Unlike many other sectors of the Egyptian economy, the ICT industry has remained remarkably resilient in the face of the political uncertainty and macro-economic instability wrought by the 2011 revolution. Beyond the basics of national internet infrastructure, Egypt offers a number of benefits for potential ICT investors, not least among which is its proximity to the lucrative European markets.

Furthermore, Egypt’s strategic location means that it has become a significant transit hub for submarine cables and is connected to 10 out of a total of 18 cables passing by the country, provided Egypt with a capacity that exceeds 60 TB ps.

The ICT industry is expected to play a central role in driving growth for Egypt’s economy in the coming years. To achieve this, the government has mapped out a plan for development with a number of key aims, which include improving the quality and accessibility of mobile, internet and government services offered to citizens; utilising ICT infrastructure to improve government efficiency, with a special focus on health, education and tourism; and facilitating the creation of a large and diverse export-focused industry.

Sector Performance

The ICT sector’s contribution to GDP grew by 13% in 2014-15, reaching LE65.9bn ($9bn) and representing 4.1% of total GDP. In 2014, 177 export-oriented firms, employing 45,000 workers, generated ICT exports of LE11.2bn ($1.5bn). The local-facing IT sector, meanwhile, employed a further 66,000 people in this period.

Egypt has achieved significant success in exporting ICT services. In 2014 the value of such exports grew by 7%, according to the Information Technology Industry Development Agency (ITIDA). Asia (including the Gulf) was the primary destination for Egyptian ICT exports in 2013, accounting for 55% of the total value. This was followed by North and South America with 27%, Europe with 12% and Africa with 5%. Call centre services accounted for 41% of exports. Software and application development made up a further 15%, while technical support accounted for 14%.

Internet Functionality

Internet penetration in Egypt has been increasing steadily. Between 2009 and 2013, it grew by 9.5 percentage points to 29.5% of the population, or 22.04m users. By the end of this period, mobile internet users accounted for 37.42% of all internet users. USB subscriptions (dongle) have also grown rapidly, reaching 3.9m subscribers by 2013. However, the country still has a long way to go in terms of both increasing subscriptions and improving the quality of service. Indeed, most users still only have access to basic internet services. In 2013 almost 85% of all ADSL subscriptions in the country had a speed of less than 2 Mbps, while only 0.3% had a speed of 10 Mbps or above.

A 2013 survey by the Ministry of Communications and Information Technology found that of those households facing challenges with internet usage, 61% were troubled by the low speed of the connection and 69% were faced with regular service disconnections. These difficulties are also reflected in the purpose of internet usage in the country. While a majority of subscribers use the internet for emails, chatting, downloading music, movies and newspapers, less than 5% of subscribers use the internet for making purchases or carrying out banking activities. This suggests that there is room for growth. The country ranked in the bottom 20 globally for internet speed in 2014. In the summer of 2015, Egypt recorded average download speeds of 2.7 MB ps and upload speeds of 0.8 MB ps, compared to a global average of 20 MBps and 8.6 MB ps, respectively, according to data taken from Ookla, a global internet metrics firm.

Fixed-Line Upgrades

The government is committed to addressing the most basic challenges in terms of internet quality, accessibility and affordability. The MCIT is putting a strong focus on both fixed-line and mobile networks as indicated by a recent project to upgrade the performance of nine locations in Telecom Egypt’s (TE) fixed network. An integral plan for a complete network upgrade is in the works, with the goal of completing the programme within six months. “The new minister [of communications and information technology] is looking to expand internet access whether it is in the fixed or mobile segment,” Ahmed Adel, senior analyst for telecoms at HC Securities, told OBG. TE is also implementing a large-scale infrastructure upgrade programme, replacing its copper wire network with fibre-optic cables to improve speeds and capacity. The company has earmarked $400m for the task in 2015 and expects to have replaced 4m lines by the end of that year. Combined, these two projects will improve the speed of internet connections and the quality of voice calls.

TE has already committed to ultra-fast speeds for some of Egypt’s new real estate developments. For example, the company has announced plans to introduce speeds of up to 10 GB ps using fibre-optic technology for one of the biggest residential projects in the country – Madinaty, which is being developed by Talaat Moustafa Group.


The other substantial impediment to internet penetration and development in the country is pricing. Egypt ranked 62nd out of 64 countries assessed for pricing in the Ookla 2014 Net Index. According to the study, the average cost of internet per MB ps is $16.83 in Egypt, in comparison to a global average of $5.58, a situation which prompted calls from consumers for cheaper internet prices and better quality and led to attempts by the government to address the situation in 2015.

