Connecting Egyptians with tech jobs
Is ICT the ticket to prosperity?
Starting in 2003, when Xceed Call Center launched Egypt’s call service industry in Smart Village, a sleek new business park on the outskirts of Cairo, fresh university graduates looking to kickstart a career in tech—or just find a job—manned phones in the country’s fast-growing outsourcing sector. The work ranged from taking fast-food orders to providing emergency tech support for multinational companies, with call center employees earning anywhere from a few hundred to a few thousand pounds a month—with the more skilled positions paying three times as much as new entrants to the workforce might hope to make in other sectors. Ahmed Saeed, who was among this early crop of young call center agents, saw the opportunity in this growing new sector and parlayed the experience into opening his own business. Now 39, Saeed is the owner of a service that provides training for call center employees.
With a prime location at the locus of three continents and a cheap, plentiful workforce, Egypt saw the potential of this growing industry to boost its economy and provide badly needed jobs for young people—following in the footsteps of India, the global leader in
so-called outsourcing. Dozens of call centers opened in Egypt after Xceed paved the way, growing some 30 to 50 percent by 2008, and by 2011, the country was named the fourth-best destination for call centers by A.T. Kearney Global Services Location Index. However, the January 25 revolution—during which the government temporarily cut mobile and internet service—greatly spooked multinational firms that had contracts with local call centers, particularly after the months of instability that followed. According to data from the Ministry of Communications and Information Technology, the number of new job postings in the call center industry dropped from more than 5,000 in fiscal 2008/09 to half that in the years following the uprising. Egypt is now ranked the 16th best location for call centers worldwide, though it’s still number one in the Middle East and North Africa region.
In recent months, the government has stepped up its ongoing efforts to transform Egypt into a technology hub, seeking to attract not just call centers but tech-related research and development and manufacturing as well. A proposed investment law meant to overhaul Egypt’s business climate calls for “free tech zones,” to attract ICT firms by promising them tax-free status on everything from machinery to imports. The Ministry of Communications and Information Technology is also pushing a multipronged strategy to lure more of these firms to Egypt by creating specialized tech zones outside of the capital to house call centers, R&D firms and factories that make electronic devices and components. In November, at the Cairo ICT conference, President Abdel Fattah el-Sisi unveiled an approximately LE 100-billion fund to support new and existing tech companies.
Not only is outsourcing a rapidly growing industry with lots of potential jobs for young people, according to the government’s rationale—call centers can be established anywhere, offering a way to create employment in remote parts of the country. In Egypt, the vast majority of the population is currently crowded into the Nile Valley.
In December 2015, Minister of Communication and Information Technology Yasser el Kady announced that the Information Technology Industry Development Authority, with the help of consultant Ernst & Young, was assessing the economic feasibility of seven zones with gated business parks suited to tech firms. “We will not stop at smart buildings and providing innovation centers,” Kady told the media, pointing out that fully serviced and integrated zones would pave the way for an ICT sector boom in Egypt. To that end, Silicon Waha, a joint venture between ITIDA, the Information Technology Industry Development Authority, and the New Urban Communities Authority, is currently working with Wadi el Nile Developments to build a 41-feddan tech zone in Assiut and a 30-feddan zone in Borg el Arab, with a total investment of around LE 400 million. Speaking to the press last month, Kady said that eight tech companies would be up and running in the two zones by the end of 2017.
“We are currently looking at both zones,” says Mohamed Ismail, the regional director for development at Transmission Holdings, a company that builds mobile phones. “Our criteria is logistics and the size of the plots on offer.” Ismail aims to have a prototype 4G-capable smartphone before the end of the year and be manufacturing 6 million phones, tablets and mini-laptops annually by 2020. Silicon Waha has also signed MoUs with Samsung, Huawei and ZTE to manufacture ADSL equipment, routers and modems in the new tech zones.
The ministry also has plans to establish other similar tech zones in Sadat City (50 feddans), Beni Sueif (100 feddans), New Aswan (40 feddans), 10 Ramadan City (85 feddans) and Ismailia (100 feddans) at an estimated price tag of LE 24 billion. Mohamed Abdel Wahab, an aide to the Minister of CIT for tech zones, was quoted last month as saying the government would charge $9 to $10 per square meter. “This is a competitive rate,” he said. Each zone will eventually have a board of directors that oversees operators and enforces regulations.
As an added incentive for developers and tech companies to set up shop here, Minister of Investment Dalia Khorshid said that the draft investment law currently before Parliament has proposed that such companies manufacturing goods for export and servicing foreign clients remain exempt from tariffs. “Our aim is to increase the amount of investments in the tech industry to $3 billion and provide an additional half a million more jobs by the end of 2020,” Khorshid said in January, following the Cabinet’s approval of the most recent version of the law.
