IT business still suffering aftermath of internet suspension

Adel Al-Lakani, Tuesday 22 Mar 2011

IT outsourcing: a prosperous business in Egypt that was hit hard by internet and mobile suspensions during the early days of the revolution

The outsourcing business in Egypt is still paying the price for the lack of democracy under Mubarak’s regime. Alaa El-Agamawi, director of two private IT companies and president of the Federation of Commercial and Educational Software Producers in Egypt tells Ahram Online how the industry was hit by the events. “January 27 was a critical day for the outsourcing business in Egypt, after a meeting was held between representatives of the National Telecommunications Regulatory Authority and internet companies, in which orders were given to completely cut internet and mobile services in the country,” said El-Agamawi. Those five days, starting from January 28 when communication services where cut off, cost the Egyptian economy a lot of money, with the losses continuing until the present day. The main problem, explains El-Agamawi, is the international clients for whom the Egyptian companies are offering the service. According to the Ministry of Telecommunications and IT, the sector exported services worth LE1.1 billion in 2010.

“The cutting off of the internet prevented the companies who offer outsourcing services from contacting their clients abroad, which make them distrust us,” said El-Agamawi, adding that the most important thing on any contract is the ability to provide the service as requested. “The foreign companies want to be sure that they can depend on the Egyptian company offering the service. That counts more than the price.”  

“Bringing the internet back doesn’t necessarily mean that the client will depend on you as before.” The curfew has also had a negative effect on the business because it reduced working hours and made the work irregular for the outsourcing centres. “It’s normal that some clients and partners ask to move the business to more stable countries. They need guarantees that such an internet cut won’t happen again. In fact some companies stopped providing the services from their centres in Egypt and shifted to other regional centres.”

The software and IT industry lost around LE159 million during the 5 days of cut of the service, from  28 January until 3 February. Bringing back the service didn’t decrease the loss much. “The business witnessed a 95 per cent decrease in February and the sector lost LE653 million during the remaining days of February. The situation got better in March, but we are still working at 25 per cent of our capacity,” explained El-Agamawi, who doesn’t expect a full recovery before June.

One authority in the IT development industry said recently that they will create alternative communication media that can be used in case of emergency. El-Agamawi thinks that the confidence of clients abroad in the IT industry in Egypt can be restored. “The revolution may have negatively affected the economy but it also won Egypt a lot of respect which can be invested. If Egypt succeeds in achieving democracy, it will be one of the developed countries in this domain,” said El-Agamawi, who decided to support the revolution once the internet was cut off.

Short link: