India, the offshoring capital of the world, is now outsourcing software and backoffice projects to Egypt as vendors like Wipro plan to send more domestic work to the most populous Arab country to leverage lower costs and availability of skilled professionals. Wipro, which counts Bharti Airtel, Unitech Wireless and Dena Bank among its top customers, said with 10 to 15 percentlower costs than India, and availability of required technical skills across different programming languages including Windows and Unix, Egypt is emerging as an attractive location for offshoring.
We believe that 20percentof our work can be offshored to Egypt,said Anand Sankaran, senior VP and business head, India and Middle East Business, Wipro. We are offshoring jobs from Middle East and India to Egypt.
Egypts attractive subsidies for creating local employment which includes incentives like waiver on training costs and newrecruit salaries is making it compelling for companies like Wipro to seriously consider sending more work to the country.
The government is providing different subsidies towards training and education of new hires. We plan to hire 400 professionals in Egypt within two years,Mr Sankaran added. Wipro currently employs 100 professionals at its Cairo centre. Almost 30,000 of 3,30,000 students graduating every year from Egyptian universities are from computing and engineering background.
For businesses, lower corporate tax rates along with other incentives make Egypt a very compelling destination to invest. Last year, Egypt attracted FDI worth USD13.2 billion, and by 2010, the country wants to have FDI of around USD10 billion.
Egypt has already reduced taxes from 40percentto 20percentand ITIDA does help multinationals with incentives like subsidising the training of professionals,said Hazem Abdulazim, chief executive of the Information Technology Industry Development Agency ITIDA, Egypt.
At a time when customers and vendors are seeking alternatives to arrest rising costs, where 10 to 15 percentannual wage inflation was a norm until last year, Egypt can help the companies balance their costs better. Egypts low wage inflation of 5percentcompared to 10 to 15 percentin other emerging locations, and low currency fluctuation of the Egyptian Pound visavis US dollar, means that the costs of operating in the region will remain stable,he added.
While Wipro is currently one of the Indian software exporter having significant presence in Egypt, others including TCS are understood to be evaluating a location for establishing a development centre in the country.
According to research firm Gartner, Indian customers will need to look beyond the limits of their own geographical boundaries, much like their Western counterparts.
Gartner predicts that Indian companies will increasingly go offshore in their sourcing strategies, which will result in outsourcing deals offered by some Indian companies that include higher end parts of service for example, design and architecture, and business consulting delivered from other parts of the world,Gartner had said around two years ago.
However, Egypt does not pose any threat to Indias dominance in the global outsourcing industry. When it comes to the IT/ITeS sectors, Egypt and India complement each other utilising their strengths to open new markets, forge closer ties between Egyptian and Indian companies and make the best use of their abilities,Abdulazim added.