Testing times for SQS in Cairo

This morning, I met with Rudolf Van Megen, CEO of software testing services provider SQS. Among other things, SQS is notable for having based one of its offshore delivery centres in Cairo.

The reason for this is that Egypt is one of the most bountiful offshore sources of workers with both IT and German-language skills. Almost half of the company’s business derives from its native Germany.

I asked Van Megen about how business was effected by the revolution that took place in the opening weeks of this month. It was “scary”, he admitted, and the company lost four days’ work because staff were placed under curfew.

But SQS had the necessary contingency plans in place, he said. German clients, which include Deutsche Bank and Deutsche Post, were serviced from the company’s ‘near-shore’ facility in Gorlitz, Eastern Germany. “We saw just how good it is to have many different locations.”

Now, he says, it is back to “business as usual”, with Cairo staff working overtime to get through the backlog.

None of SQS’ clients have said they want their work to be taken out of Cairo, he says, but the revolution has taught them some valuable lessons about offshore outsourcing. “It became very clear that if you want lower prices, there is a risk premium you have to pay.”

SQS has reassured Egypt’s telecommunications minister Dr. Tarek Mohamed Kamel that it remains committed to Cairo as an outsourcing destination. That said, Van Megen remarked that it has decided to look for more German-speaking workers in Pune, where its Indian facilities are based (not as hard as it may sound, thanks to a number of German automotive companies with engineering resources there).

The real damage, Van Megen believes, is to Egypt’s reputation. “What they built up in four or five years has gone in four weeks,” he said. “This will make it much more difficult for new companies to move to Egypt.”

I asked Van Megen whether any of SQS’ employees were involved in the revolution. “We recommended that they keep themselves out of the demonstrations, and what we heard is that they all did,” he told me. “They are among the 10% most privileged people [in Egypt] – they earn so much more than a policeman, for example. Maybe that was the reason why we haven’t seen any accidents happen with our people.”

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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