Destination Egypt: ITO-BPO Value Proposition March 2011
Contents Egypt s ITO & BPO Value Proposition Proven Industry Track Record 2
Egypt ranks as one of the top five outsourcing destinations by World wide rankings and Associations Egypt further strengthens its position, ranking 4th on the Index. A.T. Kearney Global Services Locations Index, 2011 Cairo has once again been recognized as one of the world s top offshoring cities, ranked 4th emerging city. Alexandria, also showed marked improvement jumping to 47th having only entered the top 50 last year. Top100 Outsourcing Cities Global Services-Tholons, 2010 Egypt outsourcing destination of the year. European Outsourcing Association Awards, Brussels, 2010 National Outsourcing Association, UK, 2008 Egypt was ranked as the number 1 outsourcing destination in Africa. Commonwealth Business Council and CyberMedia, 2009 SOURCE: Analyst reports 3
In 4 years, Egypt s position in the A.T. Kearney Global Services Location Index improved by 9 positions to Rank 4th 2011 Ranking 2009 Ranking 2009 vs. 2011 1 India 7.01 1 Financial attractiveness Skills availability 2 China 6.49 2 Business environment 3 Malaysia 5.99 3 4 Egypt 5.81 5 Indonesia 5.78 6 Mexico 5.72 7 Thailand 5.72 9 Philippines 5.65 15 UAE 5.41 24 Poland 5.23 35 Czech Rep 4.98 37 Morocco 4.96 SOURCE: A.T. Kearney Global Services Location Index 2011 6 5 11 4 7 29 38 32 30 Egypt has improved by 9 positions in 4 years. A.T. Kearney ranks Egypt number 1 Global Service Delivery location in the EMEA region 4
Egypt is the pioneer in ICT in the Arab world ICT history of Egypt (select milestones) NOT EXHAUSTIVE 1970s 1980s 1990s 2000s First Arabic terminal worldwidedesigned by IBM for an Egyptian customer Establishment of IBM research centre Government push to ICT sector by commissioning IDSC 1 over-seen by PM office MCIT (Ministry of Communications and Information Technology) established Egypt's key success factors for becoming a No.1 IT location ICT innovation hub since the 1960s Pioneer in localization (Arabization) gateway to the Arab world ICT export revenues of ~USD 850 millionp.a., goal of USD 1.1 billion by end of 2010 Early and substantial commitment of Egyptian government to IT sector 1 Information Decision Support Centre SOURCE: ITIDA team; MCIT; industry experts 5
ITIDA s strategy framework follows a holistic approach to support all aspects of the offshoring industry USD 1.1 billion in Exports in 2010 ITIDA responsibility Essential enablers National education system and research centers Local market demand Export growth Enterprise capacity building IT industry intelligence Innovation, research and development Human capital development Real estate (infrastructure) Telecommunications infrastructure Insourcing and mega companies (FDI) Legislative environment Multinational support Unique focus placed on ensuring vibrant links with the education system SOURCE: ITIDA 6
ITIDA will build further upon these through 3-pronged focus in next 10 years ICT for ICT Innovate (high-end product development and R&D services) Create sustainable ecosystem for high end ICT services delivery Leading hub for high end ICTbased Innovation (e.g., R&D, product development) with potential themes like Engineering services (e.g. embedded systems software, MEMS, Product design, Plant engineering) Product R&D Mobile applications (including gaming) Clinical research Catalyze Catalyze injection of IT into government/private entities Improved quality and productivity of services through IT enablement/outsourcing in domestic economy Key themes to pursue Cloud computing Healthcare Education Innovation Transform Transform O&O supply engine to achieve scale Egypt as a leading regional/ global O&O destination building on its current capabilities and expanding horizon Building upon existing services lines BPO - Multilingual delivery location (voice and data); F&A ITO - Technical support; PIS Leadership in emerging segments (e.g., Travel and hospitality, healthcare) 7
6 strategic focus areas for Egypt in ITO, broader play in BPO Remote infrastructure management Technical support Strategic focus areas for Egypt in ITO Package implementation Application development and maintenance Testing Broader play in BPO across industry verticals (eg: Banking, Telecom) and functions (eg: F&A, help desk) Engineering/ R&D SOURCE: ITIDA 8
Egypt provides unique advantages as an offshoring location for IT and business process outsourcing Abundant talent supply Structurally low cost of operations Government Support Quality and scalable infrastructure Conducive business environment 9
Egypt provides unique advantages as an offshoring location for IT and business process outsourcing Abundant talent supply Structurally low cost of operations Government Support Quality and scalable infrastructure Conducive business environment 10
