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LSE Study Shows Egypt Leads Global Offshoring For Costs
Published Jun 24, 2009
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With the $55 billion global outsourcing market set to grow by 20 percent annually over the next five years, LSE study reviews the best cost options for businesses looking to outsource in the recession.
A study by the world renowned Outsourcing Unit at London School of Economics (LSE) reveals that Egypt ranks highest out of the world's emerging offshoring destinations in the key area of costs.
With senior decision makers facing some tough decisions on reducing costs in the recession, the findings provide a key indicator of the most attractive global markets for outsourcing in the downturn.
Companies considering outsourcing IT or business processes overseas typically compare three major aspects of cost comprising labour, infrastructure and corporate taxes and incentives.
With companies worldwide facing demands to reduce business costs, many will look at outsourcing certain elements of their business overseas.
The LSE study identifies Egypt as the most competitive and attractive destination overall on cost.
Dr Hazem Abdelazim, CEO at Egypt's Information Technology Industry Development Agency (ITIDA), commented: "Egypt provides a highly skilled labour pool of workers and managers at a competitive cost, with over 300,000 graduates offering multilingual capabilities.
It also offers excellent unit costs for telecom networks, Internet access and power and office rent.
Furthermore Egypt's tax breaks, regulations and other incentives for local investment make it highly appealing to world class, international firms that wish to outsource".
Dr. Abdelazim added: "The Egyptian government offers strong support to international IT companies to help them establish clustered groupings in a range of new business parks called Smart Villages and Free Zones, both in Cairo and other key cities.
The LSE report shows that the relatively low cost base, good transportation links and government support are major factors attracting foreign IT investment to Egypt".
Based on a perception analysis carried out by the LSE among 18 international consultants/analysts, Egypt was the most attractive country based on costs.
The costs considered were a combination of start-up, infrastructure and labour costs.
The fact that most companies are based in one of the Smart Villages or the Free Zones indicates the Egyptian government's strategy of using tax and investment incentives to prime the business establishment and illustrate the expansion is working.
If you would like an interview with ITIDA about this story, please call Amina Grimen at Hill and Knowlton on 04 334 4930 or email amina.grimen@hillandknowlton.com
Copies of the full LSE report Offshoring in non-BRIC countries: Egypt - a new growth market can be downloaded from http://www.itida.gov.eg/images/Beyond%20BRIC_interactive.pdf
Posted by
VMD - [Virtual Marketing Department]
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