ITIDA and ICT Industry Development

Transcription

1 ITIDA and ICT Industry Development

2 The Information Technology Industry Development Agency (ITIDA) is a governmental entity has been established via Law 15 of the year 2004

3 ITIDA Objectives To act as the driver for National IT Development in cooperation with ICT stakeholders (PPP). Preserve and Promote for Intellectual Property Rights (IPR) related to software & Databases. Develop and Regulate for e-signature.

4 Preserver and Promoter for (IPR) The IPR Office Raise and spread awareness of IPR; Play a major role in fighting S/W piracy; Pave the road for Foreign and Local nvestments in software industry.

5 Developer and Regulator for e-signature Building the E-signature infrastructure in cooperation with private and governmental sectors. To provide a legislative authenticated platform for e-business, e- Commerce and e- Government in Egypt

6 Driver for National IT Development Formulating & setting up Egypt IT export and outsourcing strategy. t Supporting and encouraging small and medium enterprises in Egypt. Guiding and encouraging investments in ICT sector.

7 IT Industry National Development Strategy targeting Export Growth Khaireldin and T Assaad Khaireldin and T. Assaad June 8, 2006

8 Measurable Goals 2010 Cumulative sector exports ( ) 2009) $ 1.5B Grow exports from $250M (2005) to $1.1B (2010) Create (35K+15K) 50, new jobs Non-measurable Develop Local Companies Skill & Scale World-Class Foster knowledge-based economy Help other Egyptian economy sectors Become more competitive (exports) Improve productivity & level of services (national) Creating Egypt high tech image

9 Export Targets Target Revenue CAGR R&D/Engineering KPO Services Localization Arab Content BPO Services $100 m $30 m $40 m $200 m $75 m 38% 43% 22% 46% 72% Technical Support $200 m 27% Contact Centers IT Products* $115 m $45 m 50% 25% IT Services $280 m 27% USD 1.1 Billion

10 From Strategy Framework In-sourcing and Mega Companies Targeted In-sourcing Industry & Market Info Develop pipeline of target multinational companies Proactively market Egypt to these companies as an in- sourcing destination (including incentive packages) Targeting all industries not just ICT Establish specialization areas for Egypt Mega Companies & FDI promotion Incentive system for foreign and local investors to create large companies (2K - 3K) to enable global market entry Initially run by international professionals Support on logistical issues for large investors

11 Public-Private Private-Partnership Partnership Strategic Directions Export focused world class standards Market driven Not Supply driven Capacity and Human Capital building programs Existing, large, growing & supply constrained market opportunities, where Egypt has or can develop an exportable offering with relative advantage Labor Intensive LOB s including non IT professionals

12 Dual parallel Path Strategic Directions Develop & support existing companies New LOB s Paradigm shift Citi Critical mass Large / mega companies & clustering Multinationals or Nationals with international management & systems are essential locomotives backed by SMEs. Focus & Shoot high h People, People, People... Management & Professionals

13 Driver for National IT Development National IT Development Human Capital Development Egyptian SMEs Capacity Building FDI Support Egyptian NGOs Development

14 Organization Support Department OS Department t FDI Support Egyptian Organization ation Support

15 FDI Services Department t Mission Foster and pave the way for ICT foreign investors who are targetingti Egypt as a new Investment t destination, FDI Services department tends to provide investors with all the logistical support needed for establishing their business in Egypt; where investors get to know more about the favorable climate that the government of Egypt provided for investments and development in the ICT sector.

16 Services FDI Services Department Services provided by FDI Services Department in coordination with The General Authority for Investment t and Free Zones (GAFI) and legislative entities at MCIT range from: Suggesting and designing incentive packages for investors. Assisting company registration. Site location. Partner identification. Contracts and licenses acquisition.

17 Egypt A regional hub: Linking the Mediterranean, Europe, Asia and the Arab World. From North-to-South: A gateway to Africa. From East-to-West: A crossroad of shipping lines & optical fiber cables. Strong and balanced diplomatic relations with all neighboring countries

18 Egypt Population 80 Million inhabitants with 58% under the age of 25 years Ranking 17th worldwide in number of yearly graduates. 1,076,800 high school graduates last year 265,000 university graduates

19 Egypt has a large graduating talent pool of 330,000 students, largely concentrated in Cairo and Alexandria Talent pool concentrated in Cairo and Annual number of graduating students Alexandria, with ~180,000 graduates 000 Per cent ~ % = 330,000 Commerce Education Arts Law Arabic studies Engineering Sciences & Tech Medicine Other ~ Large talent pool of commerce, arts, engineering, and science graduates, who are best suited for offshoring industry Cairo 36% 46% Others 18% Alexandria Even higher concentration of engineering and commerce pool in Cairo and Alexandria Can allow easy scale up of 2,000-3,000 FTEs per annum Source: MCIT data; interviews with service providers and captive unit managers; team analysis