Talent Pool with a Heritage of Mixed Culture Assyrians Ptolemaic (Greek) Islam Turks (Ottoman) Mohamed Ali Modern History Independence 670 BC 332 BC 642 AD 1517 AD 1805 AD 1922 AD 525 BC 30 BC 1260 AD 1798 AD 1883 AD 1953AD Persians Roman Mongolians French British Colony Egyptian Republic 11
Egypt s graduating pool of ~330,000 students is one of the largest among low cost offshoring destinations ILLUSTRATIVE Country Number of graduates p.a. across offshoring destinations Thousands, 2009 China 5,600 India 3,245 Russia 1,870 Brazil 860 Poland 505 Philippines 410 Egypt Malaysia 166 Romania Hungary 72 Czech Republic 70 Morocco 63 Third largest talent pool amongst offshoring destinations in EMEA region. Largest talent pool amongst Arabic speaking countries. Tunisia 58 Jordan SOURCE: MCIT data; LRI analysis; Egypt CAPMS; UNESCO statistics 12
Egypt s large graduating talent pool has multilingual spikes in English and Western European languages (1/2) Annual Number of Graduating Students Thousands ~330 Annual Suitable and Willing Graduates Pool for Offshoring Industry 1 Number of graduates English ~26,000 Commerce 66 French ~ 3,000 Education 59 Italian ~ 1,500 Arts Law Arabic studies Engineering Sciences and technology Health Other 49 39 29 16 17 29 26 German ~ 800 Spanish ~ 300 Total suitable talent pool ~ 31,000 1 Berlitzlevel 4+ indicates ability to function in common personal and professional situations SOURCE: MCIT data; AC Nielsen language study 2009 13
Egypt s large graduating talent pool has multilingual spikes in English and Western European languages (2/2) RIM, PI, ADM Annual relevant pool for RIM, PI, ADM Number of graduates by faculties Annual relevant talent pool with language capabilities Number of graduates by language 1 ~18,500 Others 2 ~3,000 English ~5,000 Communications Computer science Civil Mechanical ~1,000 ~1,000 ~3,000 ~3,000 Relevant talent pool out of 33,000 Engineering & Sciences students French ~250 German ~150 Electrical ~6,000 Arabic only ~13,100 IT 1,500 Total relevant talent pool ~18,500 1 Berlitz level 3+ for English and Continental European languages; indicates ability to handle tasks in common personal and professional situations 2 Includes architecture, construction, chemical, and others SOURCE: MCIT data 14
Multiple initiatives to enhance the talent pool, tailored to the BPO & ITO industries, are underway XX Estimated number of trainees (2010) Programs launched Programs in design phase 1 ITI program ~ 800 8 Advanced management and professional training program ~ 600 2 3 MCIT professional training program MCIT customized training program ~ 5,000 ~ 500 9 10 Service Science Management and Engineering Program (SSME) ~ 800 2 SAP Academy Program ~ 150 4 EduEgypt (ITO program) ~ 1,000 5 EduEgypt (BPO program) ~ 10,000 1 6 Etisal ITIDA program ~ 350 7 European language program ~ 300 In addition, several ITO focused training programs are under design 1 Includes 3 rd and 4 th year students 2 Scaling up to 10,000 students over the next 4 years to cover all students in faculties of commerce, engineering and computer science. SOURCE: MCIT; ITIDA; ITI 15
Egypt provides unique advantages as an offshoring location for IT and business process outsourcing Abundant talent supply Structurally low cost of operations Government Support Quality and scalable infrastructure Conducive business environment 16
Egypt s fully-loaded operating cost is competitive compared to alternative service delivery locations across all service lines (1/2) Fully loaded operating costs per FTE for large centers (500-1000 FTEs) USD/year, 2009 BASIC VOICE EXAMPLE 26,770 24,230-41% -35% Personnel 1 16,360 15,830 15,010 Non- Personnel 2 Poland Morocco Philippines Egypt India 1 Includes agent compensation, supervisor compensation, support staff costs, training and recruitment 2 Includes IT & telecom costs, rent, maintenance, SG&A SOURCE: MCIT/ITIDA; industry expert interviews 17
Egypt s fully-loaded operating cost is competitive compared to alternative service delivery locations across all service lines (2/2) Fully-loaded operating cost per FTE for Package Implementation Services USD/year, October 2009 64,250 PACKAGE IMPLEMENTATION SERVICES EXAMPLE 49,495-35% 41,680-16% Personnel 1 53,805 38,515 31,705 33,222 24,300 Non- Personnel 2 10,445 10,980 9,975 8,922 Poland Jordan Egypt India 1 Includes agent compensation, supervisor compensation, support staff costs, training and recruitment 2 Includes Other operating expenses (infrastructure, telecom, travel, SG&A) SOURCE: MCIT/ITIDA, industry expert interviews 18
Egypt provides unique advantages as an offshoring location for IT and business process outsourcing Abundant talent supply Structurally low cost of operations Government Support Quality and scalable infrastructure Conducive business environment 19
