EGYPT - A Contact Center Hotspot?
1 Mar, 2009
By: Dr. Hazem Y. AbdelazimHow Egypt’s contact center sector is emerging as world leader; how it’s nurturing the workforce of the future?
Is Egypt on your shortlist of locations for outsourcing your contact center work? Haven’t thought of it? Well, now is the time. The Egyptian government believes that investing in world-class contact centers is a way to increase the country’s share of the global outsourcing market. Central to achieving this target is a focus on developing and maintaining a successful contact center offering.
Egypt has many advantages as an outsourcing destination and one of the key differentiators is its quality contact center offerings. The reason Egypt is so well poised to lead the contact center market is its mix of talent, cost-effectiveness, government incentives, strategic geographical position and language skills - all key to a successful contact center industry.
Egypt’s exports from its IT sector are predicted to grow from U.S. $450 million in 2006 to U.S. $1.3bn in 2010. European contracts will be a major factor in supporting this growth. With an average flight time of four hours to many European capitals, Egypt is much closer geographically, and culturally, than many other outsourcing destinations. This proximity also reduces telecom costs as all major telecom lines - north-south, east-west - pass through Egypt.
Furthermore, the Egyptian government is keen to cultivate its contact center industry and has set up a number of initiatives to support its expansion, including academies to further develop its skilled workforce and tax benefits to support the set-up and growth of companies operating in the country.
Costing Out the Benefits
Because the Egyptian government understands the importance of the IT industry to the health of its growing economy, it is committed to offering tax breaks and other financial incentives to attract international companies to set up contact center operations in the country. Commitment to economic change makes Egypt an increasingly attractive prospect financially and the more recent reform program has seen corporate tax rates cut from 42 percent to 20 percent. As a result of such changes, Egypt was named as the leading global economic reformer by the World Bank in its “Doing Business 2008” report.
Egypt is a cost-effective destination for outsourcing services. Costs of doing business are significantly lower than in Eastern Europe and are even lower than other emerging markets. Egypt also has some of the world’s lowest telecom and Internet rates. This is important to contact center outsourcing, where reductions in telecom costs ultimately deliver significant fiscal benefits. According to a Datamonitor report, the services provided by Egypt are met at 54 percent of the cost of U.S. inbound voice-based customer care agents. Egypt’s low costs mean it is less expensive than other growing locations such as Hungary, Poland, Canada and Mexico. In addition, its low wage inflation of just five percent (annually), compared to 10 to 15 percent in other locations, and low currency fluctuation of the Egyptian pound with respect to the U.S. dollar, means that the costs of operating in the region will remain stable.
Egypt’s geographical location is extremely important for companies looking to outsource their contact center contracts. Time zone similarities with Europe mean that unlike outsourcing locations such as those in Asia-Pacific, Egypt’s working hours are more akin to those of European companies. This means not only do they have fewer night-workers, but they are also able to service the needs of customers for European companies. Egypt itself has a distinctly Mediterranean feel with an understanding culturally for how Europeans do business. Many Europeans have an affinity for it as a location due to its booming tourism trade.
Winning the War for Talent
Another key cultural strength stems from the country’s IT services talent pool, where multilingual skills including English, French, German, Spanish, Italian, Portuguese, Dutch and Arabic are currently serviced out of Egypt. This positions Egypt favorably amongst other emerging outsourcing destinations thanks to the diverse regions Egypt is able to support with local language outsourcing services. In fact, a global study carried out by Global Services-Tholons ranked Cairo 11th in its list of the top 50 emerging outsourcing cities, citing its multilingual skill set amongst our strengths .
Egypt’s large annual graduate talent pool of over 330,000 includes a 31,000-strong potential specialist workforce with engineering and computing degrees. This talent pool is something the government is eager to cultivate, and has set up a number of initiatives to support it. These cover training and best practice sharing, for example through its Information Technology Institute (ITI, www.iti.gov.eg) in Cairo, which trains up to 1,000 people every year. Also, these initiatives include curriculum reform in five universities with the aim of producing more than 4,000 graduates annually, thus preparing its workforce of the future.
Over half of Egypt’s 82 million inhabitants are aged between 15 and 39, meaning it will have a talent surplus for the next five years, and government-led initiatives such as the Egyptian Education Initiative (EEI, www.eei.gov.eg), E-Learning Competence Center (ELCC, www.elcc.gov.eg) and Mobile IT Club (http://mitc.ictfund.org.eg) will enable Egypt to support the outsourcing industry in the long term. This is in stark contrast to many other outsourcing destinations that suffer from high levels of attrition within their talent base and are facing skills shortages in the coming years.
Growing and Investing in Contact Centers
The contact center industry is extremely important to the Egyptian government; investment in this area highlights its importance to the Egyptian economy and the sector’s importance in growing its share of the booming outsourcing market. Key to this growth is the cost benefits of outsourcing to Egypt, particularly the low cost of telecom and the low rate of inflation. Contact center growth is supported by the impressive talent pool, on which the industry is based and poised to grow. Culturally, Egypt is in-tune with Europe and its Mediterranean feel and understanding of European business will help it develop as a key strategic partner. The future of contact centers looks bright for Egypt. This will underpin growth for the region and help bolster the Egyptian economy, providing jobs and excellence in the outsourcing industry for years to come.
The Information Technology Industry Development Agency (ITIDA) is a governmental entity affiliated to Egypt''s Ministry of Communications and Information Technology. It is responsible for growing and developing Egypt''s position as a leading global outsourcing location by attracting foreign direct investments to the industry and maximizing the exports of IT services and applications.
Case Study: XCeed
Overview
Xceed has grown from 250 employees to over 2,000 in five years, experiencing 50 percent growth per year throughout that period.
The company was established in 2002 as an IT arm of local telecom provider Telecom Egypt. Xceed now services multinational leaders such as Microsoft, Oracle and General Motors, among others.
Located in Egypt’s corporate IT hub, Smart Village, Xceed set itself a mandate of becoming a global offshoring giant. It quickly realized that having the proper assets in terms of technology infrastructure and human resources helps companies resolve issues and upscale quickly.
Why Egypt
Xceed Chairman and CEO Dr. Adel Danish sees four main elements spurring Egypt toward success:
• Human resources – the spectrum of languages that you will not find anywhere else including English, Arabic, French, Italian, Spanish, Greek, Portuguese and Hebrew
• Infrastructure - not just telecom infrastructure, but also road and electricity
• Government incentives - including reduced costs for E1 lines and training for contact center staff
• Proximity - The country’s close proximity to Europe, Asia and the Middle East allows it to provide contact center services to countries around the clock.
