Is Egypt Trying to Make BRICE out of BRIC?

Late last year, I noted how “Made in China”, for a growing number of operations, is now “Made in Egypt” as even China is adopting outsourcing. According to a recent Industry Week article, over 950 Chinese companies have set up operations in Egyptian free zones and made an investment of about 300 Million to take advantage of cheap labor, investment incentives, and unrestricted exports.

But an even bigger story, as pointed out in a recent paper in Education and the MBA in the outsourcing sector by Mark Kobayashi-Hillary of the Egypt ITIDA, is probably the imminent rise of IT Outsourcing In Egypt, which, despite only having 77 Million people to India’s 1.1 Billion, has a large annual graduating class of 330 Thousand students, with 63 Thousand graduating in commerce, 17 Thousand graduating in Engineering, and 14 Thousand graduating with science degrees. Within this pool, you find a large number of technologically skilled, achievement-focused, and multi-lingual students (who also speak English, French, German, Spanish, Italian, Portuguese, or Dutch) suited to the IT services sector. Furthermore, the government is funding a number of workforce development initiatives (which it also initiated) that is currently contributing 6,000 to 8,000 graduates for the IT-BPO industry annually, with plans to scale the efforts until Egypt is producing 40,000 graduates suitable for IT-BPO by 2015.

Furthermore, as highlighted on the Outsourcing Intelligence Network, the Egypt IT-BPO Industry aspires to export revenues of 1.1 Billion US this year. And while there are single long-term multi-year outsourcing deals that exceed 1 Billion in the US, for what was, until recently, a relatively unknown player, that’s significant, especially when you consider that Cairo was recently ranked 7th in a recent study by Global Services in its list of the top 50 emerging outsourcing cities. This followed a ranking of “Offshoring Destination of the Year” by the UK National Outsourcing Association in 2008. And, over on Horses for Sources, Ashutosh Vaidya, in a conversation with Phil Fersht, notes that he believes that new emerging countries like Egypt will play a role — in a Hub and Spoke strategy, which was echoed by Phil in a comment.

And even the Wall Street Journal recently had a blog entry on Egypt: Land of Pyramids, the Sphinx … and Outsourcing? which noted how Egypt just cracked Gartner’s list of the top 30 countries for outsourcing and how Intel, the innovative company which transformed its operations from a memory producer to chip producer and shook the industry (and made a market where it’s all about the Pentiums) recently announced it is going to open a production centre in Egypt.

So while Egypt may still be a long way off from making BRICE out of BRIC, it looks like that is their intent. What do you think?

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