CAIRO: Egypt can now brag that it is the most attractive destination for companies looking to outsource their operations abroad.
Last week in Brussels, Egypt was named “Offshoring Destination of the Year” by the European Outsourcing Association (EOA), beating rivals like the Philippines, Colombia and Sri Lanka as well as regional competitors such as Morocco and Jordan.
Criteria for the award included cost competitiveness and a strong talent pool, specifically relating to language skills.
“The country’s credibility is [growing] amongst European companies and has put its mark on the map of favored global services locations,” Tarek Kamel, minister of Communications and Information Technology, said in a statement to Daily News Egypt.
Globally, the outsourcing industry is worth around $30 billion, said Ahmed Reda, media communications manager at Egypt’s Information Technology Industry Development Agency (ITIDA). Egypt’s piece of the pie is $1.1 billion a year, and with a goal of doubling that by 2013.
The industry could generate $10 billion a year for Egypt by 2020, an official told Reuters.
“We recognize the increasing role that Egypt can play in the fast-paced global ICT industry and we are advancing steadily on the way to position the country as a hub for IT innovation and entrepreneurship,” Kamel continued.
Medhat Khalil, chairman and CEO of Raya Holding, whose company offers outsourcing solutions to other firms and now employs 2,500 locally, told Daily News Egypt, “This is another milestone for Egypt’s flourishing contact center industry.”
He continued, “For several years, Egypt has been advancing in the top outsourcing destination rankings, and the country is expected to lead the global outsourcing market and attract big offshore accounts.”
In 2009, global management and research consulting firm A.T. Kearney ranked Egypt as the sixth most attractive offshore destination after India, China, Malaysia, Thailand and Indonesia. Egypt came in 13th place in 2008.
Park for call centers
To capitalize on the growing demand, the Ministry of Communications and Information Technology plans to complete the Call Center Park in Maadi, Cairo by 2012, answering the call of foreign companies looking to set up operations in the country.
Reda indicated that the new outsourcing hub would generate around 30,000-40,000 jobs.
Already several international companies are outsourcing operations to Egypt, such as IBM, Google, Yahoo, Oracle and Microsoft to name a few.
IBM is seeking to expand its outsourcing call center operations, David Brooks, IBM BPD delivery manager, told Daily News Egypt in an interview.
Recently, Yahoo announced that it would be teaming up with IBM to operate out of IBM’s call center in Smart Village, which employs around 35,000 people, and, as Brooks mentioned, “We are bringing in new clients in the next few months.”
In addition to Egypt offering a pro-business environment, with “state-of-the-art” infrastructure through high-tech industry parks — such as Smart Village and the center in Maadi — as well as other infrastructure such as telecommunications to lure big name companies, Egypt also boasts a well-equipped, multilingual talent pool of young job seekers, Brooks explained.
“Eighty-eight percent of the relevant workforce is enrolled in secondary schools; there are 300,000 university graduates each year, growing at 28 percent annually, with 48 percent of the population between the ages of 15–39,” Khalil said, all indicators that the talent needed by the industry is present and growing.
He highlighted that Egypt has been able to foster a multilingual workforce, which is critical to any outsourcing operation.
In a previous interview with Daily News Egypt, Jeff Russakow, global president of consumer advocacy for Yahoo, noted that of those 300,000 or so students graduating each year, “10,000 take courses to prepare them for work in the outsourcing sector — thanks to support from ITIDA.”
Reda stated that training program takes place during the third and fourth years at the university, and currently 35 faculties and 10-12 universities are participating.
Healthy competition
Egypt is seen as a complementary partner to India’s significant outsourcing industry due to its strategic geographical location right under Europe’s nose, especially as the workforce masters many of the continent’s important languages that India’s workforce does not.
“India doesn’t have the significant arm to serve the demand in the Middle East, and thus, Egypt serves as a complimentary arm to fulfill the demand. As a result, India has been looking for investment opportunities in Egypt to set up their operations,” explained Khalil.
Also, with attrition rates climbing in India, it could drive some business to Egypt, which Brooks of IBM says is “something to keep an eye on.”
Khalil, however, noted that “Egypt, in comparison to India, has a low attrition rate of around 30 percent, which could be of benefit for Indian companies to set operations here, although it is not the main reason that would affect their decision.”
Brooks concluded that Egypt, however, can only maintain its position as second to India so long as the government continues to provide the support it has, especially noting the university program that is geared toward the call center outsourcing sector as being “instrumental.”