Given that there are 220 internet service providers (ISPs) in the market – but only five main players – the country does not lack for competition in the retail segment. The bottleneck lies within wholesale capacity. The main fixed-line operator, TE, owns all the fixed-line infrastructure, and bandwidth is leased to the ISPs. As such, the government has been pressing TE to reduce its wholesale rates. This has been a protracted process, not least because the fixed-line operator generates more than 50% of its revenue in the wholesale market and has been looking to protect value for its minority shareholders (the company is 80% government-owned, 20% publicly listed).

However, in June 2015 the two parties reached a deal to reduce wholesale leasing rates, with estimates suggesting a cost reduction of almost 70%. A month later, TE Data, the internet retail arm of TE, announced a new pricing structure for its ADSL packages. These brand new deals ranged from a service offering 10 GB of downloads with speeds of 1 MB ps for LE50 ($6.82) per month to a service which provides 300 GB of downloads with speeds of 8 MB ps for LE350 ($47.70) per month.


The government has also worked to ensure other incentives and infrastructure for ICT investment in the country. The capital, for example, plays host to two dedicated IT parks, Smart Village in the west of Cairo and Maadi Technology park in the south of the city. The latter had attracted 18 companies, generating LE3bn ($408.9m) by the end of 2014. With only 20% of the park completed, this should grow substantially. By 2017 the park is expected to generate LE10bn ($1.4bn) of income and create 11,000 jobs directly and 25,000 indirectly.

The government hopes to build a number of similar parks throughout the country and has budgeted LE20.5bn ($2.8bn) for this. There are plans to establish seven new technology zones nationwide, which comprise research institutions, innovation centres, hotels and incubators.

Human Capital

This infrastructure is complemented by a number of other local benefits. For example, given the country’s youth bulge, it has a large base of newly qualified graduates. Egypt produces 480,000 university graduates each year, according to official records, 50,000 of whom hold an IT-related degree. Furthermore, almost 220,000 graduates each year have degrees and skills applicable to business process services, according to a recent study by Everest Group. This includes as many as 110,000 foreign language graduates.

The raw talent is refined through a number of programmes led by the ITIDA, which aims to create job opportunities on a technical level as well as encourage entrepreneurship. Current schemes include the Training for Employment project, which seeks to place 10,000 job seekers in ICT employment through training programmes which focus on a range of skills from data entry and telesales to network infrastructure and mobile applications development. “Our industry is moving from low value services, such as call centres, to high value services, such as knowledge process outsourcing and information technology outsourcing,” Mohammed Fathy, director of investment and international business development at ITIDA, told OBG. The Information Technology Institute’s post-graduate training programme offers its over 8000 registered students world-class training in more than 27 different specialisations.

Government Strategy

The government is hoping to capitalise on the country’s competitive advantages and place ICT at the centre of its economic development strategy. To this end, the MCIT is working on the ICT 2020 Strategy. The framework for the plan focuses on seven main pillars including basic infrastructure, digital content, electronics design and manufacturing, ICT industry programmes and initiatives, and legislative and policy frameworks.

The government has allocated a budget of LE124.8bn ($17bn) for all these developments. This includes LE4.4bn ($600m) for cloud computing, LE45.1bn ($6.1bn) for broadband, and LE3.3bn ($450m) for electronics design and manufacturing. As a consequence of this investment, the government expects to more than double ICT GDP in the next six years, increasing it to LE195bn ($26.6bn) by 2020-21, up from LE65bn ($8.9bn) in 2014-15. This would represent an 8.43% contribution to overall GDP, generating direct employment of 250,000 jobs and ICT services exports with a value of LE23bn ($3.1bn). The investment would also generate exports worth LE70bn ($9.5bn) from the electronics industry.

While these goals can seem a little abstract, the government is also working on a number of programmes that should help boost growth in the short term. The main body tasked with this responsibility is ITIDA. The government agency, half of whose board of directors comes from the private sector, raises funds for its programmes through a 1% levy on the gross income of the three mobile phone operators. It works across a range of issues from training and employment placement to export generation.

In terms of the latter, the agency has developed two successful programmes. The Export IT programme is in its fifth year. Targeting 140-plus leading exporters, it offers a cash rebate of up to 20% of the value added on exports up to $500,000 per company per year. For 2014 the programme had a budget of LE40m ($5.5m).

The agency is also working in conjunction with the International Data Corporation on the Africa Together strategic programme. This helps Egyptian ICT firms penetrate high growth markets on the continent through tailored research and by linking companies with potential customers. According to ITIDA, the programme has already generated $7m worth of deals, with particularly high demand for mobility solutions, e-learning solutions and enterprise solutions provided by Egyptian firms.

Meanwhile, the MCIT has launched a number of projects across various sectors in regards to ICT infrastructure, including six awareness campaigns for diseases such as hepatitis, high blood pressure and heart disease, and a notification system which allows citizens to keep up with their appointments and treatment decisions.

As a part of its ICT agenda, the MCIT is also promoting the development and use of cloud computing and related technologies in both government and education through workshops and conferences.