Egypt s strategic location allows easy access and connectivity to several international submarine cables Selected undersea cables passing through Egypt Primary internet backbone between South East Asia, India, Middle East, and Europe passes through Egypt Route of SEA-ME-WE 4 cable Cable Capacity (Gbps) Route (landing points) FALCON 2,262 Mumbai-Middle East-Suez (Suez) SEA-ME-WE 4 1,331 Singapore-Middle East- France (Suez) SEA-ME-WE 3 505 6 new cables to be completed in 2011 with additional capacity of 20 Tbps Australia-Japan-India- Middle East-Germany (Alexandria, Suez) 1. Marseille, France 2. Annaba, Algeria 3. Bizerte, Tunisia 4. Palermo, Italy 5. Alexandria, Egypt 6. Cairo, Egypt (overland) 7. Suez, Egypt (overland/return) 8. Jeddah, Saudi Arabia 9. Fujairah, UAE SOURCE: Telecom Egypt; Web searches; Reliance Globalcom; Kidorf Innovative Methods; SM3 20
Egypt has dedicated BPO/ITO parks for 135,000 employees Smart Village (existing) Maadi Park (under construction) Built over 32 million sq ft Already occupied by 120 companies & 20 MNCs Technology park with state-of-the-art infrastructure Located in Cairo metropolitan area Capacity of ~ 40,000 professionals. Expected to host more than 500 companies and more than 100,000 employees by 2014. BPO/ITO delivery park located built over 2 million sq ft of prime real estate in the center of Cairo. Capacity for 35,000 employees in over 40 buildings Good connectivity to metro network. 3 buildings are finalized and operating (11,000 sq m) 4,000 direct jobs through 2,000 seats Government has committed to building an additional 60,000 m2 Will become fully operational by 2012 SOURCE: Smart Village Company; MCIT Press Release 21
Egypt is gearing up to be a multicenter offshore location Cairo Cairo, with a population of 17 million people, is the 16th largest city in the world It has excellent infrastructure and access services It has high quality talent pool (AUC 1, GUC 2, Cairo Univ.) Number of annual university graduates is ~ 133,000 Alexandria El Mansoura Cairo Alexandria 2nd largest city with excellent connectivity (2 international airports, 2 ports) Alexandria is a focus for Egypt's commercial, industrial, maritime expansion Excellent multilingual talent pool availability Number of annual university graduates is ~ 31,000 Assuit El Mansoura El Mansoura is an important commercial and industrial city It is the seat of a university associated with the University of Cairo and of a college of technology Number of annual university graduates is ~ 26,000 Assuit Today, the city of Assuit has an international airport and comprises about 1.5 million inhabitants It is also home to the University of Assuit, one of the largest universities in Egypt Number of annual university graduates is ~ 14,000 1 American University in Cairo; 2 German University in Cairo SOURCE: MCIT/ ITIDA; Central Agency of Public Mobilization and Statistics, Statistical Year Book, September 2009 22
Egypt provides unique advantages as an offshoring location for IT and business process outsourcing Abundant talent supply Structurally low cost of operations Government Support Quality and scalable infrastructure Conducive business environment 23
Egypt is strategically located as a hub between Europe, Africa, Asia, and the US 5-hour flight radius London Amsterdam Paris Frankfurt Munich Moscow New York 12 hours Rome Madrid Cairo Egypt Istanbul Riyadh Dubai Tokyo 12 hours Mumbai 5.5 hours Singapore 10 hours Johannesburg 8.5 hours Similar time zone as Europe (1 hour ahead of CET) Geographically close to Europe 4 hours flight time from major European capitals Geographically close to Asia, Africa 6 hours flight time from India and anaverage of 3 hours from major centers of Middle East SOURCE: Team analysis 24
The pace of reforms has accelerated over the past years Egypt has succeeded, for the fifth time within six consecutive years, to improve its ranking, enhance its investment climate and business environment. The country jumped 71 positions from 2006 to rank 94th in the overall ease of doing business ranking. Doing Business 2011 IFC Egypt was ranked 1st in North Africa and 3rd in the African continent, after Nigeria and Angola, in terms of net FDI inflows Egypt raised from rank 126 in 2003 to rank 20 in the 2008 World Investment Report comparing 141 countries with respect to attracting FDI UNCTAD 2008 & 2009 SOURCE: World Bank/International Finance Corporation (IFC); Doing Business 2011; GAFI 2010 ; IDC Global Software Piracy Study 2010, Central Bank of Egypt Key Achievements Tax Highest personal tax rate cut from 32% to 20% Corporate tax rate cut from 42% to 20% Adopted streamlined collection procedures Customs Reduced tariff from an average of 14.6% to 6.2% Simplified and reduced tariff bands from 27 to 6 Adopted streamlined customs procedures Financial sector Stable Banking system; resilient to financial crisis Relative stability of currency Privatization of public banks initiated Introduction of Nilex, the region s first small cap stock exchange Legislation and Institutional Framework Reduced the cost to start a business. Incorporation time slashed to an average of 72 hours. One stop shops introduced at multiple locations throughout the country. New commercial court system -Anti-money laundering and Anti-trust laws implemented. Continuously improved ranking in IDC Global Software Piracy Study from 69% in 2003 to 59% in 2009, well below other BPO locations such as India, Morocco, Philippines, Kenya, Tunisia, China and Bulgaria. 25
