Egypt is well placed as the next hot spot in IT Outsourcing (ITO) and business process outsourcing (BPO), according to a study from Yankee Group. The analysts report that Egyptian government has set an ambitious revenue goal -- to claim $1.1 billion of the global outsourcing market by 2010. Plus, global companies such as Cisco, Google, IBM, Microsoft, Oracle and Orange Business Services are already exploiting Egypt's IT talent pool. They reason that Egypt could become the India of the Middle East.

As this market continues to grow with India holding 60% of the market share, more multinational companies are using IT outsourcing and business process outsourcing as tools to transform their organizations into global operations, becoming what Yankee Group calls the Anywhere EnterpriseTM.

There are hurdles. According to the Yankee Group analysis, although interest in Egypt as a location for outsourcing services is growing rapidly, there are number of structural and perceptual problems the Egyptian government must address to facilitate the ascendance of this market. Yankee Group recommends the Egyptian government:

• Invest in local infrastructure.
• Promote technical education.
• Encourage companies to obtain appropriate training and certification (e.g., CMM, Six Sigma).
• Develop an alternative location for ICT companies in Alexandria.
• Focus on the Middle Eastern market for business process outsourcing initially.

"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 and report co-author. "In an anywhere environment, where time and place are irrelevant, IT outsourcing will continue to be a strong and resilient revenue source opportunity for those regions that successfully enter it. For Egypt, the government will have to steer the development of the ICT industry cautiously through the next 5 years."

Yankee Group believes that there are two main paths by which Egypt can develop in the IT outsourcing market: learning from Indian mistakes or not heeding the lessons learned in India. Based on its current efforts and plans, Egypt is on track to learn from Indian market.

Mindy Blodgett, Yankee Group analyst and report co-author, adds, "Anywhere enterprises interested in outsourcing are demanding options for locating the work in many regions -- and Egypt could become a favored outsourcing location if they meet the many challenges."

Yankee Group concludes that, in the outsourcing world, Egypt could become the India of the Middle East.

About the market research report

Contact Yankee Group for more information on the report, "Is the Future Bright for Outsourcing IT Services to Egypt?" (May 2007).

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