Capitalising on a strong and growing talent pool, low costs, a large domestic market and robust government support, the Egyptian IT sector has continued to expand even during the country’s turbulent past, and is now enjoying a new surge of investment and innovation.

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The IT industry is the single biggest growth driver in Egypt’s economy, becoming a particularly important contributor in recent years when tourism has slowed and energy prices have been low, dampening income from those two large sectors. According to International Data Corporation, a US-based global research and consulting firm, Egypt’s IT export industry was worth over $3.25bn in 2017 and is expected to grow at a compound annual growth rate of 13.4% through to 2020. The IT industry’s contribution to GDP was LE64bn ($4.2bn) in FY 2016/17 – particularly crucial to Egypt’s economic health after a period of foreign exchange shortages. More than 500,000 Egyptians are directly employed in IT, a number that is growing steadily as the sector expands – another important contribution to a country that has an unemployment rate of over 10%. With the economy expected to grow by 5.5% in FY 2018/19, according to the IMF, the next years look promising for development.

In the wake of the 2011 revolution, when Egypt’s investment environment was characterised by political and social instability and resulted in lower economic growth, the IT sector continued to expand. Indeed, a 2015 report by management consultancy Everest Group found that several major players experienced growth in the 2011-14 period, including Dell EMC, HSBC, Vodafone, Raya and Teleperformance.

“The industry showed resilience after the revolution,” Maha Rashad, associate minister for marketing strategies and strategic marketing director of the Information Technology Industry Development Agency (ITIDA), told OBG. “Double-digit growth continued and ITIDA provided comprehensive support during the period.” A body under the Ministry of Communications and Information Technology (MCIT), the agency works with and engages the private sector.

Competitive Advantages

Over the past 20 years, Egypt has become known as one of the world’s main IT investment destinations, particularly for outsourcing. It capitalises on a range of competitive advantages, including a skilled workforce, a conducive investment environment, low costs and prime geographical location. US-based consultancy firm AT Kearney ranked Egypt 14th in the world and first in the Middle East and Africa in its 2017 global services location index. In its latest iteration Egypt moved up two places overall and ranked first in the world for financial attractiveness. The report noted that Egypt’s competitiveness has been enhanced by the November 2016 decision by the central bank to allow the Egyptian pound to float freely, which has lowered costs for foreign investors.

In 2016 Egypt was named Outsourcing Destination of the Year at the Global Sourcing Association European Awards ceremony in Bulgaria, which was attended by more than 200 participants from North America, Europe and Asia. Furthermore, in 2017 Egypt was listed as a “primary location” for outsourcing and shared services in Europe, the Middle East and Africa by Gartner, a US research and advisory company. Egypt was the only MENA nation to receive the acknowledgement.

Cementing its position, Egypt is home to one of the world’s largest qualified labour forces for IT – something generally hard to find in the region. “Technical skills are in high demand across Africa, and we are ready to share our technical know-how and expertise,” Mohamed Nofal, CEO of local communications network firm HitekNOFAL Solutions, told OBG. “That is why we find it of utmost importance to partner with local companies and foster the mutually beneficial transfer of knowledge, technologies and methods.”

In Egypt, around half a million people graduate from the country’s 35 universities and approximately 100 higher education institutions each year, according to the report “Egypt Outsourcing Destination Guide”, published by the Deutsche Outsourcing Verband in cooperation with the ITIDA in April 2017. Some 220,000 students obtain degrees in business process-related fields, while 50,000 gain skills in IT-related disciplines. Graduates also speak a wide range of foreign languages, particularly English, French and German. Native Arabic gives Egypt access to the 300m Arabic speakers around the globe, as well. The country’s own market of more than 95m people is the most populous in the MENA region, and one of the top-15 largest in the world.

“Egypt has an abundance of well-educated, capable engineers that work in all functions of the ICT community,” Mohamad S El Hawary, marketing and operations lead at Microsoft Egypt, told OBG. “The partner ecosystem is also very innovative, competitive and capable of competing along international standards, with multiple global players coming from Egypt.”