Egypt provides unique advantages as an offshoring location for IT and business process outsourcing Abundant talent supply Structurally low cost of operations Government Support Quality and scalable infrastructure Conducive business environment 26
ITIDA is a one-stop shop for dedicated investor assistance and offshoring industry development ITIDA's Responsibilities ITIDA Information Technology Industry Development Agency Executive IT arm of the Ministry of Communications and IT with a public-private partnership model Guides and promotes investments in the ICT/BPO sector Supports and fosters development of BPO/ITO industry in Egypt Supports R&D in the ICT sector and implements its output Description Industry Development Investor Assistance Dedicated initiatives to develop a qualified, sustainable and deployable talent pool Collaboration with universities, leading companies in outsourcing training and multinational clients Encourage development of dedicated state-ofthe-art parks for BPO/ITO delivery Support requests for information and due diligence Complete set-up assistance and liaison with GAFI 1 ; facilitate incorporation, work permits, customs clearance and technical approvals Subsidies granted for training and telecom Provide strong connections with local industry and ecosystem 1 General Authority for Investment SOURCE: ITIDA 27
Contents Egypt s ITO & BPO Value Proposition Proven Industry Track Record 28
BPO/Call Centers (~12,500 Employees 1 ) IT Centers (~ 11,900 Employees 1 ) Egypt s Multinational & Regional Industry Players Engineering/R&D (~ 1,000 Employees 1 ) 1 Estimated export oriented headcount at end of 2010. Technical Support Centers (~3,600 Employees 1 ) Over 30,000 direct export oriented professionals expected for 2010. Over 30,000 professionals expected in Domestic market for 2010. 29
Thank You Information Technology Industry Development Agency (ITIDA) Smart Village, Building B121, Cairo Alex Desert Road, Giza, Egypt www.egypt-on.com Tel +20 2 3534 2000 Fax +20 2 3534 5178 30
Attractiveness of Egypt as an O&O location has increased, with several multinationals setting up centers in the past 15 months BPO Deals ITO Deals Description Contact center & KPO serving UK, GER, NZ Employees 1 BPO F&A for EMEA 1,500 2,500 Description Global delivery center (package implementation) Technical support/ Infrastructure management Employees 1 1,100 230 BPO F&A 1,200 Consulting services/ technical support 410 Contact center 4,400 Technical support in English and Arabic 300 Contact center 1,400 Testing and quality assurance in German 250 Contact center 1,000 Engineering services to Middle East, Europe, North America, and Singapore 200 First Contact center in Alexandria ~ 13,000 Employees 1,000 R&D services (nanotechnology centre) ~ 2,500 Employees 20 1 Total number of employees over 3 years SOURCE: MCIT/ ITIDA 31
Several multinational and local companies have established large contact and BPO centers (1/2) Companies Description Services provided by Esnadinclude Finance & Accounting outsourcing, Contact Center outsourcing and Market Research outsourcing. Employees 1 100 Offering service to counter party link ltd. in order to equip providing complete and accurate reference data to the securities industry community globally. Customer support mainly for telecom industry serving the Middle east region in English and Arabic language. Regional call center and credit card processing center serving HSBC's customers in the Middle East & Gulf area. Business Process Delivery Center offering Back-office and transaction processing operations, along with call center and technical support services. The fastest growing Contact center in Egypt. Established in June 2009 and aspiring to grow to 4,000 employees by 2013. The first contact center established in Alexandria. Serving the NorthAmerican market, having aspiration of 1,000 employees in the next 3 years First major international call center operator in Egypt with plans to scale up to several thousands agents. Largely serves the local market along with telemarketing services provided to Western Europe, Australia and New Zealand. 88 1,100 100 140 660 100 1,020 1,700 1 Total number of employees including domestic and export work (June 2010) SOURCE: ITIDA 32
