Con­nect­ing Egyp­tians with tech jobs

Is ICT the ticket to pros­per­ity?

Business monthly (Egypt) - - INSIDE - BY TAMER HAFEZ

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


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.

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