Egypt builds upon its outsourcing growth

Over the past 15 years, Egypt has built a growing reputation as a centre for export-oriented ICT services, particularly business and knowledge process outsourcing (BPO and KPO), with revenues that exceeded $1.1bn in 2011, according to a Ministry of Communications and Information Technology (MCIT) presentation last year.

As with many other service sectors, the BPO and KPO industries were affected by the fallout from the 2011 revolution. Research by the LSE Offshoring Unit in early 2013 found that among prominent outsourcing destinations, Egypt’s risk profile was one of the most elevated in the areas of regulatory risks, macroeconomic risks and political risks. A 2013 report on the “Top 100 Outsourcing Destinations” by US-headquartered advisory firm Tholons cited the fallout from the Arab Spring as the main reason for Cairo’s drop from 49 to 58. Alexandria fell four spots to rank 77 in the same analysis.

However, Egypt’s competitive advantages as a global centre for ICT-intensive industries, including BPO and KPO, are manifold. “In spite of the instability, the quality and competitive costs of Egypt’s outsourcing services have not been impacted,” Giorgio Modesti, CEO of Teleperformance Egypt, said in an interview with OBG.

The local cost advantage is an important factor: labour, land and power are all affordable by international standards. But while workers’ wages are relatively low, the skills base is strong. As well as native Arabic, English is widespread.

Competitive skills and cost
Employment estimates vary but the number of people employed in the sector is about 43,000 positions in total. Egypt’s Information Technology Industry Development Agency (ITIDA), part of the MCIT, estimates that each year around 273,000 students graduate from Egyptian universities with degrees in fields suited to outsourcing, including technology and commerce, while 31,000 students are fluent in a Western European language on graduation.