How Egypt's IT infrastructure is attracting business outsourcing firms

Drawing on its location between Europe, the Middle East and Africa; its youthful, educated, tech-savvy and multi-lingual population; and strong IT infrastructure, Egypt has become a destination for business process outsourcing (BPO). The budding segment has been supported by the government, which offers financial incentives to outsourcing companies, and has invested in the necessary telecommunications infrastructure upgrades to support BPO, such as 4G and fibre-optic cable networks.

Workforce

The country’s success establishing itself as an outsourcing destination has created thousands of jobs, with the BPO workforce expanding from 169,000 in 2017 to 212,000 in 2019. Indeed, this figure is projected to reach 240,000 in 2020. These jobs are filled by employees with specialised skills, as the country produces around 220,000 graduates in BPO-related fields and 50,000 in ICT-related fields per year. These students are also often multi-lingual, with the top languages of study being English, with 90,000 graduates per year; French, with 5400 graduates; and German, with 3000 graduates.

BPO firms are drawn to Egypt not only for its educated labour force and geographic location, but also for its low costs. The average annual salary for a software developer in Egypt is $7500, down considerably from $20,000 in Romania and Bulgaria, and $24,000 in Poland. The country’s location also means it can accommodate work across varying time zones and allows companies to provide business continuity between operations in the US and Asia.

Build-Up

In recent years ICT development has accelerated, with public cloud servers and BPO emerging as core contributors to the sector’s growth. The International Data Corporation (IDC) projects that Egypt’s ICT exports – which include BPO and knowledge process outsourcing – will expand from $3.3bn in 2017 to $4.7bn in 2020. It is also shifting from a specialisation in multi-lingual centres to providing high-value niche services, such as product development and research. As of 2018 Egypt provided BPO services to some 100 countries in 20 languages.

New Technologies

A supportive start-up ecosystem and government investment has allowed innovative enterprises to focus on developing services related to artificial intelligence, the internet of things and big data. The rollout of 5G will be another notable step towards this end. The government and telecoms operators are investing in the network upgrades that are essential for the implementation of 5G commercial services. In 2018 the National Telecom Regulatory Authority launched broadband fibre optics, a necessity for technologies that rely on 5G.

Companies are also getting ready for the transition, with state-owned Telecom Egypt (TE) signing a deal with Sweden’s Ericsson in February 2019 to upgrade the provider’s cloud core network. That same month TE signed a memorandum of understanding with Nokia to introduce a 5G network and test use cases. Additionally, in December 2019 Etisalat Misr tested 5G on a commercial network in partnership with Ericsson, reaching speeds of up to 1.4 Gbps.

Offshoring firms will be able to use these technologies, increasing Egypt’s competitiveness on a global scale. “Egypt is effectively positioned to become a major hub of business and technology services to countries and organisations that are undertaking digital transformation, particularly those in regions such as North America, Europe, the Middle East and Africa facing resource constraints,” Jyoti Lalchandani, group vice-president and regional managing director for the Middle East, Turkey and Africa of the IDC, wrote in the German Outsourcing Association’s “Destinations Egypt 2.0: Outsourcing Destination Guide 2019” report. “After establishing itself as a preferred regional outsourcing hub, Egypt started expanding its global outsourcing footprint and is now one of the fastest-growing offshore destinations in the world.”