20 Egypt s significant talent pool also has considerable European languages g capability Total suitable and willing pool Large talent pool with strong capabilities in European languages Number of graduates English French German Spanish Italian Total suitable talent pool ~ 19,000-20,500 3,000-5,500 1,500-3, , ,000 24,800-31,500 Large language talent pool Significant suitable and willing talent pool (24,800-31,500 people added annually) Additional 40,000-45,000 trainable, graduates per annum High level of fluency in Western European languages Multilingual environment (English, French, German, Spanish, and Italian are spoken languages) Majority of graduates exposed to at least one European language for 4-5 years Top public and private universities run graduation courses in select foreign languages (e.g., English, French, German) International universities like American University and German University have all courses in foreign languages A number of English, German, and French schools teach in their respective languages Source: Team analysis

21 On the key issue of compensation costs, Egypt ranks among the best (1/2) Average wages US$, 2007 Philippines India Egypt China Bulgaria Turkey Romania Brazil Poland Hungary Czech Republic 1,440 1,776 2,112 3,276 Egypt s labor force is largely underutilized and as a result only India and the Philippines have lower average wages than Egypt 3,552 Eastern European countries 5,232 can be up to five times more expensive and the 6,948 gap is increasing as those countries converge to EU 7,308 standards 11,760 12,120 12,840 Source: Economist Intelligence Unit

22 On the key issue of compensation costs, Egypt ranks among the best (2/2) Average annual IT programmer compensation US$, 2006* Philippines Egypt Jordan India Tunisia Bulgaria Morocco Romania Poland Brazil UAE Hungary Turkey 8,775 9,126 9,457 9,875 12,062 15,179 20,966 24,891 24,901 26,140 29,625 30,413 58,552 The cost of talent in the IT sector in Egypt is competitive to all locations, including Asian low cost locations such as India and the Philippines There is a clear dividing line between compensation costs in Central Europe and the Middle East and North Africa region, where EU members now are more than twice the cost for equivalent positions * IT programmer salaries are fully loaded, includes total pay, pay roll taxes, and social security contributions Source: Mercer HR Consulting; Watson Wyatt

23 Low wage inflation and currency fluctuation will make Egypt even more competitive Slowly growing nominal wages coupled with reasonable industry attrition Yearly growth of nominal wages Percent, CAGR Low currency fluctuation of Egyptian Pound with respect to US$ Change in currency vis-à-vis US$* Percent China 18 China 5.7 Philippines 14 Philippines + India 12 India Morocco 22 Morocco 10.0 Egypt 10 Egypt Industry attrition at 12-25%, unemployment at ~10% * Change in interbank rate from Jan 01, 2007 to Dec 31, 2007 Source: Global Insight; EIU Viewswire, interviews

24 Egypt is competitive on non personnel business costs Class A real estate cost Electricity i cost (commercial) Annual US$/sqm, 2007 US$/kWh, India Bulgaria Morocco Philip- Egypt India Bulgaria Morocco pines Philip- pines Egypt Data connection costs Monthly cost of 2MBit leased line to US, US$ Telecom cost Total cost of 2 minute outbound call to US, US$ 18,000 18, VOIP allowed for B2B applications 6,000 3,500 5, India Bulgaria Morocco Philippines Egypt India Bulgaria Morocco Philippines Egypt Source: CB Richard Ellis; International Energy Agency

25 Das Bild kann nicht angezeigt werden. Dieser Computer verfügt möglicherweise über zu wenig Arbeitsspeicher, um das Bild zu öffnen, oder das Bild ist beschädigt. Starten Sie den Computer neu, und öffnen Sie dann erneut die Datei. Wenn weiterhin das rote x angezeigt wird, müssen Sie das Bild möglicherweise löschen und dann erneut einfügen. Das Bild kann nicht angezeigt werden. Dieser Computer verfügt möglicherweise über zu wenig Arbeitsspeicher, um das Bild zu öffnen, oder das Bild ist beschädigt. Starten Sie den Computer neu, und öffnen Sie dann erneut die Datei. Wenn weiterhin das rote x angezeigt wird, müssen Sie das Bild möglicherweise löschen und dann erneut einfügen. Dedicated BPO parks for more than 80,000 employees Smart Village (existing) Maadi Park (planned) Built and already occupied by MNCs, the Smart Village spreads over 32 million square feet (3 million square meter), allocating 10% to buildings and 90% to landscaping It is located in Cairo metropolitan area and can house 36,000 employees in 67 office buildings, supplying a technology park with state -of-the-art infrastructure Maadi Park will be the delivery park located in Cairo Additional It will be able to house 45,000 BPO parks in employees in over 40 buildings Alexandria, and 2 million square feet (0.19 El Mansoura, million square meter) of prime and Assuit real estate in downtown Cairo, currently with metro rail connectivity assessed Maadi Park is already planned and construction work is in progress Source: Team analysis

