Highlights
Highlights

The Rise of Egypt as a Global IT Offshoring Hub

Friday, Sep 20, 2024

Egypt has emerged as a leading destination for IT outsourcing and digital transformation, offering a unique offshoring strategy framework that's catching the eye of big global multinationals. With its blend of competitive pricing, skilled workforce, and strategic location, Egypt is making waves in the world of digital transformation, technology parks, and innovation ecosystems.

As you delve into Egypt's rise as a global tech hub, you'll discover how the country's digital transformation strategy is shaping its future. From business process outsourcing to artificial intelligence, Egypt is investing heavily in infrastructure development and talent pool enhancement. 

We will guide you through Egypt's journey, comparing it with traditional offshoring destinations and showing you why it's becoming the go-to spot for companies looking to build and manage their digital infrastructure. You'll gain insights into the offshoring process steps and see how Egypt's approach is changing the game in IT outsourcing and digital services. 

Since 2015, Egypt has transformed into fertile ground for EU-US IT offshoring projects. The United States and Europe have played a crucial role in this growth, commanding an impressive 91.6% market share in 2015. You'll find that Egypt's IT export market has seen significant expansion, growing from $1,100 million in 2017 to $1,419 million in 2020 . During this period, Egypt's share in the global offshore BPO market also increased steadily, reaching 16.9% by the end of 2019.

Recent Developments

Egypt's offshore industry is experiencing unprecedented growth momentum. In a recent development, 29 new agreements with technology multinational companies were signed, creating over 34,000 jobs directed towards exports through 35 global delivery centers. These agreements are expected to generate an export value worth $1 billion annually. The value of Egypt's digital exports is set to increase by $1 billion, marking significant growth to the current export revenue of $4.9 billion.

An attractive global offshore destination 

Egypt is an ideal destination for big global multinationals looking to build and manage their digital infrastructure. Here are the top 5 reasons to offshore your tech operations to Egypt: 

  1. Skilled Workforce: Egypt produces thousands of fresh graduates in engineering, computer and information sciences, technology, and general sciences each year.
  2. Multilingual Talent: The Egyptian workforce is proficient in multiple languages, including English, Arabic, French, German, and many others, enabling effective communication with global clients.
  3. Cost-effectiveness: Egypt provides competitive labor rates compared to other offshoring destinations, allowing you to optimize your budget while maintaining high-quality services.
  4. Strategic Location: Situated at the intersection of 15 global submarine cable lines, Egypt offers excellent connectivity to Europe, the Middle East, and Africa.
  5. Government Support: The Egyptian government prioritizes digital transformation, evident in initiatives like the Next Technology Leaders Initiative (NTL) and the Egyptian Government Cloud (EG-Cloud).

Initiatives driving the ecosystem forward 

Educational Programs

You'll find Egypt's commitment to talent development reflected in its numerous educational initiatives. The Digital Egypt Pioneers Initiative offers a range of programs aimed at enhancing digital capabilities across various demographics, including students, graduates, and job seekers. These programs cover essential areas such as cybersecurity, AI, and data science.

One standout program is the Future Work is Digital (FWD) scholarship, developed in collaboration with Udacity. Initially targeting 30,000 scholarships, it has expanded to train 100,000 individuals in 2020-21, offering free qualifications in data analytics, digital marketing, and web development.

Industry-Academia Partnerships

Egypt is fostering strong industry-academia collaborations to bridge the gap between education and industry needs. Universities are revamping their IT programs, integrating modern technologies and industry-aligned curricula. The Egyptian University of Informatics (EUI), set to open with four faculties, is partnering with international institutions like Purdue University to offer specialized courses.

Government Training Schemes

The government's Digital Egypt strategy is driving significant investments in ICT education. The Digital Egypt Builders Initiative (DEBI) offers free postgraduate qualifications in AI, cybersecurity, and robotics. Additionally, the IT Industry Development Agency (ITIDA) has custom-tailored "Skills Development" programs for computer science and engineering students, aiming to develop their technical and professional capacities.

These initiatives are designed to create a pool of tech-savvy professionals, addressing the increasing demand for IT expertise in areas such as software engineering, security, and data analysis. By focusing on practical skills and industry needs, Egypt is positioning itself as an attractive destination for global multinationals looking to build and manage digital infrastructure.

