The Impact of

Outsourcing and
Offshoring Work to
Unemployed Youth in
Egypt

Done by: Evon Farid

Submitted to: Dr. Ashraf
Table of Contents
List Of Figures:............................................................................................................................................2
List Of Abbreviations:.................................................................................................................................3
Abstract:......................................................................................................................................................4
Problem Definition:....................................................................................................................................5
Major Question:......................................................................................................................................5
Minor Question:......................................................................................................................................5
Stakeholders Analysis:..............................................................................................................................12
Literature Review:....................................................................................................................................14
Effects of outsourcing income on unemployment...................................................................................16
Egypt: a rising outsourcing destination....................................................................................................17
Egypt highlights and statistics..................................................................................................................18
Why should you outsource to Egypt?.......................................................................................................18
Roles you can outsource to Egypt............................................................................................................19
What to consider when outsourcing to Egypt..........................................................................................20
Quality.......................................................................................................................................................21
Benefits of Outsourcing industry In Egypt................................................................................................22
The Negative Impact Outsourcing industry..............................................................................................23
Conclusion.................................................................................................................................................24
References................................................................................................................................................25

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List Of Figures:

Figure 1 Business Anatomy Model - 9 Elements (Elsafty, 2020)..............................................................5

Figure 2 Unemployment Rates in Egypt................................................................................................13

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List Of Abbreviations:
BPO Business Process Outsourcing

BFSI Banking, Financial Services, and Insurance

GDP Gross Domestic Product

CAGR Compound annual growth rate

CAPMAS Central Agency for Public Mobilization and Statistics

UNCTAD United Nations Conference on Trade and Development

FDI Foreign direct investment

KPO Knowledge process outsourcing

LPO Legal process outsourcing

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Abstract:
In the last few years, the unemployment rates have increased hugely globally, especially in highly
populated countries. In 2020, because the pandemic shut down the world, many companies went out of
business and some lost a lot of their company budgets in order to save their business they laid off a lot
of employees to reduce costs.

The aim of this report is to illustrate the main reason for many companies to adopt the outsourcing
industry, which is a company hires another company to be responsible for recruiting and employing the
needed resources they need, which often involves the contracting of a business process like payroll
processing, claims processing, operational, and/or non-core functions, such as manufacturing, facility
management, call center support. This would help many companies in their cost savings, one of the
main reasons why outsourcing started in the first place.

Also, we are going to discuss the reasons behind high unemployment rates and why outsourcing seems
a big issue resolver, how the outsourcing industry evolved, what are the advantages and disadvantages
of this industry, and finally recommendations for facing these disadvantages and how we could always
improve the process to keep the good effect in future .

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Problem Definition:
Unemployment is a huge issue in our country, which affects many families and individuals’ lives. Many
people are desperate to find jobs to support their families and themselves. This lack of job opportunities
caused depression, addiction problems, and illegal ways for people to get money to live.

One of the main reasons for unemployment is the slow growth of the economy, despite planning and
launching many projects and trying to enhance our economy but yet these plans and efforts of
development didn’t generate enough job opportunities. Another reason is the increase in the
population number, every year the growth rate of the population is thick and unreasonable which
causes loads on the education facilities and living expenses, and the government is still not as quick in
action as the population raising number. Unemployment generally generates a financial cost to the
country, as governments are forced to distribute higher amounts of unemployment benefits.

Major Question:
 How are we going to solve the high unemployment rates with the help of development plans?

Minor Question:
 How does education level affects unemployment rates?
 Does the government development plan efficient to decrease rates?
 Does the outsourcing industry the most sufficient solution?

Education

In order to better understand the business model under study and have a clearer vision of the impact of
the Outsourcing industry on unemployment, we used the business anatomy model ‘9 Elements’ (Elsafty,
2020). Employment

Population

Cost

Outsourcing
Time

Experience
Low Salaries

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 Figure 1 Business Anatomy Model - 9 Elements (Elsafty, 2020).

The growing acceptance of business outsourcing by a large number of companies, as this partnership
provides a long-term cost-effective solution is likely to aid in the market growth of the BPO.

Business process outsourcing (BPO) utilizes third-party vendors or subcontractors to carry out certain
parts of their business operations. It began with large manufacturing companies to aid with supply chain
management and has grown to include all sorts of sectors, including services companies.

The outsourcing industry comprises companies and organizations that have their operations and
business done through the help of organizations situated outside their city or country. As you often hear
of jobs such as telemarketing, call centers, payroll, and data entry companies, they all belong to the
outsourced business categories. The companies performing these job functions are often well focused
and the processes involved in this work are quite streamlined so there is little management needed due
to quality control procedures in place. The companies in these cases aim to get the information back and
forth as quickly and cleanly as possible and basically create communications and interactions between
customers, clients, and businesses.

Egypt’s business process outsourcing market share dominated the global business process outsourcing
market. It is majorly due to the flexibility and customization of service offerings to fulfill the rise in need
for cloud computing technology by every individual. Furthermore, the increasing adoption of
outsourcing in this region is burgeoning the Europe business process outsourcing market revenue.

