massive.

Both quality and quantity of available labor are very high. Purely on our product—call center services—you need to have a good education,

and be bi-lingual. The education system produces intelligent, well-grounded, and ambitious people to get jobs with companies like Vodafone.

CBC Technologies

Vijay Amliwala Managing Director, CBC Technologies

In our study, Egypt is rated as the most attractive outsourcing location in Africa for a number of reasons:

Egypt has an edge because Information and Communication Technology (ICT) is supported and believed in by the leadership and all actions

are coordinated.

The close coordination between different departments, especially the Information Technology Industry Development Agency (ITIDA) and the

General Authority for Investment and Free zones (GAFI), makes a real single window service for any industry coming into Egypt.

An additional strength is the serious and coordinated efforts that the government and other stakeholders are making to maintain a steady

supply of trained human resources. Egypt is first in the people and skills score in this study.


An abundant technically skilled and uniquely multilingual talent pool...

The sustainable low cost of doing business...

A reliable and scalable infrastructure supporting your business...

Substantial ongoing government investment and support...

A strategic, culturally rich and welcoming location at the crossroads of Europe, Africa, and Asia...

These are the reasons why Egypt is an outstanding destination for information technology and business process outsourcing.

To find out more, come and talk to us at the Egypt On stand.

egypton.com