Several multinational and local companies have established large contact and BPO centers (2/2) Companies Description First center to open BPO operations incairo9 years ago. Serves mainly clients from NorthAmerica and Canada. Employees 1 900 Contact center supporting customers from North America, Europe and Middle East with Arabic, English, French, German, Italian and Spanish. 1,800 Provides call center, non-voice and technical support services to the US, UK, and Australia. 200 Contact center supports customers in English, French, German, Spanish, Italian, with 50% staff supporting international customers. Provides call center andbpo services to major multinational local clients and serves USA and UK markets. Contact center supporting customers from France, US, UK, Italy, Spain, Belgium, Luxembourg, Germany, Portugal, Greece, the Gulf, in their respective local language. 1,700 1,700 1,800 1 Total number of employees including domestic and export work (June 2010) SOURCE: ITIDA 33
Several multinational and regional companies have established IT centers in Egypt (1/3) Companies Description A global IT leader in systems integration offering deep expertise in the implementation, upgrade, maintenance, and training for the Oracle applications and technologies and ICT applications. The first ESRI branded Company and the GIS leading Professional Services Provider in the Middle East and Africa. Employees/ service line 1 Full range of business consulting, application development and maintenance, software testing. 1,000 30 260 Plan, design, implement and integrate operating and business solutions Provide functional, performance and security testing for global clients Serve Egypt, Saudi Arabia and Middle East; supports Arabic, English and French Kuwaiti based integrated information technology solutions and software services provider. Serves Middle East, Africa, and Asia Pacific Operates as an offshore center for the Gulf region, specialized in package implementation and application development. Plans to increase to 100 employees serving Europe and North American region Global Care Center (GCC) has been capitalized to provide technical support for both fixed and mobile networks in the MEA region Mahindra Satyam (formerly Satyam) opened its 1st center in Egypt in July 2007 with 30 programmers (ADM) Main region serviced is EMEA 630 200 30 250 52 1 Employees serving export and domestic markets (June 2010) SOURCE: ITIDA; Interviews 34
Several multinational and regional companies have established IT centers in Egypt (2/3) Companies Description Part of Oracle Solution Support India Centre Oracle package implementation supporting Middle East, Western Europe, Singapore, Australia and Latin America Provide experienced coordination of projects from start to finish, using Orange proprietary Synergy project management methodology. Offers a portfolio of integrated, enterprise-scale analytical solutions covering applications such as data warehousing, customer management, finance and performance management, and demand and supply chain management. Serves North Africa region. Provides software solutions for process modeling and simulation, integration, process automation with human review, business activity monitoring and collaboration. Employees/ service line 1 48 300 60 60 The company operates as an offshore center for Quality Management, Software development and testing activities. Serves Germany, Austria and Switzerland Remotely managing Vodafone Global Live! portal platform, including Unix machines, load balancers and database servers. India s third largest IT firm opened its global delivery centre to service existing client base in EMEA region (ADM) 136 10 200 1 Employees serving export and domestic markets (June 2010) SOURCE: ITIDA; Interviews 35
Several multinational and regional companies have established IT centers in Egypt (3/3) Companies Description Egyptian systems integrator providing design, implementation and service solutions for the Middle East market, specializing in the hospitality sector. IT and communication solutions providers and system integrators, with more than 400 major customers in the Middle East Egyptian systems integrator and solution provider to the Middle East market Serve telecom, oil and gas, manufacturing, utilities, government and financial services sectors Egyptian software professional services firm Offers Portals, Business Intelligence, SOA, and ADM services to global companies (Middle East, North America, and Europe) Development, deployment and support of portals, intranets & e-commerce solutions,enterprise Integration & Microsoft Dynamics CRM implementations, Helpdesk Solutions. Develop and deploy customized packages in the field of Hospital Management Information systems and ERP systems based on Oracle, Microsoft and Sybase Serve Egypt, Saudi Arabia and Middle East Employees/ service line 1 363 350 600 650 330 287 1 Employees serving export and domestic markets (June 2010) SOURCE: ITIDA; Interviews 36