Business functions are the high-level groupings of a company's capabilities and processes that describe
its work. Business functions ensure an organization runs properly and does well for its customers,
employees, leaders and shareholders. A company can have one primary business function or may have
several.

1. Finance & Accounting

Accounting and finance play an important role in the management of any business. Businesses are
operated on money, so it is very important to control money in order to have a hold on the business. An
accountant of a company helps to manage income and expenses and also the flow of money and
thereby directs the course of your business.

 Creating budgets and financial records

 Analyzing financial performance
 Developing business strategy
 Helps to set budgets
 Analyzing the costs of a business
 It helps in evaluating the performance of the business
 It helps in filing a financial statement
 Safeguarding assets through internal control
 Inventory management and control
 Preparation of financial statements

2. Human Resources

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The human resources department manages employee-related concerns and needs within an
organization. This department performs various tasks and responsibilities to strengthen the workforce
and promote a positive workplace environment. These activities can help improve employee
performance, morale, and participation at work. When employees enjoy coming to work, it can help
boost their productivity and reduce turnover rates. HR professionals also provide structure to the
organization by developing and implementing policies and procedures that protect employees and meet
organizational objectives.

The human resources department is responsible for numerous tasks and activities supporting the
business and its employees. The primary functions of the HR department include:

 HR planning
 Talent recruitment and selection
 Compensation and benefits
 Health and Safety
 Labor law compliance
 Training and development
 Employee and labor relations
 Employee well-being
 Performance management
 Career and succession planning
 Company culture and engagement
 Job evaluation
 Administrative duties
3. Procurement & Supply Chain

The procurement and supply chain are part of a broad function occupied with procuring the necessary
services and products to ensure the smooth running of a company’s product production and delivery.
Procurement and supply chain are becoming more aligned with one role often covering the delivery of
both aspects from purchasing to manufacturing and distribution. Here are some of the areas that a
career in procurement and supply chain could entail:

 Buying products or services

 Managing procurement processes
 Supplier relations
 Understand business goals and objectives
 Policy management
 Sustainability & Ethics
 Manufacturing
 Merchandising
 Operations & Logistics

4. Customer Services

The customer service job description gives you a good understanding of the duties, responsibilities, and
skills involved in customer service work. Although customer service jobs vary according to the sector,

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the company, and the level of the position, the fundamental job requirements remain standard for the
customer service function in an organization.

 Deal directly with customers either by telephone, electronically, or face to face

 Respond promptly to customer inquiries
 Handle and resolve customer complaints
 Provide pricing and delivery information
 Perform customer verifications
 Set up and manage customer accounts
 Process orders, forms, applications and requests
 Organize workflow to meet customer timeframes
 Direct requests and unresolved issues to the designated resource
 Record details of inquiries, comments and complaints
 Prepare and distribute customer activity reports
 Maintain customer databases
 Follow up on customer interactions
 Provide feedback on the efficiency of the customer service process

5. Banking, Financial Services, And Insurance

Banking, Financial Services and Insurance (BFSI) is set to grow exponentially in countries due to the
rising per capita income, the introduction of new products, innovation in technology, expanding
distribution, networking, and increasing customer awareness of financial products.

6. Healthcare

The healthcare industry, or medical industry, is a sector that provides goods and services to treat
patients with curative, preventive, rehabilitative, or palliative care. The healthcare industry is composed
of establishments devoted to the prevention, diagnosis, treatment, and rehabilitation of medical
conditions.

7. Manufacturing

A manufacturing business is any business that uses components, parts or raw materials to make a
finished good. These finished goods can be sold directly to consumers or to other manufacturing
businesses that use them for making a different product. Manufacturing businesses in today's world are
normally comprised of machines, robots, computers, and humans that all work in a specific manner to
create a product.

8. IT Telecommunication

IT services are pivotal for every organization. Practically every business depends on information
technology (IT) services for survival, but few people truly understand the intricacies of the field. In fact,
IT specialists wear many hats, far more than they often receive credit for. Here are most important tasks
for IT:

 Support

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  Data Management and Governance
 Infrastructure
 Communications
 Security
 Supplementary Programs and Services
9. Retail

Retail business is a business that involves selling goods or services to consumers in units or retail. The
retail business is different from the wholesale business. Retail business consumers do not resell the
products they have purchased, while wholesale business consumers resell the products they have
purchased.

The Recruitment Process of each outsourcing company use

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Planning is the fundamental duty of management. It has to do with planning a future course of action
and choosing ahead of time the best path of action for achieving pre-determined goals.
Choosing in advance what to do, when to do it, and how to accomplish it is known as planning. It fills the
gap between our current situation and our desired situation. A plan is a set of future steps. It is a
decision-making and problem-solving activity.
Choosing a path of action to accomplish desired goals is planning. Planning is therefore the deliberate
consideration of methods and approaches to achieve predetermined goals. Planning is required to
guarantee the effective use of both human and non-human resources. It is ubiquitous, an intellectual
pursuit, and also helps in avoiding confusion, uncertainties, risks, wastages, etc.

