Egypt’s Thriving ICT Outsourcing Market

Updated 11/26/2023 9:00:00 AM

The Egyptian government has been working to transform Egypt into a hub for outsourcing, especially in information and communication technology (ICT) services. Egypt has a set of competitive advantages to capitalize on and achieve this goal. These advantages include the large pool of young talents with high technical skills, the competitive average wage in the ICT field, the well-established infrastructure, and more.

In this Factsheet, we will explore the economic importance of ICT services and the government strategy for outsourcing ICT services, shed light on Egypt’s competitive advantages, and define Egypt’s global position as an ICT outsourcing destination.

The large pool of young talented calibers, especially in the ICT sector, comes on top of Egypt’s competitive advantages for outsourcing. Around 1% of Egypt’s employment is focused on ICT. Furthermore, around 50,000 students graduate in ICT-related fields annually, where the majority are bilingual and even multilingual. Those calibers provide outsourcing services to more than 100 foreign countries.
Egypt offers relatively competitive wage rates for outsourcing ICT companies operating in the country. At the end of the second quarter (Q2) of 2023, the average daily wage rate in the sector reached EGP 142.9 ($4.6). The competitive wage rates in Egypt encouraged global ICT players to invest in Egypt to save costs.
To further attract global ICT giants to outsourcing in Egypt, $2 billion has been invested to upgrade internet services in the country, bringing the fixed internet speed to 47 megabits per second (Mbps) in 2023 from 5.6 Mbps in 2019. In addition, Egypt invested EGP 50 billion in digital transformation projects.
The favorable business environment, government support, and continuous digital transformation led Egypt to become a prime outsourcing destination, ranking 23rd globally, according to Kearney’s Global Services Location Index 2023.
Egypt maintained its fourth-place status in the Ryan Strategic Advisory survey for the most favored outsourcing locations in terms of customer experience.
In the first half (H1) of fiscal year (FY) 2022/23, ICT sector’s gross domestic product (GDP) increased by 15% year-on-year (YoY) to record EGP 121.3 billion, which represented 3% of Egypt’s GDP. It is worth mentioning that the ICT services sector has grown by 16.5% in FY 2021/22, the highest among the other economic sectors.
In H1 FY 2022/23, the ICT-implemented public investments reached EGP 12.51 billion, which represented 4% of the total public implemented investments.
In FY 2022/23, the ICT sector was able to attract foreign direct investments (FDI) of $1.575 billion, representing 7% of the total inflows to Egypt. These investments witnessed a yearly increase of 8% compared to FY 2021/22.
Egypt’s digital exports are projected to hike by 12.2% YoY to record $5.5 billion in FY 2022/23, compared to $4.9 billion in the previous FY. This remarkable increase is attributed to the opening of local outsourcing centers in Egypt by American and Indian technology companies.
Egypt has launched the "Digital Egypt Strategy for the Offshoring Industry 2022-2026". The five-year strategy targets tripling the size of Egypt's digital exports to reach $9 billion and creating 215,000 job opportunities in the field by 2026. Furthermore, the strategy works to create a recognizable brand name for Egypt in emerging digital services.
At the end of 2022, the Egyptian government signed 29 agreements with leading global ICT companies to outsource their services from Egypt, which generates $1 billion in digital exports annually. The signed agreements created 34,000 jobs in the business process services sector (21,000), the IT services sector (10,500), and the engineering, development, and research sector (3,000). Recently, a number of global companies working in outsourcing services were inaugurated.