It has been a tough year for many businesses all over the world. However, in Egypt the Covid-19 pandemic has actually meant good business for some in the information technology (IT) industry.
According to Amr Mahfouz, CEO of Egypt’s Information Technology Industry Development Agency (ITIDA), because of Covid-19 Egypt has secured a higher share in outsourcing and offshoring industry.
“We were always well-positioned on IT and business process outsourcing because we had the infrastructure and right mix of advantages for it. We got delayed after 2011 for a while, but we have been picking up, and this year we secured good growth,” Mahfouz said.
Speaking to Al-Ahram Weekly in his first interview since he assumed the top IT job in the summer of this year, Mahfouz said that while some of the countries that usually compete with Egypt on business process outsourcing suffered serious setbacks in 2020 due to the work-from-home regulations that came with the pandemic, Egypt was in a good place to make gains.
“In Egypt, unlike in some of the countries that we compete with on outsourcing, men and women were able to work from home as they have their own laptops or home desktops and Internet access. This is the case in Egypt because computers are sold at affordable prices, the resilient infrastructure, and Internet services have been increasing significantly,” he said.
Then, he added, there were the advantages in the linguistic skills and the young population that Egypt has.
According to Mahfouz, over the past two years, the government of Egypt has invested $1.6 billion to upgrade Internet services, thus making Egypt ranks number three in the quality of Internet services in Africa and leading to a big jump from a lower rank on the African list.
“It was perfect for this year, because when people had to leave their offices we had the capacity to get them to work from home, and this left us with over 17 per cent of the outsourcing market worldwide,” he said.
Moreover, he added, Egypt is set to have a bigger share of the outsourcing business in the next few years as it is “already receiving offers from big multinationals who are seeking to open up thousands of job opportunities in Egypt.”
By working to upscale linguistic skills and to expand the teaching of the languages in top demand, namely English and German, Mahfouz is hoping that Egypt will be fast-tracked on outsourcing.
Equally, he said, Egypt has been improving its position on freelancing business during 2020. The Ministry of Communication and Information Technology and ITIDA are offering diverse skills training for some 115,000 young men and women to put them in a good position to work on a freelance basis for multi-nationals.
“Multi-nationals today want to offer packages for freelance jobs that can be done remotely from any city around the world provided the candidate has the required skills. This is why we are working on making sure that Egyptian men and women get as big a share as possible of this growing market — not just by consolidating their command of technical skills, but also by upgrading their linguistic capacities, which is a must in the business world of today,” he said.
The training programme that ITIDA launched in 2020 offers trainees training in artificial intelligence, data science, and web-development skills.
“This is a project we are working on in cooperation with big companies like Google, Amazon, and Udacity. We are not just training people to freelance, but also to launch their own freelance platforms with the full support of ITIDA,” Mahfouz explained.
“Egypt is very rich in its skills, and big companies are now looking for skills all over the world. The freelance business helps connect companies with skills in the easiest of ways. Ultimately, these are job opportunities in the making for the graduates of Egyptian universities and technical and vocational institutes,” Mahfouz said.
“We have an incredible pool of talent, with around 500,000 graduates every year, 50,000 of whom major in information technology. In the world of today, there is space for graduates of many disciplines, if we are talking about e-commerce or call centres which are among the fastest-growing sectors,” he added.
Moreover, Mahfouz added, Egypt’s talents, diverse as they are, are also quite affordable, which makes them well set to compete for as big a share as possible of the start-up market.
This is the next big gain that ITIDA is up to grab. Already, according to Mahfouz, Egypt ranks number one in North Africa and the Middle East region in terms of its share of start-up investment deals, and it is ranked second in terms of the volume of these deals.
OPPORTUNITIES: Still, he added, Egypt wants more and can get more.
To expand the start-up section of the Egyptian market, ITIDA is offering potential young entrepreneurs seed funds to help them to launch their businesses and to provide them with technical support throughout the early stage until they start securing their own investments.
Moreover, Mahfouz said, to keep the start-ups Egypt-based in the face of tough regional competition for Egyptian talent, ITIDA is now providing its own seed-funding for upcoming entrepreneurs, provided they register their businesses in Egypt, even if they have headquarters elsewhere.
ITIDA has been reaching out to talents all across the country by setting out business and community innovation hubs across five governorates over the past three years. “In addition to the one in the Smart Village in Cairo, we have innovation hubs in Daqahliya, Menoufiya, Minya, Sohag, and Qena. For next year, we are aiming to open innovation hubs in Aswan, Ismailia and Heliopolis. We are also launching additional innovation hub in Cairo University,” he said.
ITIDA has been reaching out to potential talent by organising large promotion campaigns to select promising talent through regular competitions.
“Once the selection is made, we offer the chosen talent adequate training and co-working spaces and provide them with seed funds and logistical support for around a year. Usually after a year, they will be able to attract investors for equity, and then they move to venture capital,” Mahfouz said.
During 2020 and despite the Covid-19 pandemic, Egypt managed to secure nearly $126 million in start-ups investment deals in the first half of the year, about 25 per cent of the overall MENA deals during this period.