leading is that part of the managerial function which actuates the organizational methods to work
efficiently for the achievement of organizational purposes. It is considered the life-spark of the
enterprise which sets in motion the action of people because planning, organizing, and staffing are mere
preparations for doing the work. It is that inter-personnel aspect of management that deals directly with
influencing, guiding, supervising, and motivating sub-ordinate for the achievement of organizational
goals. leading has the following elements:
 Supervision
 Motivation
 Leadership
 Communication

Organizing is the process of bringing together physical, financial, and human resources and developing
productive relationships amongst them for the achievement of organizational goals.
“To organize a business is to provide it with everything useful or its functioning i.e., raw material, tools,
capital, and personnel”. Organizing a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process involves:
 Identification of activities.
 Classification of a grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

Controlling implies measurement of accomplishment against the standards and correction of deviation if
any to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to predict
deviations before they actually occur.
“Controlling is the process of checking whether or not proper progress is being made towards the
objectives and goals and acting, if necessary, to correct any deviation”.

“Controlling is the measurement & correction of performance activities of subordinates in order to make
sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore,
controlling has the following steps:
 Establishment of standard performance.

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  Measurement of actual performance.
 Comparison of actual performance with the standards and finding out deviation if any.
 Corrective action.

The outsourcing industry causes political stability, Political developments over the last decade would
have caused uncertainty and turmoil in a relatively new Egypt outsourcing industry. While a long-time
ruler does present a veneer of stability, it appears to be a case of ‘all may not have been well under the
veneer’ as the situation unraveled in 2011 with the Arab Spring uprising.

Business needs a stable and predictable political climate to flourish. Investment decisions are based on
long-term prospects. Frequent governance changes are likely to keep investors away as they are bound
to be concerned about the safety and viability of their investments. Hence, for business to flourish, or
indeed any activity, an enabling, stable political environment is a necessity. Recognizing this truism,
Egypt has invested in improving the telecommunications infrastructure that drives the internet and also
created economic zones with a supportive environment for technology companies.

Business-friendly economic policies that support Egypt outsourcing. Business organizations, apart from a
transparent law and order mechanism, are interested in the economic environment where there is
stability and consistency, which encourages businesses to operate with freedom, without the fear of
sudden changes that could jeopardize their business and investments.

Proof of the pudding being in the eating, more than the speeches of political and business leaders, large,
widely known companies like Google and IBM operating from Egypt over several years is a sign of
confidence to other, smaller players as well. Physically located at civilizational crossroads, Egypt is
viewed as a gateway to Europe, Africa and West Asia and a potential hub for technology and business
process services

Several factors contribute to the lack of attention to environmental and labor issues in outsourcing. The
first is the lack of understanding of the outsourcing industry in developing countries, except for a narrow
focus on core capabilities of outsourcing service providers. The newness of outsourcing has not allowed
the field of global supply management to come together around commonly accepted values and
standards beyond the drive to simply obtain low-cost and high-performance services offshore.

Outsourcing brokers, client representatives, and third-party project managers in the world and BPO
outsourcing arena do not wish to risk alienating their clients, colleagues, and counterparts by raising
issues of environmental responsibility and fair labor practices offshore.

Egypt’s cost structure is around 20% lower than top emerging BPO locations in Eastern Europe, including
the world’s lowest telecoms costs. Egypt was named as a leading global economic reformer by the
World Bank in 2007 driven by tax, customs, and financial sector reforms. It has a large annual graduating
talent pool of 330,000 with a large commerce, engineering, and science base. One of the important
factors is having a unique multilingual English, French, German, Italian, and Spanish-speaking talent pool
– 23,000 fluent English speakers graduate annually. Multinationals already investing in Egypt include
Unilever, Orange, Vodafone, IBM, Oracle, Microsoft, SQS, Teleperformance, and Sun Microsystems.

Egypt has a dedicated one-stop-shop outsourcing organization for the information technology industry
which negotiates to provide a quick and smooth start-up and is emerging as a key partner location for

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the Indian outsourcing sector, with companies like WIPRO and Satyam setting up facilities in the country
to complement local Egyptian providers. Also, it is considered one of the lowest staff attrition rates
compared to rates of 100 percent in more mature markets. With its cultural understanding, beneficial
time zone, and geographic position, Egypt is the ideal location to serve African, European, and Middle
Eastern markets. Egypt’s real estate planning includes two major dedicated technology and outsourcing
parks in Smart Village and Maadi Park, with several million square feet of available space to house in
excess of 100,000 employees.

Stakeholders Analysis:
Hiring Employers

some employers hire an employee who discriminates of age. Most of them have the perception that
young employees can work fast, be more energetic, and complete tasks on time. Employers are quickly
judging fresh graduates' attitudes from their first view at resumes and interviews. Employers' market
demand expects job candidates' eager graduates and highly motivated, confident, to try to develop their
careers and improve productivity. When recruiting a new employee, many employers have a clear
preference for younger employees, while preferences for older workers are uncommon.

Governments

a range of government programs that provide financial or other aid to individuals or groups who cannot
support themselves. Governmental programs are typically funded by taxpayers and allow people to
cope with financial stress during rough periods of their lives. In most cases, people who use these
programs will receive a biweekly or monthly payment.