26 Cairo offers good international connectivity and Western standard electricity and telecommunication networks International transportation Direct flights from Cairo (New York) America London (5.5 hours) Paris (4.5 hours) Rome (3.5 hours) Madrid (5 hours) Frankfurt (4 hours) Munich (4 hours) Asia Local transportation 2 large metro lines, third line under construction, fourth line planned US$ 5 billion funding package provided in 2006 to improve the national railway Government seeks public -private partnerships to improve the road system Ongoing transport projects especially concerning ning the satellite cities (Smart Village) Cairo Egypt (Mumbai, Kuala Lumpur, Singapore, Bangkok, Tokyo, Beijing) Cairo International Airport offers more than 70 international connections per week, transporting over 11 million people per year 4 hours flight time on average to major European cities Direct connections to the USA and major Asian cities Electricity and telecommunication Egypt benefits from a power over - supply, electricity up -time is close to 100% Good access to major international submarine cables passing the Suez canal Massive wind farms were built to supplement the countries electricity network and enhance renewable energy Source: Oxford Business Group Report; Egyptian Ministry of Trans portation

27 Egypt has two distinctive offerings for BPO investors What this could mean for you? Illustrative examples 1 Low cost delivery location to some core markets (e.g., USA, UK, etc.) A delivery centre for voice/non -voice BPO that is 15-30% cheaper than India Can scale-up by at least 2,000-3,000 FTEs per annum 2 Specialist location for Middle East/ Europe Support EMEA operations for global companies (e.g., in Arabic and major European languages) Comprehensively cover the Middle - East/GCC states on arabization or Arabic delivery Several international players (e.g., Oracle, Orange, Microsoft) have effectively leveraged Egypt s strengths and set up large centers Source: ITIDA

28 The quality of living in Cairo is better than in Different Asian or other African cities Quality of living index rank of selected cities Prague Budapest Bucharest Cairo Casablanca Manila Bangalore Mumbai Chennai Source: Mercer Quality of Living Survey 2006/2007/2008 better worse The quality of living index rank is based on 10 categories of criteria i Political and social environment Economic environment Socio-cultural environment Health lhand sanitation i Schools and education Public services and transportation Recreation Consumer goods Housing Natural environment Cairo ranks higher than all African and Indian cities considered While quality of living in Cairo improved significantly over the past years, that of Casablanca and Manila declined Top 69 ranks are occupied by Westen Western Europe, North Noth America, Ameica Australia, New Zealand, and Japan

29 Country Number of Terrorist Incidents ( ) Victims (Dead) Victims (Injured) India 3,518 4,165 9,541 Thailand 2,560 1,772 3,029 Israel (till 2005 only) 1, ,442 Philippines ,123 Sri Lanka ,897 Turkey ,017 Algeria Bangladesh ,610 Spain France United Kingdom Iran Italy Ukraine China Egypt Source: Worldwide Incidents Tracking System, National Counter Terrorism Center, United States. (December 2007)

30 ICT Sector Development Deregulation in ICT Public-Private Private Partnerships Business Environment & Investment Opportunities

31 Deregulation in the IT Sector Strategic direction to reform the sector and engage Egypt in the global information society Restructuring subsidies in telecom sector Aligning tariffs with costs of fixed service (April 2006) Activation of Universal Service Fund Privatization of Telecom Egypt Lead by CSFB, EFG-Hermes & CIB in Dec Biggest IPO in the Cairo and Alexandria Stock Exchange (CASE) with a value of around USD 1 billion

32 ICT Sector Reforms (Cont d) Reforming of the Postal Sector Developing a world class postal services Supporting restructuring of ENPO Establishing a state-of-art Postal network Increasing Private Sector Participation in postal services Etblihi Establishing enabling institutional titti lframework and regulatory mechanisms Partnerships with new players in financial governmental and societal services

33 Public Private Partnerships A Key Strategy for ICT Development Launching the Egyptian Educational Initiative. CISCO, Computer Associates, HP, IBM, Intel, Microsoft, Oracle, Siemens Establishing R&D Virtual Centers of Excellence. Data Mining & Computer Modeling, Wireless Technologies, Mobile Services & Applications. Increasing of Incubators and Venture Capitals. Smart Village (phase3).

