An essential source of skills: The world’s back office

Text size +-
Share

With one of the world’s leading outsourcing sectors, Egypt is holding its own in a globally competitive field. The industry has ambitious growth targets, which places an increasing emphasis on higher-value services and niche segments. Outsourcing earned the country $1.1bn in export revenue in 2011, according to the Information Technology Industry Development Agency (ITIDA), reaching the agency’s target for the year despite the revolution. The country now aims to increase earnings nearly 10-fold in this decade, to $10bn by 2020.

Egypt ranked fourth in the world on the 2011 Global Services Location Index (GSLI), titled “Offshoring Opportunities Amid Economic Turbulence”, a ranking of offshoring destinations published by the international consultancy AT Kearney, having risen from the 13th position in the 2007 ranking.

Business process outsourcing (BPO), knowledge process outsourcing (KPO) and information technology outsourcing (ITO) are all areas of particular strength, and firms in Egypt operate everything from inbound call centres to off-shored accountancy functions. Many big-name firms, particularly in the ICT sector, have service centres in Egypt. Oracle has had a global product support centre in Cairo since 2005; IBM a finance and accounting base; Stream Global Services and Sutherland Global Services, both US BPO firms, have contact centres, the latter’s being the first established in Alexandria, which is emerging onto the global outsourcing map.

COMPETITIVE ADVANTAGES: Egypt’s outsourcing industry capitalises on a number of competitive advantages, perhaps most importantly its well-developed talent pool of multilingual graduates, many of whom have ICT-specific qualifications. ITIDA estimates that 273,000 Egyptians each year graduate in disciplines suited to outsourcing (such as technology and commerce). Some 31,000 graduates each year have essential fluency in a foreign language, while native Arabic makes this a natural base for serving the rest of the Middle East and North Africa (MENA) region. Relatively low labour, land and utility costs, government support for multinational and local firms, and expanding ICT infrastructure (including several major international communications cables) are also important. Fully loaded operating costs for large BPO centres average around $15,830 per employee, above India’s ($15,010), but below the Philippines ($16,360), Morocco ($24,230) and other countries. The proximity to Middle Eastern and European time zones is also advantageous.

KEEPING PACE: The sector is competitive – international operators can relocate more easily than in most industries. Other top outsourcing destinations include India, the Philippines and Brazil, all of which have their own competitive advantages.

However, the ITIDA asserts that Egypt should not compete directly with these giants for the same business, but complement them where possible and serve segments in which its advantages are distinct. “In the future, Egypt will have to get more creative in terms of adding value to services because currently it is fairly low on the value chain,” Amr Talaat, the general manager of IBM Egypt, told OBG. “This is especially relevant now as competition is rising from countries such as India, Vietnam and South Africa.”

Some players already focus on niches in which they see particular potential, including Xerox, which acquired ACS, the US’s largest BPO firm, and is looking to expand. “Egypt could be a hub for archiving services in the MENA region,” Steve Clay, the general manager of Xerox Egypt, told OBG. “With the events of this past year there is an increasing demand from companies to store their critical documents in a secure manner.”

GOING STRONG: The outsourcing industry suffered a setback during the revolution, when internet and mobile connectivity was shut off, and some workplaces closed. A February 2012 analysis by Ovum, a British ICT consultancy, said the unrest hurt the Egypt’s reputation for stability. Yet, despite these disruptions, the sector hit its export earnings target for in 2011 and several global companies increased their presence, including Motorola, Sutherland, HSBC and Stream International.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Egypt 2012

Telecoms chapter from The Report: Egypt 2012

Cover of The Report Egypt 2012

The Report

This article is from the Telecoms chapter of The Report: Egypt 2012. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart