Over half of GCC companies outsource part of their IT or business process

Published October 19th, 2009 - 01:49 GMT

Research launched today by Egypt’s Information Technology Industry Development Agency (ITIDA) and YouGov at GITEX, reveals that GCC companies are becoming increasingly reliant on outsourcing with over a half (52%) of respondents claiming to outsource some aspect of their IT or business processes.

The research, which studied the outsourcing requirements of GCC companies and obtained their views on the benefits outsourcing brings , found that Egypt was ranked the second most popular destination with 31% of those surveyed stating that their companies are outsourcing services to the country. Only long-term leader India was more popular among respondents.

As with many businesses, cost is an important factor for GCC companies when considering outsourcing. Almost all (92%) said it was either an extremely important or important factor in their decision making process. Three quarters (75%) of respondents also require the outsourcer to have Arabic capabilities and this gives Egypt the innate advantage over other outsourcing nations with three quarters of respondents (71%) associating Egypt with high levels of Arabic capabilities

Commenting on the findings, Dr. Hazem Abdelazim, CEO of ITIDA, said: “It is encouraging to see the increased confidence companies across the region have in the outsourcing industry. The fact that there is a growing interest in Egypt as a suitable destination proves it is meeting the demands required by GCC companies as well as being cost-competitive, which is pertinent in today’s economic climate.”

Egypt is fast becoming a leading location for global outsourcing, recognized for its cost-competitiveness, attractive location and multi-lingual workforce. When asked what would encourage more companies to outsource to Egypt, respondents highlighted the need to reduce costs (46%), availability of Arabic speakers (41%) and its close geographical location (22%) as being the key drivers.

For UAE companies, the top three reasons for outsourcing to Egypt are consistent with overall GCC results
o To reduce costs (53%)
o Availability of Arabic speakers (50%)
o Close geographical location (26%)

The story was similar in the Kingdom of Saudi Arabia (KSA) where cost competitiveness (40%) and Arabic language capabilities (38%) were also top of the respondents’ list. However, companies in the KSA also saw outsourcing to Egypt as an opportunity to access expertise and ‘know-how’ not available within their own (23%).

A quarter of GCC respondents (23%) already associate Egypt with providing dedicated outsourcing zones and 89% classified this as either important or extremely important.

Understanding local cultures is important for any business outsourcing some of its functions. Four fifths (79%) of those surveyed perceive an understanding of local cultures as either important or extremely important and almost half (47%) directly associate this quality with Egypt.

The study also revealed an increasing interest in Egypt with a third (31%) of GCC respondents saying they would consider outsourcing there in the future.

In the UAE over a quarter (27%) of companies are interested in outsourcing to Egypt in the future, and in KSA the figure rises to 33%.

“With more and more companies appreciating that Egypt provides a highly qualified and multi-lingual skilled labor pool of workers and managers at a competitive cost, the country is establishing itself as a world-class provider of outsourcing. In addition, Egypt also offers excellent unit costs for telecom networks, Internet access and power and office rent”, added Dr. Hazem Adbelazim.    

The country continues to benefit from the strong support offered by the Egyptian government. This includes helping multi-national IT companies to establish clustered groupings in its range of new business parks, including Smart Village, a six hundred acre modern business environment on the outskirts of Cairo.

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