Technology

Technology

Egypt sits comfortably amongst its neighboring countries as a provider of quality communication and information technology, ranking 1st in the MENA region and 4th internationally as a global outsourcing destination. Due to the obvious potential the country has in the field of ICT, many tier one vendors and distributors have started focusing their attention on the Egyptian market.

Additionally, the influx in technology startups which offer much needed services within the country, have also strengthened Egypt’s position as a globally recognized key market player. Teamed with a huge population, over half of which is under 40 and tech savvy, and low startup costs, Egypt is now rivaling India and the Phillipines in offering technology services.

Last year alone, 32 memorandums of understanding (MOU) were signed to improve networks infrastructure, host technological trainings, construct data centers and boost digital transformation in general. The MOUs were signed with well-known companies such as Huawei, Nokia and Ericsson.

The Government clarified measures in 2018 to incentivize international manufacturing companies to operate in Egypt, which sparked the interest of several big names such as Bosch and Mercedes. A report published recorded
internet users in Egypt at 37 million including landline and mobile phones, as well as ADSL subscribers reaching 5.43 million subscribers at the end of 2018, signifying an increasing growth in the sector.

Participation in this sector does not require costly seed investments, and the cost of developing a website or application is comparably lower than neighboring countries.

The introduction of the new technology zone under the New Investment Law will decrease associated costs further by exempting businesses located in the area from customs duty and tax on the tools, supplies and machinery that they require for their operations. A further incentive provided by the new law includes the ability to export products without the need to sign onto the exporter’s registry which is particularly useful for technology companies  looking to expand globally The aforementioned technology zone will also provide dedicated support to businesses working on the design and development of electronics, data centers, outsourcing activities, software development and technological education, all of which are relatively new markets which previously had little assistance locally.

Key to the success of this industry is the close partnership between the government and businesses, and in light of this, there has been an ongoing deregulation of the business environment. This attempt at regulatory
reformation along with the introduction of a new technology zone under the Investment Law has already resulted in an increase in the number of companies operating within this sector.
The Chamber of Information Technology and Telecommunication (CIT) assists investors further by connecting local companies to their international counterparts, and providing consistent information on the developments of the sector to ensure businesses are in line with any changes made.

MCIT

The Egyptian Ministry of Communications and Information Technology (MCIT) is the government body responsible for information and communications technology. Established in 1999, MCIT is responsible for the planning, implementation and operation of government plans and strategies related to ICT in Egypt. The ministry coordinates with a number of other agencies, namely:

National Telecommunication Regulatory Authority (NTRA): Responsible for administering the telecommunication sector.

Information Technology Industry Development Agency (ITIDA): Responsible for enhancing the expansion of the IT sector and increase its worldwide competitiveness, by identifying the local industry’s requirements and addressing them with the needed programs.

National Telecommunication Institute (NTI): The institute specializes in education, training and research activities in the telecommunications field.

Centre for Documentation of Cultural and Natural Heritage (CULTNAT): This centre runs a group of projects and programs for the documentation of Egypt’s cultural and natural heritage, including architecture, archaeology, manuscripts, folklore, music, caricatures, natural resources and plastic arts.

Areas for Investment 

1 | Business Process Outsourcing (BPO)

As a location for global outsourcing, Egypt is fast expanding; delivering a safe, modern and open business environment that is conducive to the business process outsourcing market. Similar to the Philippines and India, investors have the capability to implement large service centers and employ a suitable workforce within the country. It has also been found that sourcing operations in the country are 30% cheaper than Morocco and 40% lower than Eastern Europe.

The country is cost competitive with India, a global leader in the sourcing industry. Operational costs for contact centres in Egypt range from $14,800 to $16,100, compared to $15,400-16,400 in India, making it the most financially attractive market out of the top 10 outsourcing countries. Many international players have already taken advantage of the environment here, including IBM who have opened a substantial resource centre, and Oracle who have also established a global application resource centre which employs around 500 engineers.

Due to the fast paced nature of the technology environment, simply equaling the client’s resources and processes is no longer sufficient to keep up. The next phase of Egypt’s BPO development will therefore be focused on harnessing innovation, and increasing the country’s ability to improve and advance on clients’ existing systems and models to keep them ahead of the competition.

With its abundant pool of multi-talented, technologically savvy graduates, its low cost of operations, high quality infrastructure and strong government support, Egypt is perfectly placed to create this sense of innovation in the market, and further advance it’s positioning as a leader in the global BPO industry.

2 | Call Centers

Egypt is positioning itself as one of the leading locations for call centres, providing services for countries as diverse as the USA, Canada, UK, mainland Europe, Sub-Saharan Africa, and the Middle East. Egyptians are as well-known for their fluent and accent-free English, as they are for their dexterity with French, German, and Spanish, which is one of the many reasons the country has excelled in this field.

The country is also equipped with several technology parks such as Smart Village, and the Maadi Park, both of which house in excess of 135,000 employees, a large percentage of which will be found in call centres such as Vodafone and Orange.