The country is also a remarkably affordable destination, with relatively modest wage costs and low overhead expenses. According to the “Egypt Outsourcing Destination Guide”, the direct annual operating cost per full-time employee (FTE) in a multilingual contact centre averages $9000-10,000 in Cairo, compared to $21,000-26,000 in Casablanca and Tunis, $27, 000-42,000 in Central and Eastern European capitals, and $50,000-54,000 in tier-two cities in the UK and France.

Office rental rates of a typical space for an outsourcing company are as low as $180 per sq metre per year, while non-personnel operating costs per FTE average $6400 annually. Costs have dropped significantly due to the devaluation of the Egyptian pound.


While investors in some sectors of the Egyptian economy say that challenges include bureaucracy and heavy state intervention, the environment for IT investment is widely regarded as favourable. The regulatory environment is designed to promote investment and encourage business development, and a range of incentives are available to make that happen. These include subsidised telecommunications rates, access to extensive market research, funding for training, support finding office space and help with due diligence measures. ITIDA also has an investor aftercare system, with a dedicated account manager for each investor.

Moreover, Egypt is linked to over 10 global internet networks that provide vital bandwidth capacity and international connectivity. Egypt’s geographical position means it is a natural landing point for international submarine cables, including Telecom Egypt’s TE North cable linking to Cyprus and France, and the 25,000-km Asia Africa Europe-1 (AAE-1) launched in 2017. Egypt’s international internet bandwidth thus grew by nearly 30% in October 2017 to 1406.12 Gbps, compared to 1089.37 Gbps a year before, according to the MCIT.

Egypt’s new Investment Law, ratified in June 2017, includes a chapter on investment in tech zones. It provides specific support for businesses working on the design and development of electronics, data centres, outsourcing offices, software development firms and technological education companies. Developing the zones will entail partnerships with the private sector and the promotion of incentives. Businesses located in tech zones are eligible for tax and Customs duty exemptions on the tools, supplies and machinery required for their operations. IT investors also benefit from the broader provisions in the legislation, which intend to create a more robust legal environment for foreign businesses and improve incentives for investment.

Private Response

“The government is making significant moves to enable Egypt to continue to outperform competitors, facilitated by the legal and regulatory framework, the chapter in the Investment Law specifically for tech parks, and further development and expansion of the talent pool,” Rashad told OBG. “The value proposition of Egypt is based on talent and providing services to different clients all over the world.”

The private sector is supportive of the recent reforms, which are expected to boost business development in Egypt more broadly, generating greater demand for commercial IT services. “I believe Egypt is on the right trajectory when it comes to reform related to the investment environment,” Microsoft’s El Hawary told OBG. “We have seen a lot of effort being placed in this area, and we are also seeing a lot of positive sentiment from our partners who are looking into investment opportunities in Egypt. The new Investment Law will strengthen the regulatory environment for doing business in Egypt, and is expected to have a positive impact on all sectors, not only IT.”

Recent Investments

Many large multinational IT companies have been present in Egypt for years, and a number of other multinationals locate business process and other IT functions in the country. The number of such businesses has continued to grow over recent years, with 2017 seeing a particularly strong wave of new investments. The increasing activity indicates the success that investors in the country have had, and their confidence in the sector going forward.

“The pivotal policies that the country undertook in the last few years have helped bring the economy to a much healthier state, with a positive impact for both local businesses and international investors,” Khalid Hammouda, managing director of Teradata Egypt, an analytics and consulting services company, told OBG.

In July 2017 French automotive technology company Valeo Service announced plans to create 500 new jobs over the following two years at its base in the Smart Village on the outskirts of Cairo, where a cluster of IT-focused businesses benefit from shared, high-quality infrastructure and a green, spacious environment. This centre is Valeo’s largest software research and development hub worldwide.

