In the latest stage of its mega-project to diversify the country's economy by investing in the tech sector, the Egyptian government is refocusing on its once-thriving offshoring industry, looking in particular to fields including business-process optimisation, AI, and analytics. This has great revenue potential for the country, with analyst firm IDC predicting the global offshoring market will reach US$540 billion in value by 2026, up from US$310 billion in 2019.\n\nFollowing on from the work undertaken over the past four years as part of its Digital Egypt initiative, which included major investments in ICT education, entrepreneurship and digitalisation of the government itself, the Egyptian government is now setting its sights on developing an integrated, end-to-end digital strategy for its offshoring sector.\n\nGoals include tripling the export revenue from digitally enabled offshoring services, creating 215,000 new jobs, and increasing the country's competitiveness in areas such as big data analytics and embedded software. \n\nEgypt's Information Technology Industry Development Agency (ITIDA), working closely with consultancy firm Ernst & Young, has developed a five-year digital strategy designed to unlock the sector\u2019s growth potential. \u201cThis strategy looks at two sides of the equation: supply and demand. On the demand side, we looked at which markets would present opportunities for us. On the supply side, we looked at our talent pool to see what skills we had and what new skills we needed to nurture,\u201d says Amr Mahfouz, ITIDA's CEO and assistant minister for growth and development at Egypt's Ministry of Communications and Information Technology (MCIT).\n\nEgypt has a track record in offshoring\n\nEgypt has been a long-term, successful provider in the offshoring industry, favoured by large multinationals such as Vodafone, IBM, and Microsoft. According to Kearney's Global Services Location Index (GSLI) 2021, Egypt occupied the top spot in the Middle East and Africa and 15th place globally. However, before the turbulence of the anti-autocracy Arab Spring uprisings in the early 2010s, Egypt ranked fourth in the world.\n\nNow, thanks to the groundwork laid by the Digital Egypt project, such as US$2 billion of investments into its internet infrastructure, the agency felt it was the right time to focus its efforts on regaining or even surpassing its past position. \u201cWe're striving to get back to where we were before, but in the short term at least be back in the top 10,\u201d Mahfouz says.\n\nHe feels that Egypt is well placed to take back a bigger slice of the global offshoring pie, saying that since the pandemic began, more companies are looking to diversify their offshoring operations and the country is a natural choice for many organisations.\n\nEgypt has a large skills pool, with 600,000 graduates a year \u2014 35% of which have STEM qualifications, and many multilingual. In addition, it's 20% to 30% more cost-competitive than Eastern European locations, while having the advantage of being in the Eastern European time zone, which allows for real-time collaboration with organisations across the region, Mahfouz says.\n\n\u201cWe believe now's the time for Egypt. The stability, infrastructure and skills we now have form a unique opportunity that we're going after. It's an exciting time,\u201d Mahfouz says.\n\nEgypt\u2019s offshore focus includes AI, analytics\n\nMuch of the digital offshoring strategy focuses on creating a recognizable brand name for Egypt in digital services and technologies such as AI, big data analytics, mobility, cloud computing, and embedded software and chipset design.\n\nThis will involve marketing schemes to promote the country's capabilities to attract new investors and encourage existing ones to expand. A new incentive scheme based on operating expenses will also offer subsidies, rebates, and reimbursements.\n\nIn addition, work will take place to develop the industry's ecosystem further as well as upskill Egypt\u2019s young professionals with the skills which potential customers require. With this in mind, ITIDA plans to support new training opportunities for roughly 200,000 individuals over the next 18 months.\n\n\u201cOur strategy has three main pillars,\u201d Mahfouz says. \u201cThe first is around marketing and sales, and will shape the global perception of Egypt through marketing campaigns focused on the geographies we\u2019ve determined are a priority for us. These are German-speaking countries like Germany, Austria, and Switzerland, in addition to the UK, France, North America, and the Gulf region.\u201d\n\nThis work will include regular roundtable industry events where ITIDA can showcase what Egypt has to offer regarding offshoring opportunities and potential customers can discuss their priorities and needs. \u201cWe will use this information to develop our ecosystem (pillar two) and talent (pillar three) to make sure we're supplying exactly what they need. Along the journey we can make changes as necessary\u2014there will be a continuous dialogue with industry,\u201d Mahfouz says.\n\nEgypt expects demand for custom app development\n\nThe main offshoring industries that the strategy focuses on developing further are business process services such as HR or finance; knowledge services such as user experience, digital marketing, and analytics; IT services \u2014 everything from full-stack application development and testing through AI, cybersecurity, and data analytics \u2014 and engineering research and development (R&D). These are areas Egypt has already established a strong footing in \u2014 especially custom application development and maintenance (CADM) and embedded software design.\n\n\u201cWhile Ernst & Young's study showed us to expect interest in emerging technologies such as AI and cybersecurity \u2014 which we are developing skills in \u2014 it predicts that CADM will be our biggest offshoring business over the next five years and beyond. This is where we're seeing most demand on the ground right now,\u201d Mahfouz says.\n\n\u201cBut it\u2019s important to remember that developers don't work in a vacuum. You need to address the overall supply chain, which means you need to have architects, testers, business analysts. It's that whole end-to-end cycle we\u2019re looking to activate,\u201d he says.\n\nAs always, success requires execution. \u201cIt\u2019s great to have strategies, but in the end the words mean nothing unless they\u2019re implemented and measured. What\u2019s really going to keep me excited is following the implementation of this digital strategy, making sure we have KPIs in place to measure its success, and ensuring this feedback loop between the different players in the ecosystem continues. This is how we can reach, and potentially exceed, our current goals,\u201d Mahfouz says.