Egypt has developed considerable expertise in global technical support centers (1/2) Companies Description Employees 1 Responsible for the delivery of services to customers in the MENA region 330 Center of excellence Delivering call centre and high-end technical services, as well as opportunities for product development 152 The Global Care Center supports fixed and mobile networks in MEA region. 250 Serves over 100,000 customers across 140 countries in English (Translation hub for non-english speaking front-end customers (Arabic, French, German, Italian, Spanish, and Greek) Provides 24x7 global technical support for internal organization Target is to reach 2,000 engineers in the near future 400 1,200 Technical support for US network hardware manufacturer. 40 Contactcenter serve the company's clients in Europe, the MEA region and US in the six languages of English, French, German, Spanish, Italian & Arabic. Provides technical support for a global PC & Notebook manufacturer. Centre started in June 2005 with 20 engineers Serves high-value customers of Vodafone in Australia and New Zealand 85 120 1 Total number of employees including domestic and export work (June 2010) SOURCE: ITIDA 37
Egypt has developed considerable expertise in global technical support centers (2/2) Companies Description This center offers technical support for hardware, professional services, and networking for Middle East, Europe, and Africa. Technical support team servingmicron Technology, leading manufacturer of semiconductor devices Employees 1 80 20 It is a technical support center which serves USA for companies like Microsoft and Cisco 550 1 Total number of employees including domestic and export work (June 2010) SOURCE: ITIDA 38
Egypt is emerging as an engineering and R&D services outsourcing destination Companies Description Egypt IBM Nanotechnology Research Centre Main fields of research are in areas of simulation and modeling software, alternative energy sources (thin film silicon photovoltaics) and energy recovery for desalination Provides offshore engineering and services to Invensys Operation Management for the delivery of automation and information technology, systems, software solutions, services and consulting to the global manufacturing and infrastructure industries systems to different sectors. Design center opened 12 years ago, contributes to product development at the headquarters Growing faster than any other worldwide Mentor Graphics center One of two Microsoft global innovation labs, alongside Aachen in Germany, specialized in applied research and prototype development Development of global solutions for the group, ergonomics for products and services on the multinational & local market, voice services and content access in Arabic, usages & services for the region. High-end embedded software design center Cairo was chosen in direct competition with Central European locations, decision taken based on superior quality in Egypt Employees 1 20 300 295 70 40 260 1 Total number of employees including domestic and export work (June 2010) SOURCE: ITIDA 39
Egypt s large graduating talent pool has multilingual spikes in English and Western European languages TECHNICAL SUPPORT Annual relevant pool for technical support Number of graduates by faculties Linguistics ~17,000 ~1,150 Annual relevant talent pool with language capabilities Number of graduates by language* English ~13,800 Engineering & IT ~3,300 French ~1,800 Italian ~600 Commerce Arts ~4,100 ~8,450 German ~500 Spanish ~300 Total relevant talent pool ~17,000 1 Berlitzlevel 4+ for English and Continental European languages; indicates ability to handle tasks in common personal and professional situations SOURCE: MCIT data 40
ITIDAs strategy framework (1/4) PRELIMINARY Pillar Human capital development Innovation, research & development Initiative Management training High level IT professionals training Excellence centers Incubators and venture capital Innovation Description/examples Simulate multinational training programs for managers Cover broad disciplines (sales, marketing, business development, finance) Based on skill gap analysis and market requirements Ramp-up every year based on market demand Simulate multinational training to train IT professionals on high demand jobs (e.g., ITI 9 month program) Potential for implementing specific you hire, we train program (at 80% hire rate) for specific skills required by companies Specialized in certain high-potential domains (e.g., Data Mining and Wireless technologies) Incubators for startup companies to assist with different issues in strategy and operations Venture capital funds to provide equity funding to young Egyptian companies Business plan competition Innovation community events in Smart Village Existing Under design 41