Egypt vs. Traditional Offshoring Destinations

  • Cost Effectiveness

When you're considering offshoring destinations, Egypt stands out for its remarkable cost-effectiveness. The country offers up to 80% cost savings for entry-level salaries compared to competitors like Poland, Morocco, and Turkey. This advantage has been further enhanced by recent currency devaluations, with the Egyptian pound losing over 50% of its value since January 2022. As a result, you'll find it more affordable to outsource operations to Egypt while maintaining control over non-revenue-generating functions.

  • Talent Quality

Egypt boasts a young and creative population, with approximately 75 million people under the age of 40 . You'll be impressed by the linguistic capabilities of the workforce, with 80% speaking English and other European languages, compared to 20-65% in other leading offshore destinations. Each year, over 600,000 competent young graduates from top-rated universities enter the workforce, bringing valuable business and digital skills.

  • Infrastructure

Egypt has invested heavily in building a robust IT infrastructure to support its growing offshoring industry. You'll find reliable internet connectivity, state-of-the-art telecommunication networks, and advanced technological facilities. The government has established technology parks and free zones, such as the Smart Village and the Cairo Technology Park, providing favorable conditions for technology companies across the city’s capital. 

  • Business Environment

The Egyptian government has actively promoted the country as an offshoring destination, implementing various initiatives to attract foreign businesses. You'll benefit from tax incentives, streamlined licensing processes, and ongoing infrastructure development. The ICT sector has experienced significant growth, with a nearly 17% increase during the fiscal year 2021/2022. The launch of the "Digital Egypt Strategy for the Offshoring Industry 2022-2026" aims to triple export revenue from offshoring services and create approximately 215,000 job opportunities in the field.

Delving Deeper into Egypt's Digital Transformation Strategy 2022-2026

The Ministry of Communications and Information Technology (MCIT) has launched the "Digital Egypt Strategy for the Offshoring Industry 2022-2026" to further advance the sector’s growing maturity. This strategy positions Egypt as an attractive destination for big global multinationals looking to build and manage their digital infrastructure, leveraging the country's unique location and large talent pool.

Key Objectives

The strategy aims to achieve three main goals:

  1. Triple export revenue from digitally-enabled offshoring services, targeting a 19% compound annual growth rate between 2022 and 2026.
  2. Create 215,000 sustainable employment opportunities in the outsourcing services industry, focusing on high-value services.
  3. Establish Egypt as a recognized brand in emerging digital services and technologies, such as artificial intelligence and data analytics.

Implementation Plan

To realize these objectives, MCIT has developed a comprehensive plan:

  1. Talent Development: The technical training budget has doubled in the last three years, with a target of training 200,000 people annually.
  2. Infrastructure Development: Egypt has taken steps to digitalize core government systems and launched the Digital Egypt platform to modernize public service delivery.
  3. Innovation Ecosystem: The country has established the first Egyptian Industry 4.0 Innovation Center (IIC) in the Knowledge City.

Expected Outcomes

By implementing this strategy, Egypt anticipates significant growth in its digital sector:

  1. Digital exports are projected to reach $9 billion by 2026.
  2. The ICT sector has already shown a growth rate of 16.3% during the fiscal year 2021/2022.
  3. The value of Egypt's digital exports reached $6.2 billion in FY 2022/23, reflecting a 26.5% increase from the previous year.

Egypt's rise as a leading IT offshoring destination offers big global multinationals a unique opportunity to build and manage their digital infrastructure. The country's blend of cost-effectiveness, skilled workforce, and strategic location makes it an attractive choice for companies looking to optimize their operations. Egypt's commitment to digital transformation, evident through its ambitious strategy and numerous talent development initiatives, positions it as a forward-thinking partner in the global tech landscape.

To wrap up, Egypt's competitive edge in the IT offshoring market is set to grow even stronger in the coming years. With ongoing investments in infrastructure, education, and innovation, the country is well-equipped to meet the evolving needs of global businesses. For multinationals aiming to stay ahead in the digital era, Egypt presents a compelling case as a reliable and innovative offshoring partner, ready to support growth and digital ambitions.

 

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