CAIRO: The Boston-based Yankee Group, an independent technology research and consulting firm, announced this week that Egypt’s growing global outsourcing potential may make it the next India, which currently accounts for 60 percent of global outsourcing.
Economic analyst at the Ahram Center for Political and Strategic Studies Magdy Sobhy told The Daily Star Egypt that Egypt was in a fortunate position of having a “very talented pool of workers with strong bilingual language skills and proficient IT and computer science knowledge.
In a report titled Is the Future Bright for Outsourcing IT Services to Egypt?, Yankee cites global companies Cisco, Google, IBM, Microsoft, Oracle and Orange Business Services as companies which already outsource IT in Egypt.
Sobhy does not believe Egypt will compete with India though for major Western companies. He does say, however, that Egypt can lead the region by attracting small to medium-sized IT and telecommunications businesses, and especially Arabic companies who require proficiency with both Arabic and English. He says he was “surprised to find that Hebrew translators were also widely employed by the industry.
Dubai is our main competitor in the region, which may offer better benefits to companies, says Sobhy, but Egypt has a distinct advantage with regards to languages and lower costs.
While the Egyptian economy already relies heavily on rents, specifically from tourism, remittances, and the Suez Canal, Sobhy says outsourcing will still be good for the Egyptian economy, as the sector can employ a large number of people and invest in human capital.
The report states that the Egyptian government has set a target of $1.1 billion of the global outsourcing market by 2010, quadrupling its 2005 revenue.
Despite Egypt’s advantages, the report also states drawbacks and recommendations to boost Egypt’s outsourcing services even more. Among the recommendations is that Egypt invest in local infrastructure, promote technical education, encourage companies to obtain appropriate training and certification, develop an alternative location for ICT companies in Alexandria, and to initially focus on the Middle Eastern market for business process outsourcing.
Egypt has a number of the required ingredients in place to become a major hub for IT outsourcing in the Middle East, said Tony Marson, Yankee Group senior analyst and report co-author. In an anywhere environment, where time and place are irrelevant, IT outsourcing will continue to be a strong and resilient revenue source opportunity for those regions that successfully enter it. For Egypt, the government will have to steer the development of the ICT industry cautiously through the next 5 years.
Outsourcing is increasingly common and involves the transfer of some aspects of a company’s business to a different country in the interest of lowering costs, or redirecting company energy, using the partner country’s labor, capital, technology, or resources.