Unemployed Youth

Unemployment is dreadful for young individuals and communities as a whole; nevertheless, the adverse
effects of unemployment rates are generally correlated with longer-term unemployment rather than
unemployment itself. Young people have felt the most damaging effects of the recession in this region.
The rate of long-term unemployment among the young rose by more than a third during the recession.
Furthermore, this is not the only recent negative development in young people's labor market
experiences with long-term implications. In recent years, there has been a growing awareness that
joblessness, as it is now commonly referred to, is a cause for concern. Similarly, the rise in temporary
and part-time jobs among young people and the long-term effects of these contractual forms are
becoming a significant concern.

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Literature Review:
Taking all factors into consideration, it is important that we comprehend that unemployment is a crucial
economic indicator because it indicates whether or not employees can easily find a beneficial job to
contribute to a productive share of the economy (Chappelow, 2020). This tendency may be attributed to
the effects of the global crisis on employment and output growth as well as to structural production
changes and the declining marginal utility of labor as a result of cost pressures, according to Van Aardt
(2012). More unemployed workers will result in lower total economic production than would otherwise
be the case. And unlike idle capital, throughout their unemployment, unemployed workers nevertheless
need to maintain at least subsistence consumption.

Unemployment is one of the key elements economists consider when assessing a nation. It is a
significant issue in many states and occurs when someone is actively looking for work but is having
trouble doing so. It reveals the nation's economic growth stage, labor market effectiveness, and
economic development stage. When there is an economic downturn, people face high unemployment
rates. Unemployment can be estimated by dividing the total number of jobless people by the total
number of people in the labor force. Different states use different methods to determine
unemployment rates; for example, some states do not include the number of undergraduates looking
for work, while others do not include the total number of women looking for work.

The movement of labor, particularly youth international migration, is a global challenge that has its roots
in the high unemployment prevalence among this group in countries in the South. In fact, (Barsoum et
al, 2014) show that more than half of employed youth expressed their dissatisfaction with their jobs and
their willingness to seek employment in other countries. A survey of youth in Egypt, the Survey of
Young People in Egypt, which was conducted by the Population Council (2010), shows that one in three
young men in Egypt expressed a willingness to migrate. Employment opportunities are the key reasons
for these young people to seek migration.

In this paper, I will focus on the causes and effects of unemployment in Egypt. Because politics and
economics are intertwined, Egypt has experienced several political upheavals throughout the years,
both before and after the revolution. As a result of Egypt's unsatisfactory economic situation, citizens
have been demonstrating against the country's power brokers. A change in power has an impact on the
entire system and the stability of the economy. Did this protesting have an impact on the economy's
growth, unemployment, or overall state? This study will provide an answer to that question in addition
to highlighting the primary causes of unemployment in Egypt and how those causes were impacted by
the significant economic changes that took place in that country.

According to CAPMAS, Egypt's labor force in the second quarter was expected to be 29.115 million
people, down from 29.284 million people in the first quarter, a decline of 0.6%. The labor force is
thought to consist of about 12.981 million people in urban regions and 16.134 million people in rural
areas. There were 4.882 million females worldwide, according to statistics. The third wave of the
epidemic is causing businesses and the government to take precautions; thus, the reduction is
attributable to a decrease in both the number of employed people and those who are unemployed,
according to Egypt's statistics authority. Also, the number of unemployed people in the second quarter
was 2.115 million, which represents 7.3% of the total labor force. This is a decrease of 40,000

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unemployed people at a rate of 1.9% and a decrease of 459,000 unemployed people or 17.8% compared
to the same quarter in 2020.

Figure 2 Unemployment Rates in Egypt

Market labor in general can be determined by the labor supplied and the labor demanded, the labor
supply is the quantity of available human resources in the market whereas labor demanded is the
quantity of needed labor in the market. When the labor supply is higher than the labor demanded in the
economy thus there is an unemployment rate. (Abel, Bernanke & Croushore, 1937). Using this
perspective, the labor demanded and supplied changes affects dramatically the unemployment rate in
the economy. The effects that contribute to higher labor supply in Egypt are as follows: Population
growth rate will increase the labor supply, In Egypt growth rate is 1.6% (World Bank, 2013) and this
increases the labor supply. In addition, more retired people working will increase the labor supply, and
retirement in Egypt after the age of 60 and increases (Social Security, 2010) lastly, Education: more
education and school will increase the labor supply, in Egypt, the age of 15 can read and write, a total
educated population is 73.9%, from which male is 81.7% and 65.8% are women (index Mundi, 2014).

Is there enough quantity of labor demand in Egypt to cover the quantity supplied available in the
country? Well, the demand for labor can be affected by capital stock or the supply of products in general
In Egypt inflation rate is 11.12% (Trading Economics, 2014), and when prices raise the quantity
demanded of any product decreases thus the production decreases thus the demand of labor decreases,
the inflation rate also affects the savings of the individuals in the economy people tend to save more
and thus invest less and thus the capital stock in the economy decreases thus demand for labor
decreases. The national income level affects savings and investments and thus labor demand gets
affected. (Abel, Bernanke, and Croushore, 1937)

The GDP is the most affected area from unemployment and the output produced in the economy; the
GDP is the factor that is affected by investments, exchange rates, and unemployment and also the
average per capita GDP shares, if these factors increase the GDP increase, on the other hand, if the
interest rates increase the GDP decreases. (Agrody Othman and Hassan, 2010)

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Gross Domestic Product (GDP) is the most vital factor that explains the development of the economy,
unemployment can affect the development of the Egyptian economy, thus it is recommended to
consider Egypt, for balancing the equilibriums and having an optimal use of the economic resources,
consider Investments which are low and Exchange rate of the Egyptian pound which is low too thus it
will be optimum to consider these two factors to raise GDP, and to increase investments this can be
promoted by decreasing interest rates. (Agrody Othman and Hassan, 2010) GDP in 2012 was 5.2 and
decreased in 2013 to 2.5 and now increased to 3.7 (Trading economy).