34 ICT for Development ICT for Government ICT for All Education &Lif Life- Long Learning E-content ICT for Health Public Private Partnerships: A Key Strategy for ICT Development

35 Partnership Opportunities Infrastructure Development Communications and Postal Free Zone Human Resources Egyptian Educational Initiative Nile University Export Strategy Innovation & R&D

36 A high-tech business park: Smart Village Over 300 Acres of land (90% are green areas) Hosting 54 buildings ( sq.m. of office space) Hosting 25,000 30,000 jobs State-of-the-art infrastructure: High-speed connectivity for integrated services (data, audio/video) Customers: Multinationals (Microsoft, Alcatel, Vodafone, HP and Ericsson) Technology incubators & SMEs MCIT and NTRA moved in Dec as Phase II. A financial district in Phase III ( ) for the Egyptian and Arab Stock Exchanges and other financial institutions

37 Smart Village

38 ICT Indicators

39 Fixed Phone Users Penetration about 15.2% Sustainable growth in Subsc cribers (Million ns) with special focus on 2 rural areas Apl.

40 Mobile Phone Users Penetration 40.6% ions) One of the highest growth rates in the 25 world 20 Subscribers No. almost 5 times in 4 years reaching million subscribers Over 1 million subscribers are being added monthly Subs criber rs (M ill Apl

41 Mobile Phone Users Distribution Per Company Etisalat Misr 6% Mobinil 50% Vodafone 44% Mobinil Vodafone Etisalat Misr

42 Internet Users Internet penetration 12.5% No. of Users 9.3 Million Agrowing population of Internet users Us sers (Mi illions) Apl pl. 08

43 IT Clubs A model of PPP between GoE between GoE 1600 and civil society increase penetration of IT Numb ber among lower 600 income citizens 400 especially in rural areas Apl. 08

44 ICT Professional Trainees A Total pool of 35,000 talents that is 30, annually 25,000 prepared: 6,000 Professionals Trainee es 20, , , to be trained on ICT 10,000 basic 5, Apl. 08

45 Investments by Telecom Companies 7000 An accelerated 6000 private sector investment in telecom sector CAPEX for Telecom Companies (million LE) TE MOBINIL VODAFONE Eti l t

46 The sector has been transformed from a sector competing for subsidies and grants to a revenue creating sector for public proceeds Government Revenues from ICT The reform resulted in growing revenues of the government proceeds to 25 0 billion EGP (4 billion USD) in the last 18 months IPO of Telecom Egypt Third mobile license 3G licenses Billion 2006

47 Telecom Companies Revenues The reform resulted in 15 growth of the 10 revenues by % annually 25 No. of IT Clubs Year

48 Regional and International Outreach

49 Regional and International Outreach Scope and focus of international cooperation evolved with development of ICT sector. Current focus: Enhance positioning of Egypt s ICT sector globally in recognition of our role in bridging i the digital it divide, id locally ll and regionally Increase knowledge sharing and exchange of expertise in ICT4D and innovation Expand channels for policy level dialogue Examples: Arab and African regional projects Cooperation with EU Cooperation with UNDP, World Bank

50 Multinational Companies in Egypt Company IBM Activities i i Software Development Center of 400+ skilled IT developers Mentor Graphics Intel ITS Microsoft Design Center of 170+ engineers Regional Platform Definition Center & SW Enablement Lab RMS Developer Support Center for Regional Developers Software Innovation Center CISCO Oracle Orange Alcatel Lucent Satyam Valeo ZTE & Huwaei Core competency e-learning institute Global Support Center with 200+ Engineers Global Support Center with 200+ Engineers International Support Center with 300+ Engineers BPO Services (200+ Engineers) Embedded S/W Dev. For Automotive Wi-Max R&D centers

51 Orascom Telecom Egyptian Companies with Global Activities Mobile operator in Africa, Middle East and Europe Internet t Operator Telecom Egypt Jordan, Algeria Exceed Quick-Tel Epot Exports ofh hardware NTC Saudi license

52 Egypt s ICT Exports IT Services Technical Support Centers Contact Centers Arabic Content IT Products R&D/Engineering g Design EL MUTAHADA NAHDAT MISR

53 October 24, 2008 Egypt Named Outsourcing Destination of the Year Egypt is gaining increasing attention as a location for global business process outsourcing (BPO) and IT outsourcing. On Oct. 23 Egypt received the title of Outsourcing Destination of the Year at the National Outsourcing Association (NOA) s 2008 Awards held in London, beating rivals the Philippines and Romania. The judges cited Egypt s language skills, young population and growing list of global sourcing investments. The country has soared in the popularity stakes in the last few years as an offshore destination for Europe. Observers note that Egypt has strong potential as an offshore location for North America. It is also well placed to serve the Middle Eastern and African markets

54 October 24, 2008 Egypt Named Outsourcing Destination of the Year (Cont.) The NOA honors follows Cairo, Egypt s capital being awarded seventh in a study by Tholons on the top 50 emerging outsourcing cities in A report by the Yankee Group (News - Alert) praised Egypt as by far the Middle Eastern country currently best positioned to take advantage of the boom in outsourcing. A.T. Kearney, a leading consultancy firm, placed the country 13th in its 2007 Global Services Location Index. By Brendan B. Read Senior Contributing Editor

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