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Egypt's IT, ITeS exports hit $3.25 bn in 2017 with annual growth rate expected to up 13.4% until 2020 - IDC study

The total Egyptian IT and IT-enabled services (ITeS) export industry hit over $3.25 billion in 2017 and the sector's compound annual growth rate (CAGR) expected to rise by  13.4% until 2020, according to a study by the  International Data Corporation (IDC).

The study hailed the considerable efforts the Egyptian Ministry of Communications and Information Technology (MCIT), the  International Data Corporation (IDC) said in a study issued in February.

The number of  employees serving the overall Egyptian IT/ITeS industry – including export, onshore, and in-house services – stood at over 292,000 people in 2017, and IDC expects this figure to rise to 378,000 by 2020.

The ICT sector in Egypt has been witnessing unprecedented growth and is currently the country's largest contributor to GDP growth, the study added.

Egypt has set an ambitious plan to up export revenue to $20 billion by 2025, through expanding on the country's IT/ITeS offerings, and surging exports of electronics manufacturing and regional mega projects.

IDC believes Egypt’s IT/ITeS exports will make a significant contribution to this target, but the industry will need to continue exploring innovative new technology streams and business models in order to make it happen.

According to the study, the Egyptian Business process outsourcing (BPO) industry's export revenues totaled $1.9 billion in 2017, accounting for 58% of the country's total IT/ITeS exports; meanwhile, Egypt's Information Technology Outsourcing (ITO) exports was valued at $771 million for the same year, constituting 24% of total exports.These export industries are expected to grow at CAGRs of 16.5% and 8.1%, respectively, until 2020 period.

The Knowledge process outsourcing (KPO) industry is also expected to flourish, with export revenues forecast to ramp up from $591 million in 2017 to $775 million in 2020, representing a CAGR of 9.4%.

The study expected Egypt's BPO growth rate to double within the coming three or four years, considering Egypt as one of the market leaders in the global BPO export space.

"With businesses around the world now actively pursuing their own digital transformation (DX) initiatives, IDC expects 3rd Platform technologies (i.e., cloud, big data and analytics, social, and mobile), together with a new wave of innovation accelerators (i.e., IoT, security, automation/cognitive systems, AR/VR, 3D printing, and blockchain), to drive ICT investments over the next five years," says Jyoti Lalchandani, IDC's group vice president and regional managing director for the Middle East, Turkey, and Africa.

"The rapid growth of digital technologies has created the potential for offshoring hubs to emphasize their global position, and those countries that take the initiative to build out their resource pools are going to be the market's true game changers," he added.

Egypt has adequately foreseen the transformation required for 3rd Platform technologies and is therefore employing a multi-faceted approach towards developing corresponding competencies within the country's ITO, BPO, and KPO industries.

Egypt has made a number of investments that are expected to boost the skills ecosystem in this regard, with one example being the Next Technology Leaders (NTL) initiative – a presidential initiative implemented by MCIT that focuses on building outstanding technology capacity within the workforce.

Expanding beyond Cairo has been a key part of the industry's ongoing transformation, with modern technology parks being built and becoming operational in places like Assiut, Alexandria, Sadat City, and Beni Suef. The parks are offering immense investment opportunities, including datacenter clusters (Borg El Arab), electronic design and manufacturing clusters (Assiut), and Egypt Government Cloud and data hubs (Cairo and Borg El Arab). The Smart City initiative for the country's new administrative capital, with its focus on Big Data and the Internet of Things, as well as the continued focus on cybersecurity (Egypt currently ranks 14th in the ITU's Global Cybersecurity Index) are further enablers for building out the ecosystem. Furthermore, Egypt's high mobile penetration rate and its recent launch of 4G networks are expected to boost the mobility segment of the industry.

The technology innovation ecosystem is booming in Egypt, with the United Nations Development Programme (UNDP) selecting Cairo to host its first Regional UN Technology Innovation Lab (UNTIL) in Africa in 2017. This traction has been driven by the outstanding success of startups and small and medium enterprises (SMEs) in Egypt.

 Furthermore, numerous industry collaborations with best-in-class ICT organizations continue to be put in place, with the aim of further empowering the thriving ecosystem of entrepreneurs and SMEs. One such example is IBM's provision of support for SMEs in the country through its cloud computing and data analytics solutions. With these collaborations already beginning to bear fruit, Egypt's offshoring industry is poised to grow from strength to strength.

 

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