With Maadi Technology Village to open this summer, outsourcing in Egypt is about to get a boost
Egypt's ICT sector received a boost last month after global consulting firm AT Kearney listed the nation as the top destination for outsourcing in the region. Rising seven positions to number six, this is the first time Egypt has made the top 10 on the Global Services Location Index, beating out competitor Jordan at number nine to be ranked first for the Middle East, MENA and African regions.
The index, released May 18, is good news for the Ministry of Communications and Information Technology (MCIT), which is spending LE 100 million on the first phase of a call center park in the heart of New Maadi. The park is part of the Ministry's plan for an outsourcing industry worth $1.1 billion (LE 6.2 billion) in combined revenues by FY2010-11. In 2008 the industry was valued anywhere between $450 million (LE 2.5 billion) and $1 billion (LE 5.6 billion) ("Resourcing Outsourcing," Tamer Hafez, Business Today Egypt, May 2008).
It has a great deal of potential to increase Egypt's ICT exports and will help attract foreign investment to the country. [...] it is projected to offer 40,000 seats within the coming two years."
The Maadi Technology Village -- referred to in local media as the Maadi Business Process Outsourcing (BPO) Park -- will comprise around 40 buildings on 75 acres of land exclusively dedicated to outsourcing call center operations. The complex, which is overseen by the government-run Information Technology Industry Development Agency who declined to comment for this story, is slated to provide jobs for between 50,000 and 100,000 people when fully operational, with facilitates accommodating 40,000 'seats' for call center staff. Current MCIT estimates state the project will be finished in 2012. The first three buildings and mosque are set for completion this summer.
The outsourcing park's first residents will likely be call center companies with expansion plans too large for Smart Village, the business and technology park on the other side of Cairo, says Sherif Abd El-Kader, chairman and partner at Shuttering Construction, the firm responsible for constructing the first three buildings at the Maadi site. El-Kader calls the development "ambitious," but a must if Egypt is to continue to garner international recognition in the call center sector. "It's a very ambitious project. [] This is [ICT Minister Tarek Kamel's] plan to establish a world-class, state-of-the-art call center facility in Egypt," he says.
Already touting many of the characteristics of a call center hub, such as strong foreign language skills and a time zone suitable for communications with North America, Europe and the Far East, El-Kader says the Maadi Technology Village will put "Egypt on the map as a pioneer in call centers."
Homegrown Talent
The AT Kearny rating comes as no surprise to industry players that have seen Egypt's call center sector growing rapidly over the last several years.
"Egypt is starting to be perceived as a hub for call centers. There are many studies and reports published that position Egypt as the destination for call centers [and] as the best in Africa compared to places like Morocco, Tunisia and South Africa," says Xceed CEO and chairman Adel Danish. Last year, Egypt was awarded Outsourcing Destination of the Year by the National Outsourcing Association, the United Kingdom's peak body for outsourcers.
One of the largest local firms, Xceed, has over 2,000 employees, most of whom work at the company's two call center branches in Smart Village. According to Danish, the call center industry in Egypt is worth around $400-450 million (LE 2.2-2.5 billion) based on his estimates that call centers make $20,000 (LE 112,000) per employee on average. He predicts that the industry will grow another 10-15% this year.
Xceed, ranked 79 out of 100 by the International Association of Outsourcing Professionals, on its 2009 Global Outsourcing Index, plans to expand by between 400 and 1,000 employees this year one of the reasons Danish is eyeing the Maadi Technology Village.
"Whenever it's ready we'll jump on it. That will be our expansion I hope. We're waiting for the park, but we have some other options for having maybe a training center somewhere downtown or Nasr City or Maadi, but we really want to have delivery out of Maadi. It would be very useful at least for the nightshift," he says.
Xceed may not be the only company interested in the property says El-Kader. Though he will not go into specifics, El-Kader says there will be tenants moving into the newly constructed buildings at the Maadi site as soon as they are finished. There are several companies operating in Egypt that run call centers for other companies in essence outsourcing outsourcing.
These include global call center operator Teleperformance which has over 100,000 employees around the world and multinational newcomer Stream, which opened a 700-seat Cairo office in May this year, offering 'outbound' activities such as telemarketing and 'inbound' services like customer service inquiries. Their homegrown counterparts include Raya Contact Center with 1,200 seats, C3 Call Center Company (owned by Raya) the Egyptian Contact Center Operator and Xceed. Mobile services operators Vodafone and Orange as well as business software provider Oracle, on the other hand, use internal call centers, also known as captive call centers, to serve their customers directly.
The industry's forecast for growth and the entry of multinational players such as IBM which in March announced its plans to open a technical support center with as many as 1,500 employees this year make the Maadi Technology Village prime real estate for call center growth. The park is situated on Laselky (Wireless) Street about five minutes from the Autostrad. Just south of downtown, Maadi was chosen because of its proximity to the Helwan-El-Marg metro line and several housing developments in the area. The district is also well connected by a number of bus and mini-bus routes to Greater Cairo. Its geographic location and the Ministry's decision to foot the bill for the park's infrastructure, on top of on-site linguistic training as well as a gym, sports and activities zone and a library, give the Maadi Technology Village a unique advantage that the expanding Smart Village the country's first technology development park and home to IT giants like Microsoft and Intel, can't match, says Summit Holding Chairwoman Magda El-Sabee.
"We believe [the Maadi Technology Village] is one of the best decisions made by the minister. It has a great deal of potential to increase Egypt's ICT exports and will help attract foreign investment to the country," says El-Sabee. "Moreover, it promises to offer huge employment opportunities as it is projected to offer 40,000 seats within the coming two years."
Summit Holding, which controls Orascom Training & Technology, Qemmah and Summit Technology Solutions, works with companies such as Teleperformance and City Cab to set up call centers in the region. While Egypt does not have the number of seats to compete directly with BPO giants such as India, the government's investment in the sector has helped Egypt gain ground. According to research company IHS Global Insight, Egypt is currently spending $9.8 billion (LE 54.9 billion) on the ICT sector. The company predicts that number could grow to $13.5 billion (LE 75.6 billion) in the next two years.
The large number of graduates entering into the industry, partly due to the creation of technical post-secondary educator Nile University, is also a factor. There were 80,000 graduates from technical programs in 2007, according to a report by technology research and consulting firm Yankee Group. This trend is further bolstered by the large number of Egyptians between the ages of 15 and 40.
"With the onset of globalization and the rapid development of technology across the different sectors, the MCIT is working on providing the suitable environment to support such development," says El-Sabee. "Among the important steps to create such ground is to have advanced call centers to support business growth. Call centers will help on creating huge employment opportunities that will create new career professions for the young generation," says El-Sabee.
The first three buildings under construction at the Maadi site have a combined footprint of 4,000 square meters and utilize the latest call center designs, says engineer Mohamed Abdel Monem from Engineering Consultants Group (ECG). He and his team were integral to the buildings' design, which includes special consideration to acoustics and uninterrupted power generation -- as the centers will operate on a twenty-four hour cycle.
"ECG is the consultant for the Ministry of Communications and Information Technology for the design and supervision at the Maadi Technology Village. [] We used only the most updated technology in all our call centers," says Monem.
Reports from the MCIT say the park's infrastructure will be complete within the year and tenders for the rest of the complex are already under consideration, says El-Kader, hinting that Orascom Construction is one of the interested parties. When asked whether the complex would be finished on time, El-Kader replies: "If [Minister Kamel] says it's going to be done at this time, it will be done."
By Jessica Gray
© Business Today Egypt 2009
