Over the past 15 years, Egypt has built a growing reputation as a centre for export-oriented ICT services, particularly business and knowledge process outsourcing (BPO and KPO), with revenues that exceeded $1.1bn in 2011, according to a Ministry of Communications and Information Technology (MCIT) presentation last year. As with many other service sectors, the BPO and KPO industries were affected by the fallout from the 2011 revolution. Research by the LSE Offshoring Unit in early 2013 found that among prominent outsourcing destinations, Egypt's risk profile was one of the most elevated in the areas of regulatory risks, macroeconomic risks and political risks. A 2013 report on the "Top 100 Outsourcing Destinations" by US-headquartered advisory firm Tholons cited the fallout from the Arab Spring as the main reason for Cairo's drop from 49 to 58. Alexandria fell four spots to rank 77 in the same analysis. However, Egypt's competitive advantages as a global centre for ICT-intensive industries, including BPO and KPO, are manifold. "In spite of the instability, the quality and competitive costs of Egypt's outsourcing services have not been impacted," Giorgio Modesti, CEO of Teleperformance Egypt, said in an interview with OBG. The local cost advantage is an important factor: labour, land and power are all affordable by international standards. But while workers' wages are relatively low, the skills base is strong. As well as native Arabic, English is widespread. Competitive skills and cost Employment estimates vary but the number of people employed in the sector is about 43,000 positions in total. Egypt's Information Technology Industry Development Agency (ITIDA), part of the MCIT, estimates that each year around 273,000 students graduate from Egyptian universities with degrees in fields suited to outsourcing, including technology and commerce, while 31,000 students are fluent in a Western European language on graduation. As with many outsourcing destinations, such as The Philippines and Morocco, Egypt grapples with finding qualified labour for middle management roles, but MCIT, in collaboration with the Ministry of Higher Education, has also been in the process of implementing a multi-phase curriculum development and training programme, known as EDUEgypt, at university level to help ensure graduates are able to meet the job requirements of the BPO sector. The programme has been rolled out in 16 universities around the country, with more than 6000 trainees in specialised BPO-related technology-tracks. Price competitiveness remains an ever-important factor. According to ITIDA, costs for voice-based BPO services in Egypt are comparable to those in India and the Philippines, two global leaders in the sector that have successfully capitalised on low-cost bases. In 2010, the organisation estimated that fully loaded operating costs for call centres stood at $15,830 per employee, compared to $16,360 in the Philippines and $15,010 in India. Of this, personnel costs averaged $9430, with the balance of $6400 accounted for by technology, telecoms, rent and maintenance. "With its vast dedicated technology and low costs, Egypt is accessible and attractive for global ICT companies, compared with other emerging outsourcing locations," Maged Taher, CEO of Xceed, told OBG. Egypt has even taking to exporting some of its BPO expertise to other burgeoning markets, such as Uganda, where the MCIT signed an MOU last year with the Ugandan Ministry of ICT to provide support and guidance for their BPO industry. In spring of 2013, Egypt sent a team of trainers to Uganda to provide technical assistance, and the MOU outlines plans for the further training of 3000 Ugandans employed in the BPO sector in Egypt. EU market rebounding European language skills could become an increasingly important tool this year and beyond. Opportunities for Egyptian outsourcing service providers appear to be on the rise, with a slow but steady recovery in the EU. Demand for outsourced services in Europe climbed in the last quarter of 2013, according to a study released in late February by market research firm Everest Group. The report showed that global outsourcing transaction volumes reached their highest point since the beginning of 2012. If demand continues to strengthen in the EU alongside more robust growth in the US and the Arab world, Egypt's attractive fundamentals as a BPO destination, including its cost competitiveness and skill set, should help the country see a jump in both employment and activity over the medium-term This article was originally published by Oxford Business Group
