Business process outsourcing in Egypt becomes major source of revenues

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In mid-August 2016 the European Outsourcing Association (EOA) announced that Egypt had been shortlisted for Outsourcing Destination of the Year. The Arab Republic was one of only four countries to make the list, alongside Belarus, Fiji and Sri Lanka. For many local BPO firms currently operating in the country, Egypt’s status as a major centre for offshoring – and particularly for the provision of digital technology-enabled services – has long been well-established.

In 2010, it placed ahead of Colombia, the Philippines and Sri Lanka to win the EOA’s Outsourcing Destination of the Year award. In terms of population, demographics, cost, foreign language skills and ICT fluency, Egypt is acknowledged to be well-positioned to continue to attract new BPO contracts for the foreseeable future. Furthermore, forward-looking oversight and planning on the part of public agencies and the Information Technology Industry Development Agency (ITIDA), have contributed to rapid growth across the industry.

Current Status

By mid-2015 approximately 50,000 Egyptians were employed in the offshore BPO sector, while an additional 40,000 worked in regional outsourcing. This workforce is as cost competitive as other potential or active outsourcing centres around the world, while maintaining a relatively high degree of ICT awareness and training. Some 200,000 new graduates – around 10-15% of which are multilingual – come onto the market each year in the greater Cairo area alone, thus providing a large pool of new potential employees. According to data from Intelligent CIO, a UK-based, Middle East-focused ICT media analysis firm, Egyptian universities and training institutes generate approximately 500,000 new graduates on an annual basis, around 50,000 of which have degrees or certificates in ICT-related fields. Meanwhile, nearly half of the total – or around 220,000 graduates – are certified in service jobs or other BPO-related segments.

From 2014 through the end of 2015, Egypt’s ICT sector posted growth of 13%, to reach a total contribution of 4.1% of GDP, according to Intelligent CIO estimates. The offshore outsourcing sector, in particular, has grown rapidly in recent years – posting annual growth of around 7.5% since 2014 – on the back of various agreements with leading multinationals, including IBM, HSBC and Nestlé, among others, as reported by management consultancy Everest Group. At the heart of this expansion has been a push by ITIDA to shift the nation’s outsourcing sector from a low-value to a high-value service model, taking advantage of Egypt’s high-quality ICT connectivity and skills base to move into more complex areas.

While voice services continue to account for the bulk of BPO revenues in the country, recently a handful of new areas – including IT outsourcing, research and development and other data-driven facilities – have become increasingly important to the country.

Looking Ahead

The Egyptian Information, Telecommunications, Electronics and Software Alliance (Eitesal), a private sector industry group, is developing a number of programmes to ensure Egypt maintains its reputation as a major destination for BPO services. As of mid-2015 Eitesal was in the midst of rolling out an online portal for BPO service providers. Other projects currently under way are aimed at attracting new offshore projects to Egypt and facilitating the ongoing development of the government’s telecoms regulatory framework (see overview). In May 2016 the ITIDA announced that eight multinationals planned to expand their presence in Egypt, in the process creating 6000 new jobs. A key contributor to this expansion is IBM, which has been active in Egypt since 1954. In early 2015 IBM launched a new digital centre for sales services to Africa and the Middle East in the Smart Village on the outskirts of Cairo. With a workforce of around 800 Egyptians, and built at a cost of some LE25m (equivalent to $1.3m as of December 2016), the facility represents a major new BPO site, and was widely seen as an expression of confidence in the segment.

 

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The Report: Egypt 2017

Telecoms & IT chapter from The Report: Egypt 2017

Cover of The Report: Egypt 2017

The Report

This article is from the Telecoms & IT chapter of The Report: Egypt 2017. Explore other chapters from this report.

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