Effects of outsourcing income on unemployment

Outsourcing is one of the most talked-about issues of recent times. Simply put, outsourcing is getting
the work done by freelancers who are people outside of the company and usually located in different
countries. Various companies in nations are now conducting business Process Outsourcing (BPO).

For BPO (Business Process Outsourcing), organizations are heavily relying on numerous freelancers all
over the world. Since a high level of education is not mandatory for outsourcing, even moderately
educated people who become successful freelancers earn a tremendous amount of money. Those who
have completed university-level knowledge and are not getting a suitable job are gradually getting
interested in the outsourcing field and earning money online. Thus, outsourcing income has a positive
effect on unemployment.

Outsourcing has marked its presence in many fields, namely call center, IT support services, software
development company, IT consulting, a software company, etc. Moreover, payroll, HR, legal, accounting,
recruitment process, etc., sides of the firm are also getting outsourced by large organizations these days.

There are several benefits of outsourcing, both for the company and the freelancer. A corporate
institution has many types of work, including dull and low skill ones like data entry. If a company wants
to get all their employees’ jobs, they have to either pay them more or employ more people. These are
very costly options. This is when outsourcing comes into the picture.

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Companies give jobs like these to contractual freelancers who do the job. Most such freelancers are
from developing or less developed countries of the world. So, the remuneration given in advanced
countries’ currencies seems adequate to them. On the other hand, for the company, it is less expensive.

There are some advantages to the freelancers’ part as well. Many students fail to find the right job
opportunities after graduation. Besides, many students want to start earning money before their studies
are complete. Furthermore, many women want to work from home. Also, there are loads of individuals
who are already doing a job; however, they want to increase their income by doing extra work. People
from all these categories are becoming interested in online posts. Through home-based jobs, they can
make money online without much qualification because only a moderate education level is necessary
for jobs online. Plus, one can work from the comfort of their home. Freelancers can also set their work
schedule according to their convenience.

There are several effects of unemployment that can be observed in society. If the unemployment rate
gets higher, then it has an overall negative impact on the economy. It is becoming tough in today’s
competitive world to get a suitable job according to one’s qualifications. Many of the time, students
aren’t able to get the job they desire. Also, many students manage to find a job, but it may not be in
their field. All these situations ultimately lead to frustration. For such people, outsourcing can be a way
out. They can take the necessary training from a qualified training institute and obtain the proper skills
to become a successful freelancer. On the other hand, many students are not yet done with graduation
and have not become qualified to hold a corporate job but want to earn money by working. Freelancing
can be a brilliant solution for them. They can get proper schooling from an outsourced training center.
Thus, they can learn the ins and outs of freelancing and thrive in the outsourcing field.

Moreover, many women, especially homemakers, want to hold a job but fail to do so because of various
family reasons. Freelancing can be a lucrative option for them. After getting adequate training from an
outsourcing establishment, they can become flourishing freelancers. Finally, outsourcing can be the
answer for those who want to earn some additional money with their regular salary and thus increase
their income in general. Of all sorts, of people discussed above, outsourcing can be an outstanding
solution. Many outsourcing institutions have been established all over Bangladesh at present. They offer
precious training from knowledgeable tutors. In this way, the students, including newcomers and
beginners, can set themselves as skilled freelancers and sustain themselves in this arena. Therefore,
they will be able to earn lots of funds and get benefited financially. Ultimately, they can make their
financial condition a lot better. There is a possibility of earning huge amounts of money by outsourcing
work if one can do it correctly. Each year Bangladesh receives a massive amount of remittance because
of freelancers’ earnings. This helps to augment the country’s financial condition. In a nutshell,
outsourcing is beneficial for the individual level and a country’s economy as a whole. Income from the
online outsourcing field helps lower the unemployment rate. Consequently, this is beneficial for
everyone.

As more outsourcing destinations rise, global companies have wider options in hiring remote teams
according to their requirements. They have the chance to either tap a neighboring location or offshoring
destinations in Asia or Africa for their convenience.

Egypt is one of the fastest-growing destinations for offshoring services nowadays. With the continuous
development and support from the government, more companies have started to invest in the country
by delegating their services to BPOs.

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Egypt: a rising outsourcing destination
Currently establishing itself as an outsourcing destination, Egypt came from a rich history of influence
and control from France and Britain. Its background made the country most compatible with developed
nations nowadays, especially for business.

Despite opening for business in the 1970s, Egypt only opened up its economy fully in the 2000s. From
there, the country has experienced rapid growth despite the turmoil it experienced over the years.

