Egypt’s cost efficiencies and robust digital infrastructure makes it a flourishing outsourcing destination

For companies looking to gain a competitive edge and focus more on strategic goals, outsourcing has emerged as a compelling solution as it increases productivity and efficiency, reduces cost, as well as leads to savings in time on day-to-day operations.

With an enabling business environment, government support, availability of a rich pool of skilled talent, and digital resonance, Egypt has positioned itself as a prime outsourcing destination, ranking 23th out of 78 outsourcing markets globally, according to Kearney’s Global Services Location Index 2023.

The Egyptian government has come to play a crucial role in fostering the growth of the outsourcing industry. Recognising its potential, the government has actively supported the development of the Information and Communications Technology (ICT) sector, which serves as a catalyst for attracting investors to choose Egypt as their outsourcing destination and business service hub. The ICT sector has experienced significant growth, with a nearly 17% increase during the fiscal year of 2021/2022, making it the fastest-growing sector in the country.

The launch of the "Digital Egypt Strategy for the Offshoring Industry 2022-2026," a comprehensive five-year plan, has further bolstered this sector. Aimed at tripling export revenue generated from offshoring services, the innovative strategy also aims to create approximately 215,000 job opportunities in the field. Having welcomed 29 global firms into Egypt last year, the government aims to generate additional jobs in sectors such as Business Process Outsourcing (BPO), IT services, and engineering, with a combined annual export value of USD 1 billion. These initiatives, coupled with financial incentives and tax reductions, have contributed to Egypt's attractiveness as an outsourcing destination.

With several global organisations looking to expand and export some of their support functions to Egypt, the country’s outsourcing market has witnessed substantial growth across a multitude of sectors including call centres, HR, finance, and accounting. Raya and Teleperformance are among the largest BPO operators in Egypt while key players in the call centre services, including Webhelp, Sutherland, and Concentrix, have recognised its potential and established a presence in the country. The outsourcing industry is expected to experience significant expansion in the coming years in both job creation (increasing by over 300% between 2022 and 2026 in the BPO sector alone) and contributions to the country's GDP, as ITIDA projects the BPO industry will contribute between 1.2 and 1.4% of the country’s total GDP by 2026.

One of Egypt's key advantages is its cost efficiency. The country offers up to 80% cost savings for entry-level salaries compared to its competitors Poland, Morocco, and Turkey.

Currency devaluations have further enhanced its appeal, as the Egyptian pound has lost over 50% of its value since January 2022. This depreciation has made it more affordable for foreign companies to outsource operations to Egypt, enabling them to benefit from lower labour costs while maintaining control over non-revenue generating functions.

Egypt's desirable geographic location, centrally positioned on the Mediterranean, is another factor contributing to its appeal. The country also shares a similar time zone with Europe, Asia, and the US, enabling seamless coordination and productivity for businesses serving global clients.

With approximately 75 million people under the age of 40, Egypt boasts a young and creative population. 80% of the country’s working population speaks English and other European languages, compared to 20-65% in other leading offshore destinations. In addition, over 600,000 competent young graduates from top-rated universities enter the workforce each year, bringing valuable business and digital skills to power Egypt’s growth as a strong outsourcing hub.

That said, a strong area the country could perhaps strengthen in the coming years is increasing the available supply of its tech parks dedicated to call centres and the various outsourcing activities exported in the country, especially given that it has ranked among the top five most preferred destinations to outsource contact centres, according to Ryan Strategic Advisory’s 2019 Front Office Omnibus Survey. Currently, the Maadi Tech Park is the first and only specialised technology and investment zone in Egypt that is specifically allocated to contact centres, facilitating smooth operations, and offering various incentives to its investors (such as custom exemptions, etc.). Therefore, there is limited availability of such centres compared to their relatively higher demand.

To summarise, there is no doubt that Egypt's outsourcing industry today stands at the threshold of remarkable growth and recognition on the global stage. Benefiting from favorable government policies, strategic positioning, a highly skilled workforce, and cost-effective solutions, the country is poised to enjoy continued success in the dynamic and competitive world of outsourcing.