ITIDA is managing the fund the president unveiled in November. It includes LE 50 million in subsidies specifically earmarked for new tech-hardware manufacturers that make devices such as mobile phones and tablets or components like circuit boards or chips. Companies with capital of at least LE 10 million can apply for up to 30 percent of their capital expenditures on equipment to be paid for by the government, provided that 40 percent of their purchasing budgets are earmarked for locally made machines and components. The fund will cover an additional 10 percent of equipment expenditures if a company exports at least 25 percent of its goods. The fund also offers support for existing tech firms
“OUR AIM IS TO INCREASE THE AMOUNT OF INVESTMENTS IN THE TECH INDUSTRY TO $3 BILLION AND PROVIDE HALF A MILLION MORE JOBS BY THE END OF 2020.”
that use local inputs—and even more for those that export at least a percentage of their final goods. It also aims to support employee training, offering even more for enterprises whose work forces are at least one-quarter female.
Even though these funds have not officially launched, new investors are already factoring them into their investment decisions. “We are looking at which of these incentives would suit our business model,” says Mohamed Salem, CEO of Sico Technology, a hardware firm that’s building a LE 100-million mobile phone factory in the Assiut tech zone. Ahmed Kandil, the exclusive local dealer for Xtouch, a Chinese electronics brand that makes smartphones and other devices, has long-term plans to partner with an Egyptian factory to build various Xtouch phones and tablets. “We are still only a few months in the market, but we see great potential with these initiatives,” says Kandil. “At this stage, partnerships will work very well with us.”
MCIT’s goal is to boost Egypt’s ICT exports to $2.5 billion by the end of fiscal 2017/18, up from $1.8 billion in fiscal 2015/16. Officials are hoping these measures will help create jobs for the millions of youth who need them. Unemployment, a chronic problem, has only gotten worse in recent years, especially among the young and educated, with 42 percent of Egyptian youth between 15 and 24 jobless, according to the International Labor Organization, compared to 12.5 percent of the general population. In the last academic year, some 500,000 tech-trained young people graduated from Egyptian universities, according to the Ministry of Higher Education. Since the rise of tech parks in the early 2000s, the government says it is also trying to integrate more ICT skills into the basic curriculum as well as offering post-graduate courses through the state-owned Information Technology Institute, the Software Engineering Competence Center and the National Telecom Institute. Meanwhile, the ICT ministry has authorized training centers to offer an International Computer Driving License in cooperation with UNESCO.
While Egyptian university students remain fixated on the traditional prestige professions of medicine and engineering, an increasing number of youth are drawn to the tech industry. Tamer Hassan is a senior at Cairo University’s Faculty of Computer Science and Engineering who would happily accept an entry-level job at a call center, even if it meant working night shifts or 12-hour workdays. Over the summer break, he interned answering phones at a call center. “I have established very good relations with my future employer,” he says. “This is why I think my first step is to work at a call center and see where it takes me.”
Another student, Hadya Yassin, is studying electronic hardware design. Recently, she’s been learning how to design circuit boards, and she hopes to parlay this into a factory job upon earning her diploma. While some might see working on an electronics assembly-line or answering phones as menial, Yassin proundly points to her elder sister, who took an outsourcing job upon her graduation from university back in 2005 and now has a good job managing one of the country’s largest call centers. “It is always better from a career perspective to work in a new industry,” declares Yassin.
Othman Lotfy, a computer science professor at Cairo University, says that students who can speak a foreign language have an edge in landing jobs at Egypt’s call centers, which cater to callers across Europe as well as in places like Russia and Latin America. In recent years, the ICT ministry has organized job fairs at the university, big employers like IBM and Microsoft search for recruits among the soon-to-graduate.
As of 2014, the most recent year statistics are available, Egypt’s ICT sector employs 800,000 to 1 million people, according to officials. Even the Egyptian government now employs call centers, with the Ministry of Electricity outsourcing its customer service operations since 2016. Currently, call centers field calls from customers in southern Cairo, but eventually they will serve all of Cairo and Alexandria. The growing popularity of delivery services in the cities has also created call center jobs. “Those call center positions only require a basic education and good Arabic pronunciation along with the most basic computer skills,” says Lotfy.
Said Riad, head of the commercial sector at Wasla Outsourcing, a call center with offices around Cairo, agrees that the ICT sector is indeed growing again but that it will ultimately need more than just infrastructure in order to provide good, viable long-term employment for more Egyptians and deliver equitable growth. Workers need access to affordable public transit to get to work, among other things. “Youngsters are still not so desperate that they’ll be willing to work in the middle of nowhere,” says Riad.