Information and communications technology (ICT) has been one of the fastest-growing industries in
Egypt ever since. Managing to attain a 20% CAGR in 2008, it remained resilient and stable during the
Arab Spring in 2011.

Cairo, its capital, first entered the Tholons’s Top 50 Emerging Cities in 2007, ranking 11th, and then
landed in the top 10 the following year. Egypt climbed to the 4th ranking in 2010, making it the top
outsourcing destination in the Middle East. Egypt continues to develop its outsourcing sector even
during the pandemic. Recently, the ICT Minister rolled out the plans for Digital Egypt Strategies on
Offshoring Services, which could further help the industry move forward.

Egypt highlights and statistics

Law and order. A 2018 poll by Gallup found that Egypt ranked higher (16th) in the global law and order
report, compared to the US (35th) and the UK (21st).

New administrative capital. To ease the congestion in Cairo, the Egyptian government is building a
“New Administrative Capital” approximately 45 km east of the capital.

Modern calendar. The modern 365-day calendar was invented in Egypt to predict the Nile River flooding
every year.

Social media monitoring. A controversial law was passed in 2018, categorizing social media users with
more than 5,000 followers as media outlets and will be monitored by the government.

Homogenous country. Egypt is said to be an ethnically homogenous country, with 99% of the population
being Egyptians.

Why should you outsource to Egypt?

More companies choose to outsource to Egypt for the following reasons.

 Multilingual support

Egypt has a vast workforce with a strong grasp of multiple languages aside from Arabic. This makes it
easier for companies to look for multilingual support services.

Moreover, Egyptians learn English as a second language at school. Having been influenced by European
countries in the past, some graduates even take French or German as a third language when needed.

A majority of workers also learn Italian, Russian, Korean, and other languages for tourism. Recently,
Mandarin Chinese was even included as an elective foreign language in schools.

 Young, tech-savvy workforce

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The country produces millions of young and tech-savvy graduates that enter the workforce each year.
Based on the latest Central Agency for Public Mobilization and Statistics (CAPMAS) statement, the
Egyptian labor force in urban areas alone reached up to 13 million. These millions of workers are trained
to provide the best service in different fields, including IT and related functions. Aside from this,
institutions and universities offer educational resources and workshops to train employees for call
centers and BPOs. With this, Egyptian BPOs can easily help their clients access the best teams they can
find in the country.

 High-quality infrastructures

Egypt has top-of-the-line infrastructures that can compete with the top offshoring destinations and
developed countries. Thanks to the Egyptian government, digital infrastructures in the country continue
to develop through the Digital Egypt strategy.

Egypt was considered an “African tech hub” to be reckoned with in 2019, with almost 100 tech startups
investing in the country. The latest Global Services Local Index also named the country as the most
attractive location in the Middle East and Africa while ranking 15th in the world.

Ranking 86th in Ookla’s global speed index as of January 2022, the country has one of the fastest
internet connections in Africa.

 Business-friendly climate

The country is named one of the leading foreign direct investments (FDI) recipients in the Middle East
and the top recipient in Africa in the 2021 UNCTAD report. Indeed, it has a huge potential to attract
foreign investors in terms of its location and policies.

Linking Africa to two continents, Egypt has one of the most conducive environments for developed
countries. Egypt is geographically closer to the US and Europe, having time differences of up to seven
hours.

The government even strives to make the business climate in the country better by implementing
policies such as the new investment law. The policy aims to attract more foreign investments through
incentives, guarantees, and more streamlined processing.

Roles you can outsource to Egypt

Egypt can be tapped to delegate a wide range of services, from customer-facing functions to
professional roles. Here are some of the popular roles’ companies can outsource to Egypt.

 Customer support

Egypt gets high demand for customer support services in multiple languages, including English, French,
and German. Companies can save up to 40% on costs with an Egyptian customer support team
compared to hiring local staff.

 Knowledge process outsourcing

With continuously developing infrastructures, Egypt has a great potential for knowledge process
outsourcing (KPO), especially in research and development.

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By delegating KPO, businesses can easily get expert advice and services in managing their data, growing
their business, and getting market and industry insights. This even helps them overcome the skills gap in
professional roles in developed countries.

 Back-office services

Aside from customer support, Egypt also has a good market for back-office services. A lot of institutions
throughout the country offer training for BPO services, including office administration and bookkeeping.

When clients delegate their back office to Egypt, they can have a reliable remote team and optimized
functions using the latest tools available.

 Design services

The country has a fleet of creative workers ready to help businesses with their website, content, and
social media.

Outsourcing design helps businesses save at least 40% on costs and scale their functions according to
demand. They can either delegate one-off design work for logos and web designs or have their entire
design department offshore for recurring campaigns.

 Legal process outsourcing

Still, a growing sector, legal process outsourcing (LPO) in Egypt is most viable for companies looking to
make their legal compliances more efficient. Organizations outsourcing their legal processes can save
time and effort in dealing with international trade laws and processes.

What to consider when outsourcing to Egypt

Despite the advantages it could give, companies are still hesitant to outsource to Egypt mainly due to its
political instability. Yet, they should worry less about this, given that Egypt’s ICT industry has been stable
through the years.