ITIDA, Mahfouz said, is working on a strategy with a reputable consultancy firm to broaden Egypt’s share of such start-ups. “The global startup economy is worth more than $3 trillion, so for us there is a lot more to gain,” he added.
A key segment that ITIDA is planning to work on through 2021 is to secure compatibility between the proposals that up-and-coming developers are offering and the demands of the market at the local, regional, and international levels.
“I want to see all possible new ideas coming up, but I also want to enable developers and tech startups to sense the needs of the private sector and the government to help them be more oriented to the demands in place, because this will help them to get clients and secure investments,” Mahfouz said.
“There are so many things we need to see startups working on, including green energy, the automation of agriculture, self-driven cars, and so on,” he said. He added that the digital transformation plans that the Egyptian government is working on is one area where he is hoping to see plenty of new ideas coming up.
DIGITAL FUTURE: Egypt is committed to its digital future, and the objective of the government is for government services to be fully digitised by 2030. The beginning of the transfer of government offices to the New Administrative Capital in 2021 is being managed with an eye on full digitisation.
“The New Administrative Capital is about the future, about digitisation, and as the government moves to the New Administrative Capital there is a major chance to revamp government services and digitisation is the key,” Mahfouz said. “I have had heads of global companies visiting the future business quarters of the New Administrative Capital, and they were all very impressed with the quality of planning and infrastructure that will make it best placed to host new businesses.”
Meanwhile, in parallel with launching the New Administrative Capital, the government is “not going to leave” Cairo behind in its information technology plans. “On the contrary, there are going to be new and central venues for office spaces to allow for outsourcing at the local level and also at the regional and international levels,” he said.
The IT sector is one of the fastest-growing in Egypt and one of the largest contributors to GDP growth. By the end of this year, Mahfouz said, the sector’s annual exports are forecast to grow from $3.26 billion in 2017 to $4.7 billion by the end of 2020.
He is hoping that in 2021 an equal upscaling can be secured. Egypt, he said, was not only a country with a competitive edge when it comes to its pool of talent and affordable costs, but also a country that multi-nationals and international organisations can use as a hub for IT and business-process services that grant access to Europe, Africa, and the Arab countries.
Mahfouz argued that Egypt’s Internet connectivity had significantly improved and would be further improving through the use of scalable and high-quality international submarine cables. He argued that with its location at the heart of worldwide cable networks, Egypt can provide offshore cloud services to Europe, Africa, and the Middle East.
Moreover, he said, the government’s focus on building technology parks across the country would be further attracting multi-national companies.
ITIDA is also set to launch hyper-scale data centres in 2021. “We are currently working on selecting the places for these centres in order to maximise their potential capacities,” he said. “Here we are talking about big-volume projects — each could be about hundreds of millions of dollars. We still need to secure the full know-how, and it is certainly a very ambitious project that we are eyeing for 2021,” he added.
Meanwhile, Mahfouz said, ITIDA is also focusing on using 2021 to expand the already growing electronics manufacturing and design sector in Egypt that has successfully created a niche during the past 10 years.
Currently, the volume of this market in Egypt stands at around $2 billion. According to Mahfouz, this has the potential to quadruple its volume in just a few years.
“The government is all set to support this industry and the information technology industry. We have the executive bill of the new investment law coming up with special incentives for the IT and electronics industries, especially for projects that could be set up in Upper Egypt and the border governorates with tax holidays of up to 50 per cent, while the rest of the country will see a tax holiday of up to 30 per cent,” he said.
Moreover, he added, Egypt has signed agreements with several countries under World Trade Organisation (WTO) regulations to allow the import of components at zero tax rates and to allow for the export of appliances at zero tax rates as well.
“We are going to help existing companies expand, and we are hoping to get new companies to work within this coming year. We are absolutely on the radar screen,” Mahfouz said.
Adequate infrastructure, a good pool of talent at affordable prices, and satisfactory legislation are the three factors that can help Egypt maximise its share of the information technology and electronics businesses. Mahfouz is content with what Egypt has done on these three fronts and is confident that more can soon be done.
He is “really hopeful” that the next few years will see an increase of over 100 multinational companies and over 3,000 national companies working in Egypt in the sectors of information technology and electronics.
“The objective for ITIDA today is not just to expand the volume of the working companies, but also to increase the number of such companies, especially those working in the new technologies,” he said. “On the national scale, we are determined to give a push to small and medium-sized businesses and to encourage the scope for exports,” he added.
A graduate of the Engineering Faculty at Cairo University, Mahfouz has over 30 years of experience in business development, digital transformation and management, capacity building, and global operations in emerging markets. Having worked in several countries for many years, Mahfouz has always thought of Egypt “as home and always wanted to come back.”
With this experience and mindset in place, Mahfouz believes that he can help to give a push to the work that ITIDA has been doing for the last 16 years to build a digital future for Egypt.
Could Egypt be the new Dubai? “Our target is to be the next India, and that will be a lot of work already,” he said.
*A version of this article appears in print in the 17 December, 2020 edition of Al-Ahram Weekly.