The Egyptian ICT and BPO sector

This article is an abstract of the sector analysis published in the Outsourcing Destination Guide Egypt which is available for free download, written by Stephan Fricke, CEO & Head of Advisory Board at German Outsourcing Association and German Process Automation Association.

The Egyptian ICT sector accounts already for about 5% of the country’s GDP, almost half generated through tourism, which directly reflects the efforts that have been taken by the public and private sector over the past decade. Moreover the Egyptian government spurred the growth of the sector as well as research and education with the aim to raise GDP contribution to 8% over the coming three years (Columbia University Institute for Tele-Information / Egyptian Ministry of International Cooperation).

All these efforts have been supported by good infrastructure projects (especially IT infrastructure like mobile connectivity and energy) as well as new pro-business laws whose impacts are positively reflected in the World Banks Ease of Doing Business rankings (IMFConnect 2021).

In 2020-2021 digital exports grew from $4.1B in 2019/2020 to USD 4.5B (MCIT Egypt). To further support this trend the Egyptian Government is also working with Ernst & Young on an ambitious strategy that aims to triple the size of BPO and ITO exports over the next five years.

At the same time the Government launches a new Export-IT Program, relieving micro-, small-, and medium-sized enterprises (MSMEs) from their tax burden by giving 35%, 15%, and 10% incentives, to drive the exporters competitiveness and reducing export related costs (ITIDA 2022).

ITO, BPO and other ICT exports have become an important source of revenue for Egypt. By now the Industry provides services to approximately 100 countries in over 20 languages and considering the Egyptian commitment over the past decade laid down a solid foundation for further accretion (Oxford Business Group 2021).

Digital Strategy and Sector Development

With the ICT 2030 strategy, Egypt is undertaking an investments to improve capacity building, training programs, digital government service reforms, and infrastructure upgrades. Its overall goal is to maximize the ICT sectors contribution to economic growth by focusing on capacity building, electronics design, manufacturing, as well as expanding and diversifying their technology parks. The Strategy also includes the digital transformation of core government services in the areas of education, healthcare, and government services.

The Ministry of Communication and Information Technology (MCIT) launched an initiative called “Our Future is Digital” in 2021 that aims to train 100,000 young Egyptians to develop their ITC skills in areas of high market demand, like website design, data analysis, and digital marketing. (International Trade Administration U.S. Department of Commerce 2021)30 This is essential to further develop the sector and more importantly to compensate the massive brain drain that not only Egypt but all African countries are experiencing and which, according Deputy Minister of Communications for Digital Transformation and Mechanization Khaled Al-Attar, is the biggest problem capable of stalling the Egyptian digital transformation ( MCIT / Daily News Egypt 2021).

In 2020 the “Our Digital Opportunity” initiative was launched to stimulate the contribution of Small- and Medium-Sized Enterprises (SMEs) in the digital transformation projects of government entities and establish partnership between the public and private sector (MCIT 2021). The initiative is also driven by the ministry’s Digital Egypt Project that aims to supply some 32,000 government buildings, especially those of the New Administrative Capital (NAC) that is build 30 miles east of Cairo, with fiber-optic cables at a cost of $375M (International Trade Administration U.S. Department of Commerce 2021).

Furthermore the MCIT is also working on developing six new technology parks in the cities of Minya, Menoufiya, Mansoura, Sohag, Qene, and Aswan with a focus on hardware design labs, startup incubators, training institutions, integrated systems for AI training, data science, and cybersecurity to further support the ICT industry (International Trade Administration U.S. Department of Commerce 2021).

Example 1:?WORLD BANK

In 2016 Egypt launched the World Bank Equal Access and Simplified Environment for Investment (EASE) program that aimed to create jobs by improving the regulatory environment for investors.

Story Highlights:

1. The EASE Program has laid the foundations for investors to quickly and easily obtain operating licenses.

2. Reforms introduced by EASE have resulted in a 91% improvement in average length of time to get a business license and allocate lands for businesses.

3. The operation supported the General Authority for Investments and Free Zones (GAFI) in establishing One Stop Shops that act as a window for would-be-investors and also supported the Industrial Development Authority (IDA) to reduce the number of days required to issue high-risk industrial licenses from 640 to 55.

Even though EASE ended in 2021 it made its mark on the GAFI One Stop Shops that still act as a window for would be investors. It also lastingly helps the IDA in its ongoing quest to simplify, automate, and decentralize regulations and bring them in line with international good practice. And it helped the Egyptian Regulatory Reform and Development Authority expand its capacity to manage reform (World Bank 2022).

Example 2: BMZ

In 2022 Egypt launched another project with the German Federal Ministry for Economic Cooperation and Development (BMZ) called Supporting e-Government and Innovation in the Public Administration (InnoPA). Its aim is to create the prerequisites for digital transformation of the public administration through a more citizen-centric approach. To achieve its goals the project cooperates with wide array of relevant ICT actors, while simultaneously adhering to the “Leave No One Behind” (LNOB) principle because a great advance in technology always bears the risk of leaving marginalized groups behind. Summarized the projects goals are:

- Creating institutional and process-related prerequisites for a citizen-oriented, digital transformation through better regulation and strategic coordination.

- To improve and prepare the human resource management in the public administration for the digital transformation.

- Improving the public administrations ability to provide digitalized user-centric public services.

- Developing institutional and personnel foundations for innovation management in the public administration

Education

Egypt’s education system is the biggest in the Middle East and North Africa (MENA) region with more than 23.5 million preuniversity students, 1 million teachers, and 56,000 schools. The tertiary education system consists of over 50 Universities and 100 institutes that bring out over 500,000 annual graduates of which 330,000 are trained in business service and 50,000 are trained in IT related fields.

Since 2014, the Egyptian Government has set education reform as one of its top national development priorities to improve learning and development for children, as well as incorporating ICT at all levels of schooling, particularly at tertiary level, in cooperation with the World Bank and other multilateral institutions.

In 2018, Egypt’s Ministry of Education and technical Education (MoETE) launched a new system, Education 2.0 for all levels of education to adapt to international standards. Its overall aim is to build the student’s capacity and skills for problem solving, creativity, critical thinking, negotiation, teamwork to enable them to deal with the issues of the age and to align them with the country’s newly developed 2030 Strategy Vision.

Especially in regard to technical education and vocational training the MoETE put in great efforts to?increase and qualify the number of young people with skills and capabilities that allow them to meet the needs of the job market (UNESCO 2022 / DARPE 2022 / MoETE 2022)

Read the entire article with graphs and numbers in the Outsourcing Destination Guide Tunisia, which is available for free download at www.outsourcing-destinations.org.