The Egyptian government provides various packages of incentives and subsidies, for new call centres, including training and telecom support. These incentives are coupled with the government’s reduction of tax for companies investing in Egypt, making the country all the more ideal as a home for all types of call centres. Furthermore, Egypt is favoured among investors since its geographical location allows the country to serve various time zones easily.

3 | App Development

It is expected that by 2020 the global combined mobile app revenue will reach a massive $189 billion, and the Egyptian share of this is yet to be exploited. As well as being a necessary marketing tool for businesses and simplifying day to day activities such as food delivery or restaurant reservations, apps can generate a huge amount of profit in a short time with low start up costs.

Investors can introduce the public to a new idea, or assist existing companies in modernizing their current portfolio and communicating more efficiently with their clients. Over the last three years, apps have been introduced for booking doctors appointments, getting traffic updates,

making payments online and for public transport, many of which have made an appearance on Forbes for their innovation. The average application costs around $5000 to create which is considerably lower than hiring a developer in the USA, Europe or even other areas of the Middle East. Despite the low costs, investors need not compromise on the quality of their platform since the country is home to a large number of capable and innovative website and app developers.

Advantages

A Pro-Business Government and Regulatory Body: The introduction of the Technology Zone indicates the governments willingness to help this field flourish. Additionally, MCIT and its branches are highly dedicated to assisting local and foreign entrepreneurs by providing support and business building opportunities, especially in the business process outsourcing and information technology outsourcing field. ITADA has also been proactive in facilitating set-up and establishment procedures in Egypt, in addition to reducing start-up and telecommunication costs.

A Robust Infrastructure: Egypt is served by four mobile networks: Vodafone, Orange, Etisalat, and the newly introduced Telecom Egypt. The competition between the four providers is positively reflected on the cost of services, introduction of the 4G network, and the increase in mobile database services and mobile phones applications. Furthermore, wireless and wireline broadband covers every major urban center in Egypt.

A Large and Growing Domestic Consumer Base: Over half of the Egyptian population regularly use the internet, and this provides a consumer base which is larger than the combined population of Europe.

Critical Mass: Egypt has emerged as a destination of choice for multinationals looking to establish cost-effective product developments and call centers. The establishment of a number of technology parks in the country offer key industry clusters which provide high-tech telecom and IT infrastructure.

Proximity to Major Markets: Egypt is close to major ICT consumers in Europe, Africa and the Middle East. It is closer to Europe, the United States and Canada than India or the Philippines. It is also just five hours’ flight time to most European cities, as well as being close to India and Asia. The ideal location of Egypt therefore gives it proximity to major export markets.

Proximity to Suppliers: All ICT components are available locally. Additionally, Egypt is home to a broad network of skilled service providers.

Technology Zones

Technology zones promote benefits to member organizations and companies including access to shared resources, such as an uninterruptible power supply, highspeed telecommunications connections, security, management, offices, convention facilities, parking, retail outlets, and entertainment and sports facilities. Below is an overview of the country’s leading technology zones which are open for investments:

1 | Egyptian Silicon Valley

The country’s very own Silicon Valley is currently being established with 12 billion EGP of capital in East Port Said. Sitting on 50 acres of land, the project currently consists of 10 solar companies initiated through a joint Chinese-Egyptian venture, a research center, an energy production plant, a silica and quartz purification plant, and a fiber optic cable manufacturing plant. The overall aim of initiating this project was to help the country solidify its role in the fields of nanotechnology and alternative energy so that it may continue to compete on an international level. A number of international tech companies have already signed up to open branches within the region, and opportunities are still open for further investments.

2 | Smart Village Egypt

The village was created and managed by the Smart Villages Company, which was formed through a public-private partnership between the private sector and MCIT.

The company specializes in the establishment and management of technology clusters and business parks on local and regional levels.

The village is spread over an area of 3 square kilometers to the west of Cairo, and accommodates local and multinational companies, government and financial authorities, educational institutions, and research and development centers, all of which share state-of-the- art infrastructure, modern facility management and a broad range of business and recreation services.

The village in 6th of October hosts companies such as Xceed, Raya and the Hawass Saqqara Training Centre, an Egyptology research center by the Bibliotheca Alexandrina as announced in late 2018.

 

3 | Cairo Contact Centers Park

Cairo Contact Centers Park was established as a technology hub to bring together Egyptian and international companies specializing in business and knowledge process outsourcing (BPO /KPO) and information technology outsourcing (ITO), making Egypt one of the top offshore outsourcing contact center destinations in the region. Located in the Cairo district of Maadi, the park offers the latest outsourcing and offshore technologies, and has contributed to making Egypt one of the world’s emerging destinations in the off-shoring and out-sourcing industry. Development slots are announced through MCIT, and by the end of this year, 22 additional areas will be completed.

Investors are given the right to utilize the land on a usufruct basis for up to 49 years, at extremely competitive prices per meter squared.