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Thu 24 May 2007 04:00 AM

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Egypt tipped to become outsourcing hotspot

Egypt is set to become a major hub for outsourcing in the Middle East, according to research firm Yankee Group.

Egypt is set to become a major hub for outsourcing in the Middle East, according to research firm Yankee Group.

As more multinational companies start outsourcing IT services and call centre operations, Egypt is in pole position to develop its share of the global outsourcing market, the group said.

“Egypt has a number of the required ingredients in place to become a major hub for IT outsourcing in the Middle East,” said Tony Marson, Yankee Group senior analyst.

India currently dominates global outsourcing holding a 60% share of the market, but Egypt has various advantages over the Indian market, Marson told ITP.net.

Many people living in the country speak several European languages and don’t have strong accents, something that can be a problem in India, he said.

Salaries in Egypt are also lower than in India and there is less churn of IT staff, he added.

Yankee Group cited Cisco, Google, IBM, Microsoft, Oracle and Orange Business Services as some of the companies currently doing outsourcing in Egypt.

The country’s development as a prime outsourcing location could be hindered, however, by various “structural and perceptual problems”, the research firm warned.

One of the main problems at present is that most activity is located around Cairo; the government should look at developing an alternative location for ICT companies in Alexandria, the second largest city in Egypt, Marson suggested.

Other areas that the government needs to work on include investing in local infrastructure and promoting technical education, according to the firm.

“If Egypt wants to become the India of the Middle East, it has to address these issues up front,” Marson said.

The Yankee Group said the Egyptian government is aiming for the country to capture US$1.1 billion of the global outsourcing market by 2010, four times its revenue in 2005.

Egypt currently ranks in 13th place on management consulting firm AT Kearney’s Global Services Location Index, which compares the financial attractiveness, people skills and business environment of 50 countries worldwide.

India, China and Malaysia hold the top three spots in the ranking, while the UAE is placed number 20.

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