A month prior, in June, Dell EMC declared plans to expand its operations in Egypt by 25% before the end of the year, creating 250 new jobs. The company operates a “centre of excellence” in Cairo, offering a range of technology services and working closely with local universities to nurture talent. The company said it would focus on implementing smart-city projects in the New Administrative Capital, which are due to start operating in 2019. Dell EMC already plays a large role in the Egyptian data market, working with government bodies and banks. It has been involved in implementing the Takaful and Karama social security programmes with the Ministry of Social Solidarity, as well as projects in health and education. Private-sector clients, meanwhile, include communication and energy companies. Dell EMC’s IT engineers in Cairo provide global support to the mother company’s operations in the US and around the world in 14 languages.

In September 2017 Orange Business Services, an arm of French telecoms company Orange, announced plans to create more than 170 new business process outsourcing jobs at its Egypt site, increasing its total workforce to around 2000 before the end of the year. The company expects to take on 450 additional staff in 2018 to help serve customers in Europe.

In October 2017 ride-hailing service Uber reported it would be investing $20m over five years in its operations centre in Cairo, its largest in the region and second-biggest in the world. The company said that Egypt is one of the fastest-growing markets in which it operates, and the location will serve customers in 16 countries. From 400 employees at the time of announcement, Uber said it aimed to bring this number to 700 by the end of 2017 and to 1000 by 2020. Whereas jurisdictions in other countries have become increasingly hostile to the ride-hailing service, the Egyptian government has encouraged Uber to invest more and develop mass transit options.

Silicon Waha

The government’s provisions to develop new technology parks in the 2017 Investment Law dovetails with the 2016 foundation of Silicon Waha, a joint-stock company established by a group of government agencies with the aim of creating technology and business parks around the country. The initiative aims to support the planning, design, implementation and development of such parks in second-tier cities, offering logistical help and initiating associated technology and infrastructure projects. A commercially driven enterprise, Silicon Waha participates in tech-focused investments with a range of partners, with a focus on boosting value and innovation in the sector.

The company acts as a partner and one-stop shop for entrepreneurs, start-ups and international investors of all sizes, with industries such as outsourcing, electronics design and manufacturing encouraged to invest in the parks. The areas themselves are designed to be high-tech industrial clusters with supporting services and facilities, creating jobs for young Egyptians in particular, and are thus located near university cities.

In late 2016 two zones were created in Borg El Arab, an industrial city west of Alexandria, and Assiut in Upper Egypt, which are now operational. Parks in Sadat and Beni Suef were launched in late 2017 and the next set will be located in 10th of Ramadan City and New Aswan. In Borg El Arab, tax incentives and streamlined procedures for incorporation are available to investors, and there are plans to expand public-private partnerships in the zone in the future, according to the MCIT. The Borg El Arab area alone has around 30,000 university graduates entering the labour force each year, and some 32% of current workers have a postgraduate qualification, according to Silicon Waha.

In March 2017 Silicon Waha signed a memorandum of understanding with Finnish tech company NxtVn to create a firm that will develop data centres in Egypt. Related investments are expected to total €40m over the next four years. The partners also plan to establish a data centre complex in Borg El Arab.

“We want to utilise untapped talent that Egypt has in second-tier cities, develop the ecosystem to expand the ICT industry and provide investors with resources they can use,” Rashad told OBG. “These slightly smaller cities are often more competitive in terms of costs for labour, rent and other overhead. Investors thus far are happy with the quality of the talent they find.”


For some years now, one of the MCIT’s priorities – shared by the private sector – has been to nurture innovation in IT to boost the value-added segment of the industry and increasingly make Egypt an exporter of technological innovation. To this end, the ministry and its agencies, including the Technology Innovation and Entrepreneurship Centre, run a range of funded programmes intended to foster innovation and business skills. Many operate in cooperation with international and private sector partners, who in turn benefit from the stronger tech ecosystem (see analysis).

This environment has already nurtured a wide range of start-ups, capitalising on the same advantages as the sector as a whole – talent, low costs, government support and a large domestic market. The GrEEK Campus business and technology centre at the heart of Cairo has earned the nickname Tahir Ally – a play on Silicon Valley – and is home to more than 100 businesses, from one-person start-ups to international firms.

