Global Arab Network | Egypt - Pursuing foreign corporation to develop IT industry

Translate this article to your language:

GANPublications

e-Publications

Add Site to Favorites

Add Page to Favorites

Make Homepage

Share This Page

RSS Feed

--------------------------------------------------------------------------------------------------------------------
| |

Egypt - Pursuing foreign corporation to develop IT industry

Tuesday, 20 October 2009 18:55

Egypt's Ministry of Communications and Information Technology (MCIT) is pursuing cooperation with foreign tech corporations to develop its own IT industry, which has been driving the economy during the financial crisis.

In June, MCIT emissaries to the US signed a $10m deal with Google to bolster its Internet presence. Using the search engine's advertising platform, Egypt will "promote [its] software development industry, business process outsourcing (BPO), call centre industry, valued added services (VAS) and e-government," according to MCIT. Travel companies and airlines will be highlighted in web ads to boost the tourism sector.

The contract also stipulates that Google will re-invest $2.5m in the Egyptian economy to support IT business and workforce development. Additionally, the search engine will "offer technical support, the required skills and knowledge to a number of local companies working on digital advertising."

On his visit, MCIT director Tarek Kamel projected that Egyptian IT exports to the US would reach $1.1bn by 2010, led by low-cost outsourcing. "Egypt is now at the new crossroads for next stage in the IT revolution," he stated.

Other global IT companies are also choosing Egypt for investment: in June, Cisco opened a contact center to serve Europe, the Middle East and Africa and IBM launched a Nanotechnology Research Centre with the Egyptian Information Technology Industry Development Agency.

Partnerships such as these are helping to create a regional IT hub in Egypt. According to MCIT, "More than 10 multinational companies have expanded or outsourced their business to Egypt in the past 12 months." The country placed sixth on AT Kearney's 2009 Global Services Location Index, a ranking of countries for outsourcing, moving up from 13th place in 2007. With a strong technology infrastructure and the largest potential customer base in the Middle East, Egypt is an attractive jumping-off point for corporations looking to penetrate Arabic-speaking markets.

Egypt's young, technologically adept workforce is also catching the attention of multinationals. Approaching 60% of the population is under the age of 25, and the country produces 250,000 graduates annually, with 12,700 joining the IT workforce in 2008. Kamel told international press that IT corporations "realise that we have Arabic-speaking human resources with a multilingual background – that has other differential advantages in terms of geographical location, in terms of growth in the local market and growing local market demand, [and] in terms of excellent infrastructure that connects us with the rest of the world." US-based consultancy Yankee Group wrote in its recent comparison of several Middle Eastern countries that Egypt "has the strongest position in the outsourcing market," based partly on the versatility of Egyptians' language skills.

Egypt's communication and information technology sector fared particularly well in the past fiscal year, expanding 14.6%, compared to the 4.7% overall growth of the country's economy. Business Monitor International predicts that Egyptian IT spending will increase from $1.2bn in 2008 to $1.9bn by 2013. However, the IT employee growth rate lags behind the growth rate of the sector. The IT sector increased from 162,500 employees at year-end 2007 to 175,100 at year-end 2008, representing a 7.8% growth.

Much of the positive growth in foreign investment in the IT sector can be traced back to liberal reforms, including the establishment of the General Authority for Investment and Free Zones in 1997 and the Labour Law of 2003, protecting employer and worker rights. The MCIT was established in 1999 to oversee the development of Egypt as an information society and promote investment. Smart Village, opened in Cairo in 2001, has also been instrumental in attracting international investments. The 3m-sq-metre technology park houses more than 100 foreign companies, including Microsoft, HP, Alcatel and Vodafone.

Global Arab Network

This article is published in partnership with Oxford Business Group

Add comment

The opinions of the authors in articles published are theirs alone and do not necessarily reflect the views of Global Arab Network
------------------------------------------------------------------------------
Published comments are the opinions of private individuals and do not reflect the views of Global Arab Network