Outsourcing to another country such as Egypt always poses risks to business operations in terms of
control and expected outcomes. This is why clients are continuously reminded to plan, strategize, and
research carefully about outsourcing and the industry. They can get advisory services from industry
experts to help them with this where businesses can gather more information about outsourcing and
offshoring in Egypt and other countries.

Egypt’s cost structure is around 20% lower than top emerging BPO locations in Eastern Europe, including
the world’s lowest telecoms costs. Egypt was named as leading global economic reformer by the World
Bank in 2007 driven by tax, customs and financial sector reforms. Egypt has a large annual graduating
talent pool of 330,000 with a large commerce, engineering and science base. Egypt has a unique
multilingual English, French, German, Italian and Spanish speaking talent pool – 23,000 fluent English
speakers graduate annually. Multinationals already investing in Egypt include Unilever, Orange,
Vodafone, IBM, Oracle, Microsoft, SQS, Teleperformance, and Sun Microsystems. Egypt has a dedicated
one-stop-shop outsourcing organization for the information technology industry which negotiates to
provide a quick and smooth start-up. Egypt is emerging as a key partner location for the Indian

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outsourcing sector, with companies like WIPRO and Satyam setting up facilities in the country to
complement local Egyptian providers. Egypt has one of the lowest staff attrition rates compared with
rates of 100 per cent in more mature markets. With its cultural understanding, beneficial time zone and
geographic position, Egypt is the ideal location to serve African, European and Middle Eastern markets.
Egypt’s real estate planning includes two major dedicated technology and outsourcing parks in Smart
Village and Maadi Park, with several million square feet of available space to house in excess of 100,000
employees.

Quality
Egypt ranks in the top 10 for its IT skills in emerging markets, according to AT Kearney. The Egyptian
Education Initiative (Edu Egypt) trains university graduates in the soft, technical and language skills
required for the business process outsourcing (BPO) and call center industries. The initiative produced
3,100 graduates in its first year and aims to supply 40,000 graduates per year by 2011. Egypt has 20
technical institutes with 17,000 engineering graduates entering the marketplace annually,
complemented by graduates from leading universities such as Al-Azhar University, Cairo University and
Ain Shams University. Egypt’s first dedicated Contact Center Park, based in Maadi, Cairo, and the 600-
acre Smart Village Technology Park on the outskirts of Cairo, create a dynamic platform for local and
international communities to outsource world class information and communications technology
services.

Egypt offers a cost effective and world class alternative to organizations considering outsourcing. The
cost of doing business in Egypt is 13 per cent lower than in India and 20 per cent lower than Eastern
Europe. The Egyptian Pound (EGP) is relatively stable against the US Dollar, preserving cost
competitiveness and encouraging foreign investment. The McKinsey Global Institute Location Cost-
attractiveness Index ranks Egypt fifth among the most attractive business process outsourcing locations.

Companies operating in Egypt also benefit from the world’s lowest telecoms costs with ready access to
VoIP at decreased global internet rates. Egypt’s average wage of 2,076 USD per annum is significantly
lower than those in Eastern Europe, and only India and the Philippines have marginally lower rates.
Egypt is one of the most secure and stable countries in Africa and the Middle East and offers a rich and
varied Mediterranean lifestyle. The government is committed to the development and economic
liberalization – a trend which has gathered pace since the appointment of Premier Dr. Ahmed Nazif in
2004, a former Minister of CIT, who leads a cabinet of young, business-oriented ministers. Renowned
globally for its culture, history, and heritage, Egypt is also a modern, progressive country. Condominium-
style housing, boutique shopping, lush golf courses, and vibrant nightlife are just some of the attractions
that draw expatriates to the Egyptian lifestyle. Egypt is a Mediterranean country. It’s an African country.
It’s an Arab country. It’s at the crossroads where East meets West. It’s an intercontinental business
destination. Egypt’s close proximity to Europe – an average four-hour flight time to most European
capitals – and similar time zone support advantageous business partnerships. It is geographically closer
to North America than India and the Philippines, and near the Gulf, Asia, and the rest of Africa. The
Smart Village on the outskirts of Cairo offers state-of-the-art, modern infrastructure in a verdant
environment with plentiful parking and facilities for over 35,000 people. Other Smart Villages are
planned for Alexandria and Damietta, while Maadi Contact Center Park in Cairo will be operational in
2012 offering 60,000 seats.

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Benefits of Outsourcing industry In Egypt
The majority of businesses delegate one or more of the following operations to outsourcing companies
in Egypt:

 Save time & money

One of the top reasons businesses turn to outsourcing companies is to save time and money.

Many business owners – especially new business owners – aren’t aware that their time is money.
Literally. The more time they spend on administrative tasks and non-core or non-essential tasks, the
more time and money they’re losing that they should be investing in growing their business.

This is where outsourcing companies offer a ton of help. Instead of having managers and business
owners struggle with unfamiliar work, outsourcing companies take on these responsibilities and ensure
everything is in order. Meanwhile, the business owner can focus on their business.

By taking away that work load, your time becomes more valuable and better used. This, in turn, save you
money because you can hire the company when you need it, thereby cutting unnecessary costs.