Founder Ahmed El Alfi also formed and chairs Sawari Capital, a venture capital fund, and Flat6Labs, an accelerator that supports 10 start-ups per cycle, with two cycles per year. Thanks to organisations such as these, Egypt has a growing rank of start-up successes. One of the most celebrated is e-payment platform Fawry, which sold an 85% stake to a consortium of international investors in 2015. Others include Yaoota, which raised $2.7m in funding in 2016; health-tech company Vezeeta, which has raised $11m, including a $5m deal in 2017; and bug-reporting app developer Istanbug, which was supported by Flat6Labs.


Expanding access to the internet is another essential priority for the MCIT, and seen as a crucial means of accelerating social and economic development. With modern businesses increasingly driven by technology, equipping young Egyptians with IT skills and ensuring that all citizens have access to information and services available online is becoming ever more important. The launch of 4G mobile networks in September 2017 following licence issuances to all four operators in 2016 was a major step towards increasing the availability of broadband internet, as 4G allows for the flow of more data traffic (see Telecoms overview). Operators see 4G as a platform for rolling out various technologies in the medium term, bringing more products and services to the Egyptian market and upgrading overall technology in businesses and households.

Egypt had 33.7m internet users in FY 2016/17, equivalent to a penetration rate of 41.2%, according to the MCIT. This is relatively low for a middle-income country and indicates substantial scope for growth, particularly given Egypt’s young population. For some years, one of the biggest barriers to the growth of mobile data was the small amount of Arabic-language content and applications appealing or useful to ordinary Egyptians. This situation has changed radically thanks in part to the work of Egypt’s burgeoning tech development industry.

Hardware Breakthrough

Another hurdle for the growth of mobile internet in particular has been the cost of smartphones, which for many years were beyond the budget of many ordinary Egyptians. In recent times, however, the prices of smartphones have fallen due to rising competition and technological development. Access to the internet is likely to broaden further thanks to the launch of the first Egyptian-made smartphone in January 2018, in what was also a breakthrough for the Egyptian technology manufacturing industry.

The NileX smartphone is developed by Egyptian Silicon Industries Company and ranges LE2000-4200 ($132-277) in price. The MCIT has invested around LE400m ($26.4m) in the company in conjunction with Chinese partners. The NileX was unveiled at the 21st session of the Cairo ICT trade fair, with Yasser Al Kady, the minister of communications and information technology, presenting the phone to President Abdel Fattah El Sisi. The device is assembled in Assiut in Upper Egypt, the latest sign that IT development is accelerating in the regions, and 45% of components are made in-country. The Assiut factory has the capacity to produce 1.8m units per year from five production lines, according to press reports. Increasing local production of IT equipment has been a government goal for some time, and the rising cost of imports has made the economic case for local manufacturing even stronger.


In 2017 Egypt launched a new e-commerce strategy, created in conjunction with international partners such as the World Bank. The goal of the new policy is to double the number of firms in the country offering goods and services online; currently, the proportion is less than 18% of large companies and just 3% of small and medium-sized enterprises. These figures are low given the rapid growth of internet penetration and a technology-literate young population.

The strategy list a number of goals that align with broader aims: improving access to high-speed broadband, particularly in rural areas; modernising the postal system; enhancing the legal and regulatory framework for e-commerce; building trust in online payments; improving training and apprenticeships in areas relevant to e-commerce; and encouraging government employees to use e-procurement for low-value transactions. This all should help increase tech usage by businesses, boosting activity and creating e-commerce jobs.


Having continued to grow even when the overall economy was more sluggish, the IT sector has seen a surge of investment as political stability and the broader macroeconomic outlook have improved. Increasing investment in 2017 demonstrates international confidence in the country and the continuing appeal of Egypt’s competitive advantages. Attractive factors have been further enhanced by pro-business reform, growing international broadband capacity, new initiatives to promote innovation and the launch of 4G.