In a dynamic move, Egypt's Information Technology Industry Development Agency (ITIDA) is spotlighting the untapped potential of outsourcing in tier 2 cities and showcasing advantages for IT firms to set up in more cost-effective destinations, extending the momentum beyond Cairo.
As the global outsourcing landscape evolves, technology industry leaders and global offshoring players are strategically expanding operations across tier 2 and tier 3 cities. This move aims to harness the large pool of talent and capitalize on the operational cost advantages offered in these cities in comparison to larger metropolises.
Backed by unwavering government support, the outsourcing industry in Egypt is experiencing significant growth. The Ministry of Communications and Information Technology is at the forefront, spearheading nationwide initiatives. These include the establishment of science and technology parks in Tier 2 cities, the development of robust physical infrastructure networks, and positioning Egypt as a global contender in business process outsourcing, high-value-added innovation, electronic design and manufacturing.
This strategic expansion beyond Cairo underscores Egypt's commitment to offering diverse investment opportunities and tapping into the potential of Tier 2 cities. With its large pool of skilled workforce, cost-effectiveness, exceptionally low attrition rates, and government-backed initiatives, these cities stand out as compelling alternatives for global companies aiming to optimize their offshoring operations.
Assiut Governorate, a historic and significant trade center in southern Egypt, stands out as a prime example. Hosting one of Egypt's burgeoning technology parks, Assiut has already attracted a range of IT companies, global outsourcing players, and electronic design enterprises. Notably, it is home to the first regional university, Assiut University, in addition to a population of nearly 5 million inhabitants, as per the Central Agency for Mobilization and Statistics (CAPMAS) data from late 2022.
Strategic Partnerships and Skills Development:
During a recent visit to Assiut Governorate, Minister of Communications and Information Technology, Dr. Amr Talaat witnessed the signing of Memorandum of Understanding (MoUs) between ITIDA and Brightskies, an Egyptian digital transformation enabler and market leader, and Swift-Act, an embedded software solutions company. The MoU aims to train and qualify 200 locals in software design, development, and integrated electronic systems. At least 150 of these graduates are targeted for employment in the offshoring sector within the tech park in New Assiut.
Additionally, the governmental delegation visited the headquarters of iSON Xperiences, an Indian company and global leader in Customer Experience Management (CXM). The company has a significant presence in Egypt with four sites including one in Assiut technology park which employs 700 employees, and 3 other sites in Cairo. The company is leveraging Egypt's tech talent, employing a total of nearly 3500 Egyptian employees, 50% of which are females and 5% representation of people with disabilities.
The tour also included a visit to a Saudi company called "Ejada"; a leading provider of digital transformation, technology and development solutions in the Middle East and North Africa. Around 1700 Egyptian employees work in Ejada, including 50 employees in its branch in Assiut. Ejada exports most of its services to the Saudi market from its branch in Assiut, and plans to expand its business in the city of Assiut and continue to invest in the Egyptian market.
Growing Demand on the Talent Pool in Upper Egypt:
ITIDA's CEO, Ahmed ElZaher, highlighted the increasing demand from global and local tech companies to establish or expand their delivery centers in various Egyptian governorates beyond Cairo and Alexandria. The focus is particularly on Upper Egypt, leveraging the rich pool of skilled engineers and multilingual talent in these governorates. "The availability of skilled youth, coupled with the low cost of operations, make these governorates attractive for global and local tech investments," ElZaher stated.
Government Support and Industry Growth:
ElZaher emphasized the technological advancements in Assiut, showcasing facilities such as ITIDA's technology incubator for startups under the Technology Innovation and Entrepreneurship Center (TIEC) at Assiut University. Additionally, the Electronics Innovation complex in the Technology Park embraces advanced labs for IoT, robotics, electronic circuits manufacturing, and digital manufacturing and prototyping.
Acknowledging the unprecedented support from the Egyptian government, ITIDA CEO affirmed that the outsourcing industry is poised for growth. The government is committed to enhance Egypt's competitiveness globally, fueling the knowledge economy and creating job opportunities in the IT sector.
Digital Egypt Strategy for the Offshoring Industry Pays Off
In 2022/2023, the ICT sector grew by 16.3%, to become the highest growing sector in Egypt for the fifth year in a row. Egypt's digital exports grew to reach $6.2 billion in 2023, up from $4.9 billion in 2022, with a growth rate of 26%. Since the launch of the "Digital Egypt Strategy for the Offshoring Industry 2022-2026" in February 2022, ITIDA has signed 74 agreements with local and international companies in the outsourcing industry. These agreements focus on expanding offshoring centers, inaugurating new ones in Egypt, and hiring 60K employees over the course of these agreements.
