In Part 2, different aspects of the Egyptian call center industry such as market size, agent wages, availability, education, linguistic skills, commercial sophistication and stability were presented vis-à-vis its key near shore market counterparts. The study suggests that Egypt is at par with the industry key standards and therefore can be the next outsourcing destination.
Business Climate
Stability
The Egyptian economy is both stable and growing. This is seen clearly in Figure 3, which shows both GDP growth and inflation at very sustainable and relatively constant levels. Economic stability is crucial for any customer care investor, as heavy shifts in growth can lead to adverse business conditions, most notably cost fluctuations, which can erode long-term competitiveness, as was seen in Ireland in the early part of this decade.
Another indicator of the stable business climate in Egypt is the consistent growth of its stock market over the past five years. As seen in Figure 4, growth has been consistent year on year, with no evidence of downturn or disruption. This points to ever-increasing confidence among both domestic and global investors in this national market.
Political Stability
An enduring misconception that countries in the Arab world must work to overcome is that of instability and violence due to political tensions. However, upon examination, Egypt's political system is characterized by regular multiparty elections held every 4-5 years. This is in contrast to other countries in the Middle East, which have experienced large ideological swings, in many cases at the expense of foreign investment.
Business Transperency
Relative to the region, Egypt's legal system is transparent, and is based on the English common law, the Napoleonic Code and Islamic law. There are provisions for judicial review and a supreme court is in place.
In order to reassure foreign investors, the Egyptian government has made several amendments to its business law. Highlights include heightened provisions against fraud, price manipulation and insider trading. As well, protection of intellectual property rights have also been strengthened to western standards.
However, Egypt still has some work to do in the domain of ensuring a clean business environment. This is noted by its poor rating in terms of overall corruption by the Corruptions Perception Index, which rates Egypt 77th out of 145 countries. The government continues to move in the right direction, by signing on to numerous global anti-corruption conventions, as well as reforming laws governing financial institution transparency.
Business Culture
Egypt's business culture and top management is very westernized. Indeed, most commercial leaders are multilingual, speaking at least one Western language, with many having had experience working abroad. In addition, due to its cosmopolitan nature, Egypt has attracted a number of ex-patriots to help manage multinational subsidiaries located in Cairo. This is very important in the context of understanding not only how to conduct business transactions with western companies but also ensures a corporate culture based on western business practices.
Incentives
Following the example of many other contact center nearshore locations, the Egyptian government has implemented several provisions to aid the establishment and development of such facilities. These include:
Tax breaks from the existing 40% current corporate levy for contact centers that wish to establish in Egypt, regardless of location. These reductions last for a period lasting between 5 to 10 years ;
Free trade zones are in place for companies to establish operations, which guarantee a tax-free period as mentioned above. Firms investing in these locations are also guaranteed not to have any of its property confiscated or nationalized by the government. An example of such a location is the Smart Village established for IT and communications firms based in Cairo, headquarters for major Egyptian contact center outsourcer, Xceed.
Subsidies are also available to customer care specialists in terms of contact center agent training for up to 800 individuals annually at recognized educational institutes throughout Egypt.
$68 million to support additional training, marketing and technology development to foreign businesses.
IT focus
Egypt is rapidly developing a sophisticated telephony network, comparable to those from other developed countries and has developed a modern and reliable fixed line, mobile and Internet network that bode well for the contact center industry. As well, since 1999, the Ministry for Information and Communications Technology (MCIT) has also taken steps to ensure deregulation of the Egyptian telephony market. Egypt Telecom's monopoly over communications services has long been broken, and that company is slated for privatization later this year. In a special effort to develop the contact center industry, the government has dropped telephone rates to Western Europe and North America to $0.07 and $0.05 per minute, respectively. It should also be noted that VoIP adoption is also being explored by the MCIT, and western telcos are being courted to establish service operations in Egypt.
The MCIT is also working to ensure an IT-literate workforce by partnering with several major communications firms to train IT engineering graduates, in order to keep Egypt competitive in this sector. These partners include Siemens, Alcatel, Cisco and Lucent.
