THE recently toppled Egyptian government always used to point to its young, tech-savvy population as one of the
main reasons to outsource to the country.
Quite how tech-savvy young Egyptians are was showcased during the revolution that ended president Hosni Mubarak’s 30-year rule in February 2011, as protesters used social networking sites to coordinate and broadcast their demonstrations.
Those companies that had been attracted by Egypt’s outsourcing sector found themselves in a difficult situation following the demonstrations, not least because of the government’s initial reaction to block access to the Internet.
Microsoft and Vodafone, both tenants at Cairo’s Smart Village technology park, were forced to redirect work out of the country, while Indian offshore providers Wipro and Infosys evacuated non-Egyptian workers from its facilities there.
What will hopefully prove to be a great event for the Egyptian people was a troubling one for the global outsourcing industry.
A number of developing countries have followed India’s example of pursuing economic growth through IT outsourcing, and Egypt’s was one of the best-executed campaigns.
Many now feel, however, that Egypt’s example will discourage Western businesses from investing in what they may perceive to be unstable nations. The political stability of a possible outsourcing destination was always a consideration, but this could make businesses more risk averse.
That could be a good thing for local or ‘nearshore’ IT services companies, many of which have become more cost effective as a result of recent currency fluctuations. Businesses might now feel that sourcing IT services closer to home is a safer bet.
But the globalisation of IT work has benefited countries such as India, and it is an opportunity that might now be harder for other emerging economies to capitalise on.