Egypt is on the road to outsourcing ICT development and services, reports Dena Rashed "Egypt has ranked No 12 worldwide on the Kearney outsourcing index for 2005," Khaled Ismail, advisor to the minister of communications and information technology, announced at a press conference held in the Smart Village last week. Kearney, a global management consulting firm, was chosen to evaluate Egypt's capacities for outsourcing and to rate its potential in this respect compared to other countries. "We found out that we have good capabilities in the IT sector but that we also do not market ourselves properly. Investors were concerned about our standing in international reports and indices," said Ismail. "We were quite surprised that we ranked number 12 on the index because we were not on it previously. We also ranked above 25 other countries which were lately introduced on the index," he added. India ranked first on Kearney's index followed by China and Malaysia. Ismail says he hopes Egypt will be able to move up to the third or fourth rank in the coming years. "Compared to Malaysia we have similar human capabilities and costs. But they are better off in terms of the business environment -- an aspect which we are trying to improve," he said. Several factors qualify Egypt positively in the eyes of investors, as a potential market for outsourcing. High-end IT and technical skills are growing and gaining international recognition, with the top output of Egypt's best universities comparable to graduates in India for instance. "We have 30,000 people working in the IT sector and hope they will reach 300,000 in two years," said Ismail. According to Kearney's evaluation, one of the factors which promote Egypt up along the scale is language skills. Multilingual capabilities figure prominently because of the presence of long-established international institutions such as English, German and French high schools and, more recently, universities. Tourism also traditionally helped enrich the country's multilingual resources. Low labour and construction costs are also cited as factors. Multinationals and local vendors say that wage rates for Egyptian skilled IT programmers and call centre representatives are comparable to those in India and other low- cost locations. Costs of telecom, electricity and rents are also cited as being "highly competitive". Standing at the crosswords of Europe, the Middle East and Africa, Egypt also offers advantage terms of free-zones, accessibility, cultural adaptability and infrastructure. Its position as the region's largest market also makes it a logical choice for regional support centres and product development activities. "But bureaucracy remains one of the obstacles affecting investment in Egypt." Ismail admits. "With the ICT field moving in a fast pace the government has been trying to improve the current environment," he added. Progress has been attained by the government in this respect by means of reform measures that have been undertaken specifically in the areas of tax reform, labour law and customs regulations. Three studies are currently underway by the MCIT to further upgrade the environment needed for outsourcing. The first focuses on devising a strategy for the ICT sector and identifying the competitive potential of Egyptian companies, in addition to pointing out the matching industries and countries that could potentially become strategic partners. The study which is undertaken in collaboration with Information Technology Industry Development Agency (ITIDA), the Information Technology Export Council, and the private sector will be completed by Kearney the coming June. The second study looks into combining ICT and tourism in a comprehensive programme which would be implemented in collaboration with the Ministry of Tourism, the private sector, and USAID. The principle is to allow each sector to promote the other so as to provide tourists with better access and connectivity during their stay in Egypt. The third study focuses on entrepreneurship as a vehicle for driving the economy in general and the ICT sector in particular. It will be conducted in collaboration with Nathan Consultants, the US Agency for International Development (USAID), ITIDA, the General Authority for Free Zones and Investment (GAFI) as well as the private sector. By Dena Rashed