Egypt s fully-loaded operating cost is competitive compared to alternative service delivery locations across all service lines ILLUSTRATIVE Fully-loaded operating cost per FTE for Technical Support Services USD/year, October 2009 28,960-36% 21,745 Personnel 1 22,160 18,510 15,865-15% 14,780 12,180 11,210 Non- Personnel 2 6,800 6,965 6,330 4,655 Poland Jordan Egypt India 1 Includes agent compensation, supervisor compensation, support staff costs, training and recruitment 2 Includes Other operating expenses (infrastructure, telecom, travel, SG&A) SOURCE: MCIT/ITIDA, industry expert interviews 42
Egypt s fully-loaded operating cost is competitive compared to alternative service delivery locations across all service lines ILLUSTRATIVE Fully-loaded operating cost per FTE for Remote Infrastructure Management USD/year, October 2009 34,950-49% Personnel 1 20,750 17,690-15% 13,895 Non- Personnel 2 Poland Jordan Egypt India 1 Includes agent compensation, supervisor compensation, support staff costs, training and recruitment 2 Includes Other operating expenses (infrastructure, telecom, travel, SG&A) SOURCE: MCIT/ITIDA, industry expert interviews 43
Egypt s fully-loaded operating cost is competitive compared to alternative service delivery locations across all service lines ILLUSTRATIVE Fully-loaded operating cost per FTE for Application Development & Maintenance Services USD/year, 2009 45,915-52% Personnel 1 26,205 22,180-15% 17,100 Non- Personnel 2 Poland Jordan Egypt India 1 Includes agent compensation, supervisor compensation, support staff costs, training and recruitment 2 Includes Other operating expenses (infrastructure, telecom, travel, SG&A) SOURCE: MCIT/ITIDA, industry expert interviews 44
ITIDAs strategy framework (2/4) PRELIMINARY Existing Under design Pillar Capacity building Local market demand Export growth Initiative Enterprises Tailored consulting for Egyptian IT companies, using local and foreign experts Clustering Encouraging M&A for Egyptian companies (partnership with investment banks) Financial Allow IT companies access to bank loans through loan default insurance support mechanism, provide cost subsidies for local companies SECC Certification programs for key areas (e.g., CMMI and COPC) NGOs Capacity Building for industry NGOs, co-operation and relationship with different bodies (i.e., Etisal, Elabs, CIT, Itec) IT awareness Raise companies awareness of available IT solutions and educate industries on the value of IT to international competitiveness Reimbursement Product cost reimbursement of % of SW to buyer after purchase is completed SMEs Government support; government tenders to favor bids with high SME portion Promotion Develop relationship with top global consulting firms and analysts to position Egypt on global map Product Support and provide additional promotion for best products on the market champions Expatriates Engage Egyptian expats to help promote exports Outpost business Description/examples Awareness programs for selected commercial attaches on Egyptian IT products, trade missions to select geographies 45
ITIDAs strategy framework (3/4) PRELIMINARY Existing Under design Pillar Initiative Description/examples Insourcing & mega companie s Targeted insourcing Mega companies and FDI promotion Develop pipeline of target multinational companies Proactively market Egypt to these companies as an insourcing destination (including incentive packages) Targeting all industries not just ICT Establish specialization areas for Egypt Incentive system for foreign and local investors to create large companies to enable global market entry Multinational support Know how and transfer Multinational experts assigned to local companies to transfer knowledge, especially on management and system sides Promising Egyptian managers internship inside multinationals for one or two years Promotion and Participation in Egypt road shows and other promotion events marketing Egypt Day in multinationals HQ and other key locations to raise internal awareness Co-exhibitions in regional trade shows with Egyptian business partners 46
ITIDAs strategy framework (4/4) PRELIMINARY Pillar Initiative Description/examples IT information centre-local industry International market intelligence Provide information and statistics on local IT industry Implement export measurement system ICT industry skill database & talent pool statistics Local market sizing IT industry profiling Database of companies, products and contacts Existing Under design Data on market sizes and growth rates of different segments and geographical markets Global world trends and hot growth areas New technologies and offerings on the market Database of brokers and other sales channels Industry and market information Legislative reform MCIT task force stakeholders & Subject Experts Task force to define methodology to identify and prioritize problems facing IT exporters Strengthen role of Conflict Resolution committee Define best of breed country laws per selected area 47
