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Egypt aims to double the size of its IT market

Posted in Middle East Business by thomthumb84 on March 16, 2010
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The Egyptian Government has implied that it could double the size of its IT market. With global demand for ICT outsourcing in the area growing, and the Government’s continuing efforts to push the sector forwards, this is certainly a possibility.

Towards the end of 2009 Egypt’s Information Technology Industry Development Agency (ITIDA) revealed that GCC companies are becoming increasingly reliant on outsourcing , with over a half of respondents claiming to outsource some aspect of their IT business process.

This is good news for Egypt – which is currently positioned as the leading destination for outsourcing in the Middle East. There has been an astonishing amount of interest in this area. In early 2009 Egypt was featured as a leading global offshore destination in a study by the London School of Economics called Beyond BRIC. Egypt was also ranked number one in a report, Outsourcing to Africa, published by the Commonwealth Business Council and CyberMedia.

Finally, a report by a company that specializes in analyzing the global ICT market, Yankee Group, positioned Egypt as the most attractive destination for outsourcing in the Middle East, saying inter alia that Egypt was the only Middle East country to rival India and China, and that Egypt scored better than both those countries in categories such as language skills and geographical proximity to key markets.

The reasons behind this are two fold – the first being the Egyptian Government’s commendable efforts to force the country into the ICT arena, the second being Egypt’s fortunate geography and strong links with major international players.

However the latter in no way demeans the former and it is only through the Government’s conscious efforts to take advantage of its fortunate position that the country now finds itself so well placed.

Saeed, Almarri, CEO of Dubai World Trade Centre, said: “Positive government initiatives have helped to make the Egyptian ICT market among the world’s most competitive today,”

“Despite the global economic slowdown, public spending by the government, combined with significant population growth and continued development in healthcare, education, real estate and tourism, will offer excellent opportunities for ICT companies in Egypt.”

The government has spent a fortune attempting to support its ICT ambitions. In order to encourage the development of the industry, the government has lowered tarrifs on computers, computer equipment and software to 5%.

In late 2002 the government launched ‘the affordable PC initiative’, which aimed to raise the ownership of computers from 1.5m to 6.5m within five years. While initially designed only for domestic use the initiative was extended to include small businesses in 2004. 66,000 sales were made under the initiative that year alone.

The establishment of Egypt’s first dedicated technology park, or Smart Village, in 2003 has also played its part in attracting international players. The LE2bn project has rapidly become an ICT cluster, hosting a number of international ICT giants.  Currently this includes such major players as Microsoft, IBM, Oracle, Vodafone, and Alactel.

In 2007 Satyam Computer Services, an Indian ICT systems integration and outsourcing firm, setup a software development centre in Smart Village, employing 500 engineers. A report from the Economist Intelligence Unit quotes Satyam as saying “(Egypt is) the best location in the Middle East for offshore outsourcing and product support development,”

“Egypt offers an affordable location, well developed high-tech facilities and plenty of highly skilled ICT professionals, in a very competitive labour market.”

Praise must also lie with the ITIDA, a governmental entity affiliated to Egypt’s Ministry of Communications and Information Technology. The Agency is a common presence at every ICT business event throughout the world, responsible for growing and developing Egypt’s position as an outsourcing location.

During the recent ‘NASSCOM India Leadership Forum 2010’ the praise was positively vocal. Ramachandra Murty Yadaville, Head of Marketing at Wipro Egypt, acknowledged ITDA’s support in helping Wipro scale up their staff to 300 people by the end of the year and Hassan El-Shawarby, General Manager of Raya, attributed the company’s success in receiving COPC certification and accreditation three years running to the support of the ITIDA.

Amin Khaireldin, an ITIDA Senior Advisor and Board Member, said: “Egypt is at the new crossroads of the next stage in the IT revolution. With a long history of innovation, we are a young, energetic country with a population that grew up in the technology world. We have built a nation around technology and Egypt is now a hub for innovation and research, cyber security and cross-border collaboration.”

Business Monitor International reported in September 2009 that Egypt’s ICT industry could be worth around $1.9 billion by 2013. And overall foreign investment rose to £13.4 billion – one major area of investment being the ICT market. This is promising news. Even more promising is the increased interest from the Chinese market.

Tarek Kamel, the Egyptian Communications and Information Technology Minister, said: “We have seen several companies from China, such as ZTE and others, invest in Egypt,”

“We have seen immense interest in helping us with the establishment of the smart village, technology parks and business parks.”

As long as this momentum holds, and the Government continues to push forwards with initiatives designed to encourage the industry, Egypt’s ICT outsourcing sector is on a good path to success.

To be published in Issue 5, April 2010, of  The Arab Business Review (A publication for the Arab African International Bank)

– Apologies for grammar, etc- yet to be proof read for third time!

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