As the dust settles on Egypt’s 2018 presidential election, investors are besotted with its recovering political situation. Despite government’s severe austerity measures and repressive tactics, support from people continues due to its success in upholding security front in the mainland Egypt. The country witnessed a drop in the number of violent attacks outside North Sinai from 671 in 2015 to 131 in 2016. Moreover, there were only three attacks outside North Sinai in the first quarter of 2017, in comparison to 75 attacks during the same period in 2016 and 261 during the first quarter of 2015. That being said, terrorism still remains a big threat for the country with travel warnings being issued by nations such as Canada due to the unpredictable security situation.
As seen in the graph below, Egypt ranks moderately high on its Geo-Political Risk rating by Supply Wisdom; and looks more uncertain when compared with some of the other top nations in the Middle East and North Africa (MENA) region.(1)
However, according to ITIDA, the IMF support in the reform program assures that Egypt has no political instability that could affect investments. It is worth mentioning the attacks in the Sinai Peninsula (in a very small remote area) are more than 400 KM/5 hours drive from Cairo. Even Sharm ElSheikh, which is in the South Sinai Peninsula, hosts regularly international and regional conference and events.
ITIDA also states that while India is a top outsourcing destination worldwide, in the Global Terrorism index, it is ranked higher than Egypt. Even the US, UK and France, are in the “High Impact of Terrorism” category. Regarding Travel advice, the US Travel alerts for India, Egypt, and surprisingly the UK have the same level. Similarly, for Canadian travel advice (high degree of caution for Egypt, India, and UK) and UK travel advise (Egypt, India, and US).(2)
Due to its pivotal location in the middle of the world, Egypt is considered to be a prime outsourcing location:
- Business continuity with the Americas and Asia
- Similar timezone with Europe
- Only a 5-hour radius when it comes to EU countries
- A strong internet backbone, connecting 60+ countries through 13 marine cables that have a capacity of 60+ TBps
Egypt is home to several technology and business parks that support the outsourcing business with state-of-the-art infrastructure. In addition to the business hubs in Cairo, the government has started in 2016 to spread technology parks across tier-II cities under the name WE Parks. Two WE parks (Borg Al Arab and Assiut) were inaugurated in late 2016, another two WE Parks launched in 2017, (Beni Suef and Sadat City), and further two to come this year as well. In addition, a Knowledge City within the New Administrative Capital will be inaugurated in 2020 to create an ecosystem of business, government services and research and academia.(2)
Egypt has established itself as strong player in IT-BPO service sector sustained by its adequate labor pool and low cost. Still, a lot of effort is further required from the country to restore its political stability and social-security in order to improve investor’s confidence and boost the business environment. Egypt also has a lot of catching up to do with respect to developing human capital, adoption of new age technologies and improving ease of doing business in order to compete with other prime outsourcing destinations. Initiatives to address these challenges through public-private partnership will help Egypt to sustain the momentum of growth in the outsourcing industry. In recent years, the government has realized the seriousness of these challenges and started taking steps towards resolving them to ensure the country’s outsourcing industry meets the global sourcing dynamics.(1)
1: Supply Wisdom & Neo Group: Location Assessment – Sourcing in Egypt. Sandeep Suresh, Head Research; Meena Priyadharsini B, Manager Research; Sudeep Chakraborty, Senior Research Analyst.
About Neo Group: Founded in 1999, Neo Group helps organizations meet business objectives and address business challenges by leveraging global services and sourcing. To learn more about Neo Group, please visit NeoGroup.com.
About Supply Wisdom: Supply WisdomSM is a unique cloud-based service that provides data and intelligence for sourcing risk and opportunity monitoring of global countries, cities and suppliers. To learn more about Supply Wisdom, please visit SupplyWisdom.com.
2: ITIDA: The Information Technology Industry Development Agency
About ITIDA: The Information Technology Industry Development Agency (ITIDA), the executive arm of the Ministry of Communications and Information Technology, is Egypt’s engine for spreading technology, driving innovation, and supporting foreign investors seeking to enhance their global offering from Egypt. Visit TimeforEgypt.net to learn about what Egypt has to offer in the outsourcing industry.