Indeed, as internet connectivity numbers rise, Egypt is becoming increasingly active in addressing cybersecurity issues. In 2014 a new government body – the High Council for Cybersecurity – was set up to protect against potential cyber attacks, and in 2015 new legislation on cybercrime was approved by ministers, and new laws regarding private data protection and cybersecurity are currently being drafted.


Egypt has managed to attract a large, diverse number of multinational companies offering a range of services across the value chain: from call centres and technical services to software design and research and development centres.

In order to support the country’s development and expansion plans and attract foreign investment, the MCIT has met with key leaders in global companies such as Microsoft, Intel and Cisco. Microsoft has set up one of its two global innovation labs in Cairo (the other is in Aachen, Germany). The Cairo lab specialises in prototype development and applied research.

Another success story is the establishment of the software design centre of Valeo, an automotive supplier of components and integrated systems for both original equipment and aftermarket sectors, in Smart Village. As of 2015 the company employed 900 specialised engineers. “Efforts are under way to implement Egypt’s strategy for electronic design and manufacturing, while creating a complete ecosystem that involves innovation, research and development, know-how development and transfer, human capacities and incentive schemes,” Yasser El Kady, minister of communications and IT, told OBG.

The industry is moving from low-value services, such as call centres, to high-value services, such as knowledge process outsourcing and IT outsourcing. These high-profile, high-value investments build on the foundations that Egypt has already established in the ICT sector. The country has held a solid reputation in the global outsourcing industry, for example. Egypt ranks 10th in A.T. Kearney’s latest Global Services Location Index, a table ranking the competitiveness of different outsourcing markets. “Egypt’s outsourcing and offshoring potential is huge. Given its geographic location and quality human resources, it could easily be used as a delivery hub for multinational IT companies looking to access other countries in the region,” Haitham Abdu, general manager of Xerox, told OBG. “That said, labour laws need to be improved so that workers are easier to hire and fire before this can become a reality.”

This puts the country first in the Middle East and North Africa region and above many of its main competitors in Central and Eastern Europe. It has slipped six places from the 2010 index on the back of political instability and a high inflation rate. However, A.T. Kearney marks the country out as a promising regional centre in the same vein as Brazil and Bulgaria. “For global companies, Egypt is increasingly the preferred location to serve operations in the Middle East and North Africa, with costs that are comparable to India. IBM and Mentor Graphics, Schneider Electric and Atmel (recently acquired by Dialog Semiconductor) both count Egypt as the leading delivery centre location in the region. Long term, an improved political climate will go a long way to capturing foreign investment and more buyers,” A.T. Kearney’s Global Services Location Index concludes. Given that ICT spending in the MENA region is set to grow at almost 9%, exceeding $270bn in 2015, Egypt is well placed to bolster export revenues further.

Cost Competitive

One of Egypt’s clear competitive advantages is cost. According to the A.T. Kearney index, Egypt is the most financially attractive market in its top 10 outsourcing countries. Sourcing operations in the country are 30% cheaper than Morocco and 40% lower than Eastern Europe, according to a 2015 report by Avasant. The country is cost competitive with India, a global leader in the sourcing industry.

Operational costs for contact centres in Egypt range from $14,800 to $16,100, compared to $15,400-16,400 in India, according to Avasant. Similarly, Egypt is as cost-effective when it comes to technical support and application development. The former has an operational cost range of $15,400 to $17,300, while the latter has a range of $19,240 to $24,200. Although these figures are slightly higher than in India, Egypt has the advantage of being near-shore to Europe and is also building a multi-lingual and competent labour force.

It is unsurprising then that Egypt’s sourcing industry is set on an upward curve. Business process management (BPM), knowledge process outsourcing and IT exports in Egypt increased from $1.18bn in 2011 to $1.52bn in 2014. The industry has created more than 90,000 jobs. According to Avasant, this trend is set to continue, with exports forecast to reach $2.58bn by 2020 and direct employment in the sector touching 161,000 jobs. Egypt is making significant headway in building its market share in the global industry. A 2013 report by India Today stated that the country had lost 40,000 jobs in the BPM sector to Egypt between 2008 and 2013.


If all goes to plan, over the next decade the outsourcing industry will become just one facet of a mature and thriving ICT sector in Egypt, one that is capable of competing in a number of segments, such as software development, electronics design and manufacturing. However, if the sector is to become a substantive contributor to Egypt’s economy, improvements will need to be made in a number of areas.

In this vein, support from the government in terms of technology parks and subsidy programmes coupled with initiatives such as the large-scale infrastructure upgrade programme implemented by the MCIT is evidence that the government is committed to its goal of placing the sector at the forefront of socio-economic development. These efforts, given the advantages inherent in the market, from a substantial skilled labour force to market proximity, ensure that Egypt is well placed to realise its ambitions for the industry.