Egypt’s IT sector is seeing an increase in staffing, amid a surge in hiring by multinationals that are expanding operations in the country.
Following a meeting in July with automotive component and technology company Valeo Service, the Ministry of Communications and Information Technology (MCIT) announced that the France-based company plans to generate 500 new jobs over the next two years at its base in Cairo’s Smart Village. The company’s Cairo office is its largest software research and development hub worldwide.
The ministry’s announcement was made just weeks after the press reported that US computing company Dell EMC planned to expand its operations in Egypt by 25% before the end of 2017, in a move that will create 250 new jobs. The company operates a “centre of excellence” in Cairo, offering a range of technology services, while working closely with local universities to nurture talent.
Valeo and Dell are part of a broader wave of multinationals that are expanding their IT operations in the Arab world’s most populous country. In September Orange Business Services (OBS), the business services arm of telecoms company Orange, announced plans to create more than 170 new business process outsourcing jobs at its Egypt site, increasing its total workforce to around 2000 before the end of 2017.
The company expects to take on approximately 450 additional staff in 2018, to help serve customers in Europe.
ICT drives economic growth
Egypt’s ICT sector is already a major employer. The industry provides direct employment for some 500,000 workers, and this number is rising.
Excluding telecoms, the sector represents the single biggest driver of growth in Egypt’s economy. The industry expanded by 12.5% in FY 2016/17, which ended on June 30, contributing LE64bn ($3.6bn) to GDP and generating $1.87bn in export revenues, according to the Information Technology Industry Development Agency (ITIDA).
Investment should also benefit from a recovering economy, which is expected to grow by 3.5% this year and 4.5% in 2018, according to the IMF.
Harnessing competitive advantages
Egypt’s large pool of skilled graduates coupled with low operating costs are major factors contributing to the growing interest from tech investors, and they have enabled the sector to buck broader trends during the worst of Egypt’s economic crisis.
A total of 220,000 Egyptians graduate with business-process-related degrees every year, and a further 50,000 graduate with degrees in ICT-focused subjects, according to ITIDA. Costs per full-time employee in multilingual contact centres can be just 20% of those in Western Europe and are kept down by low overheads and competitive wages.
In addition to this, the sector benefits from its location between Europe, Asia and Africa, to serve a range of global markets, particularly businesses that have adopted the “follow the sun” approach, where work is passed around the globe from one office to another to maximise working hours. Egypt is also linked in to more than 10 global internet backbone networks, which improve bandwidth capacity and international connectivity.
Help from the top
As well as utilising these competitive advantages, successive governments have been supportive of tech investors, making available a range of incentives, including subsidised telecoms rates, training subsidies, and help with due diligence and identifying suitable office space.
Ratified in June, the new Investment Law includes a chapter on investment in technological zones, which will provide dedicated support to businesses working on design and development of electronics, data centres, outsourcing activities, software development and technological education.
Businesses located in the hubs are eligible for tax and Customs duty exemptions on the tools, supplies and machinery that they require for their operations. Technology investors will also be covered by other guarantees and incentives featured in the legislation – which is aimed at bringing about a more robust legal environment for foreign businesses – including guaranteeing equitable treatment of foreign and local investors and the right to export the investment project’s products without needing to sign up with the Exporters Registry.
This Egypt economic update was produced by Oxford Business Group.