 Delegate unfamiliar work

Many business owners are familiar with the area of their business.

For example, someone who decides to launch an e-commerce website or mobile app, is more likely
familiar with software or e-commerce or marketing or a combination of those.

But they’re not likely to be familiar with creating a company structure, an HR strategy, a salary-grade
system, financials, among other business requirements.

Outsourcing these tasks and requirements to companies helps you delegate areas you’re not familiar
with and at the same time ensure they’re given due care and are delivered in a timely manner.

 Reduces turnover and helps teams focus

Many small and medium-sized businesses delegate administrative tasks to their employees, team
leaders, and managers.

Usually, these employees have to divide their time between additional and admin tasks, which they may
not be familiar with, and with their actual work.

Moreover, employees overloaded with admin usually end up becoming demotivated, struggling with
burnout and leaving. And a high turnover hurts your overall business.

Outsourcing companies save you and your employees from all that hassle and hard work. By outsourcing
tasks, you can ensure your employees, like you, aren’t easily distracted and are more focused on their
work.

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  Project-based opportunities

Last but certainly not least, working with an outsourcing company means you can request their service
on a per-project basis.

Whether you want to work with that company for a month, a quarter, a year or more, it depends on
your workload and your needs. Unlike employees who prefer full-time jobs with steady monthly salaries,
outsourcing companies are more flexible.

Nearly any service or job can be outsourced. As business, you can outsource one service or several, or
even an entire team if needed. That said, the most commonly-outsourced types of services are HR
services, administrative tasks, legal services, customer support, content and writing services.
Outsourcing companies in Egypt usually provide HR services including payroll and manpower
outsourcing. But some companies go a step further and offer more.

The Negative Impact Outsourcing industry

outsourcing leads to higher unemployment in a number of ways. First, when companies outsource jobs,
they are often replacing high-paying jobs with lower-paying jobs. This leads to a decline in the overall
wages paid to workers, which in turn leads to a decline in spending and an increase in unemployment.
Second, when jobs are outsourced, the workers who lose their jobs are often replaced by workers who
are less productive and less skilled. This leads to a decline in the quality of the workforce, which in turn
leads to a decline in the overall productivity of the economy and an increase in unemployment. Finally,
when jobs are outsourced, the workers who lose their jobs often have difficulty finding new
employment. This can lead to an increase in the number of people who are unemployed for long periods
of time, which can further increase unemployment.

A company can outsource any job that does not require the company to perform any work within its
borders. One reason for outsourcing is that it saves money for the company. Computer programming,
telemarketing, and many other sales and technician jobs are among the most common jobs outsourced
to foreign countries. In any case, lowering wages and benefits always hurts the economy. Because they
earn less, the replacement workers are outpriced by the replacement workers. Only jobs where high-
quality workers are hired have an unambiguous economic impact.

When outsourcing occurs, there is a risk that joblessness in the United States will rise. According to
outsourcing insight, the primary negative outsourcing effect is that it increases unemployment.
Outsourcing can have both positive and negative effects on employment. On the positive side,
outsourcing can create new jobs in the country where the work is being outsourced to. This can help to
grow the economy and reduce unemployment. On the negative side, outsourcing can lead to job losses
in the country where the work is being outsourced from. This can happen if the work that is being
outsourced is in a high-demand field, such as manufacturing or IT.

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The outsourcing of jobs has been a controversial topic in recent years. Some argue that it leads to
unemployment, as companies send jobs overseas to take advantage of lower wages. Others argue that
outsourcing can actually help create jobs, as it can lower costs for companies and make them more
competitive. There is no clear consensus on the effects of outsourcing on unemployment. Furthermore,
outsourcing encourages new competition by creating fragmentation and disorganization within the
supply chain. Employees who are aware that their jobs may be outsourced to cheaper foreign labor may
lose trust in their employers in the long run. Outsourcing may also be ineffective as a means of turning
off consumers. Some argue that outsourcing is responsible for higher unemployment, but there is little
doubt that it does eliminate certain types of work. Outsourcing can also lead to labor shortages, making
entire communities deserting. Many factories, especially those that make products, may be built as a
result of an influx of foreign investment, causing pollution and carbon dioxide to be released into the
atmosphere.

A third issue with outsourcing is that you may not get the results you want. A smaller vendor may be
unable to do a good job because they lack the necessary resources. Furthermore, if the vendor is larger,
they may be less interested in protecting your privacy.

Conclusion
Finally, Analysis found that Outsourcing would lead to an increase in the productivity, specialization in
resources. Outsourcing is beneficial for the economy as a whole as it creates not only direct but indirect
jobs for the people., Solution of unemployment is an urgent need for Egypt. The number of unemployed
people increase day by day. It is not possible to find only one perfect solution for such huge problem.
There are a lot of possible solutions provided in order to reduce the rate of unemployment. One of the
solutions is Outsourcing sector. Outsourcing has dramatically altered the structure of the global labor
market in just the last ten years. It also allows access to world-class capabilities with lots of global talent,
available at your service from anywhere, anytime. It takes the load off your direct staff while providing
jobs for competent employees in remote locations.

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