Industry Cooperation
Egyptian outsourced contact center providers have recently formed an association called Call Centers Egypt, in order to encourage the development of this sector. As such, the various players work in tandem to ensure the long-term competitive nature of this sector by providing its services. It should also be noted that mutual support is provided in the form of using each other's services, should extra-capacity be required, thus ensuring minimal disruption for clients.
Urban Centers
Egypt has several cities in which contact center facilities can be located. The largest of these centers include Cairo, Giza and Alexandria, all of which have populations in excess of one million. This yields tremendous potential for offshore outsourcing, due in part to large pools of labor, multiple universities and excellent transportation and telecommunication infrastructures currently in place. It should also be noted that Cairo's underground system currently undergoing expansion to facilitate travel to the outer-reaches of the city, where many contact centers are located.
However, contact centers need not be limited to these three large locations, as there are a number of second-tier cities located in Egypt, which also have significant potential for contact centers, given their relatively large populations. These include Port Said, Suez, El Mahalla el kubra, Tanta and Luxor, all of which include large labor forces and numerous post-secondary institutions for contact centers to draw potential agents.
Egypt has also developed several new towns, in an effort to alleviate overcrowding in existing urban centers. These include Tenth of Ramadan City, Sadat City, Sixth of October City, New Ameriya City, Al Obour, Al Amal and Badr City. There are significant incentives for contact centers to establish operations in these locations, including the previously mentioned 10 year tax holiday (which can be extended in circumstances where investors decide to expand existing operations), as well as inexpensive land and labor.
Competitive Overview
To date, there are five contact center outsourcers established in Egypt.
CONCLUSIONS
Evidence in favor of Egypt as an offshore contact center location is compelling. Investors from Western Europe and North America are likely to be impressed with Egypt's opportunities on several fronts, including:
Workforce: Egypt's labor pool is ample and it is educated. It is clear that young Egyptians are enthusiastic employees, westernized in the commercial outlook and value the ability to speak numerous languages. This provides contact centers with an excellent opportunity to recruit the type of employees with whom they can be confident of serving foreign callers effectively.
Business culture: Egypt possesses a commercial atmosphere that is decidedly westernized, and that has attracted numerous multinational corporations. Management level executives are multilingual, and foreign workers are commonly found. Such an atmosphere helps facilitate confidence in foreign investment in contact center services and an understanding of what clients and end-customers expect.
Stability: In the middle east, Egypt is a hallmark of economic and political stability. As discussed earlier economic growth has been consistent and inflation has remained low. As well, elections are regular and democratic. Combined with efforts to strengthen transparent business practices, Egypt's stable investment climate should build confidence among prospective offshore contact center investors.
Industry development: With the establishment of a local industry association, and support from the government, Egypt is rapidly gaining a reputation for quality infrastructure that is reliable and modern in terms of contact centers.
These key reasons are the foundation for growth in the Egyptian offshore outsourced contact center business. Given the enthusiasm shared by existing players and customers, it is very likely that this industry will continue its already rapid growth
About Xceed:
Xceed is a global provider of quality, multi-lingual Business Process Outsourcing services and is engaged in managing extensive outsourcing and leasing agreements with key government accounts and Fortune Global 500 companies.
We are one of Telecom Egypt companies that were established in 2001 to act as the IT arm for Telecom Egypt, the incumbent operator.
We started our first Call Center operation in 2003 with a Contact Center in Smart Village, Cairo, Egypt; Now; we reached seven sites within Egypt and one site in Morocco with an operating capacity of more than 8000 web-enabled, multi-channel workstations.
Proudly managing various international & local programs; providing them with wide array of customer care services in different languages.
Our languages range from Arabic, English, French, German, Spanish, Italian, Portuguese & Russian.
Our OMNI Channel Solutions ranges from; Voice, IVR, Email, Web Chat, and Social Media Support.
About Informa:
Informa plc is a multinational events and publishing company with its head office and registered office in London
Published: Tuesday, November 1, 2005
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