From an Arabic ITO centre, Egypt has developed into a global IT delivery hub BACKUP First Arabic terminal (screen) commissioned by IBM, designed in Egypt Government commit-ment to ICT by com-mission of IDSC Development of Arabic speech recognition Establishment of Information Technology Institute (ITI) Formation of SECC (Software Engineering Competence Center) under MCIT MCIT launched IT strategy program IT research center established Formation of 1st IT venture capital company 1969 80 82 86-92 89 93 99 2001 03 06 07 2009 Formation of IBM research center (2nd one globally) Developme nt of bidirectional editing software (IBM) Arabic OCR (Optimal Character Recognition) (IBM) Establishment of Ministry of communications and information technology (MCIT) Development of dedicated technology park (Smart Village) Establishment of ITIDA IT export revenues exceeded $300 MM Formation of public/ private partnership (Nile University) Formation of 2nd IT venture capital company (Technology Development Fund) Foundation for localization (Arabization) opportunity in Egypt SOURCE: MCIT; ITIDA; industry experts 48
Several initiatives are underway to enhance talent pool for the ITO and BPO sector (1/2) Existing Target groups Programme structure/skills covered Scale European language program MCIT professional training program MCIT customized training program EduEgypt Etisal ITIDA program New hires (entry level) Fresh university graduates University graduates and entry level professionals 3rd and 4th year university students Employees of ITO companies Experienced professionals from general labor market Training on European language skills Enhances availability of suitable entry-level talent for technical support with proficiency in French, Spanish, German, and Italian Launched in partnership with leading language institutes in Egypt (French cultural centre, Cervantes, Goethe Institute) Raises technical level of engineering graduates by enhancing basic IT skills Tailored programs based on proposals from companies on specific skill sets Areas to be covered include Oracle financials, Microsoft ERP, Medical transcriptions, and soft skills University elective course Curriculum covering English language skills, soft skills and IT technical skills (such as ERP and Microsoft technologies trainings) Modular program structure for employees of ITO companies, program for experienced professionals from general labor market Oracle technology and functional tracks (50:50 split), resulting in certification of trainees ~300 trainees in 1st year across 2 languages Plan to expand to all languages and ramp up by 3-4x in subsequent years Two 3 year phases completed Phase 1: 5,000 trained; Phase 2: 3,000 trained Ad hoc based on each company s hiring requirements 3,000 trained this year, scaling up to ~10,000 for 2010 ~200 employees of ITO companies ~150 experienced professionals from the general labor market SOURCE: MCIT, ITIDA, ITI 49
Several initiatives are underway to enhance talent pool for the ITO and BPO sector (2/2) Target groups Programme structure/skills covered Scale Under design Existing ITI 9 month program Fresh university graduates, primarily of engineering background 9-month full-time program covering soft skills, basic and specialized IT skills, certifying trainees as professionals in difference disciplines (including ERP, ES) Content directly sourced from and delivered by technology providers Currently ~800 trainees per year Advanced management program Industry professionals Industry-relevant advanced management training and development services to multinationals and local companies in the ITO and BPO, to enhance capabilities and competencies of middle managers Planned for 2010 ~600 trainees in year 1, scaling up over 3 years SSME University students Collaboration between ITIDA, the Supreme Council of Universities and IBM to include services related sciences in Egyptian universities Elective courses in selected universities and faculties at the graduate level ~800 trainees Scaling up to 10,000 students over the next 4 years to cover all students in faculties of commerce, engineering and computer science. SAP program Employees of ITO companies Experienced professionals from general labor market SAP technology and functional tracks resulting in certification of trainees ~150 trainees SOURCE: MCIT, ITIDA, ITI 50
Package Implementation Remote Infrastructure Management Application Development Egypt s Multinational & Regional Industry Players in diverse IT service lines Technical Support Testing Engineering/R&D 51