Egypt: Following the Trend of IT Outsourcing

The world of outsourcing today is getting bigger and bigger. Huge IT companies around the globe are gradually hooked-up on the trend of outsourcing and are opting to outsource their businesses or services outside the country to cut-cost, as well as to achieve growth and agility.

Countries such as India, Philippines, and China are the world leaders of IT outsourcing services today. Egypt is the newest in the long line of countries that is about to set up a government agency that would focus on putting its IT services on the market and make it open to businesses overseas.

According to Amin Khaireldin, a board member of Egypt’s Information Technology Industry Development Agency (EITTDA) the country has learned a lot from India’s paradigm. He also said in his statements that they have studied the happenings in India carefully and later learned two things: that there is a need to focus on the country’s talent pool in order to keep supply ahead of demand and that it has to be made sure that there are enough reliable infrastructures”.

The Egyptian government together with representatives of the industry has approached universities to help design an IT curriculum that hopes to produce 40,000 graduates per year for the next three years who are able to work for the outsourcing industry.

The central infrastructure investments, along with the construction of a technology village near Cairo, have attracted three huge companies to outsource business processes in Egypt. The internal IT infrastructure investment has grown from $4bn (£2bn) to $12bn (£6bn) in the past three years. Consequently, rising labor costs in India have led cost-cutting outsourcers to look elsewhere.

Egypt has cut corporation tax from 42 per cent to 20 per cent and began customs reforms to improve trade. Also, a competition prize offering three startups a year worth $50,000 (£25,000) and free resources has led to a number of innovative new firms.

According to Stephen Page, Chief Executive of hardware manufacturer Sapphire, says he has been happy with his company’s recent outsourced operations in Egypt. “It has good value, good workers and not too much red tape. We have found that the infrastructure is at least as reliable as in Russia or India.”

As of now, Egypt is the 13th best outsourcing destination globally, and on average 14 per cent cheaper than India.

It is a good thing for Egypt to be receiving positive feedbacks from companies who outsource their business functions to the country. If they show continuous progress and increased competitiveness in the industry, huge companies from the US and Europe would probably decide to outsource their business functions in the country.