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Positive Outlook from the Egyptian BPS Market

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The impacts of the pandemic and lockdowns are creating winners and losers in terms of BPS delivery geos. Determining factors include a geo’s ability to manage the health and safety of workers, its success in minimizing economic disruption, and the flexibility of its labor regulators.

For Egypt, the unfolding effects of COVID-19 on front-office BPS may be too early to judge, but so far the country has been praised by both vendors and clients. This strong performance comes at a time of revival for Egypt BPS, and this makes it an attractive multilingual hub offering lower costs and scale of talent for nearshore delivery to Europe and the Gulf countries.

Potential for significant market growth

Egypt’s Information Technology Industry Development Agency (ITIDA) estimates the country’s BPS market at $3.5bn for 2020, growing at 17% y/y, with ~186k employees in the industry. Egypt offers HRO, F&A, procurement, and other mid-office activities, but ~70% of the market is CX services. The majority of the CX services are for international markets in Europe, the Middle East, Africa, North America, and Asia, and approximately a third of the delivery centers serve three or more regions.  

The country is now established as a multilingual destination offering bilingual Arabic and English, and also French, German, Spanish, Italian, Turkish, Russian, Hebrew, Greek, and other languages. For example, there is a Greek speaking minority, a German university in Cairo, and a Russian university in Badr City. Annually, ~90k university students graduate with English language alone. For Arabic, the Egyptian spoken dialect is considered neutral and the most widely understood in the region, with a significant Egyptian diaspora in the Middle East.

With a fully-loaded cost of $10-12 per hour, CX services in Egypt come in at 20-25% lower than Eastern Europe, 15% lower than Morocco, and 15-20% lower than South Africa, but ~10% higher than India. The average contact center agent monthly salary is in the range of 4k to 8k Egyptian Pounds ($250-$500) and increases to $500-$1000 for highly sought languages such as German. The Egyptian Pound is slowly appreciating against the U.S. dollar but remains below 2017 levels and is comparatively stable as an emerging market currency.

Lastly, Cairo is two hours ahead of the U.K. (one in the summer), the same time zone as Athens and Bucharest.

Increased interest by BPS firms

Interest in the Egyptian BPS and ITS delivery market is not new, with major captive and outsourced centers starting as early as 2001. The country hosts development and shared services centers from Microsoft, IBM, Vodafone, Orange, Dell, HSBC, Uber, Oracle, and Nestlé, among others. In 2019, Amazon, Etisalat, and PepsiCo also entered the market with their own BPS centers.

Currently, major CX services players include Majorel, Teleperformance, Concentrix, Sutherland, SYKES, and most recently Transcom and TTEC, both entering in 2020. Egypt also has a number of domestic and pan-African players such as Xceed, Raya Contact Center, iSON Xperiences, and Etisal International; and smaller centers such as Centro Global Solutions, icall Outsourcing, and FGS. The largest footprints exceed 7k employees and spread across the cities of Cairo, Alexandria, Asyut, and Beni Suef.

Domestic and international opportunities: the example of Xceed

Xceed is a fully-owned subsidiary of Telecom Egypt and started operating in 2001. It offers back-office CX services, inbound and outbound customer care, technical support, sales, and collections over voice, chat, and email. In 2018, it started offering F&A, RPO, and payroll outsourcing. It currently has ~10k seats, including sites in Morocco and Mauritius, and ~18k employees supporting European markets, UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, U.S., and Canada. Its clients are in the following sectors: telecom and ISP, high-tech, real estate, food delivery, restaurant chains, travel, energy and utilities, and the domestic public sector. In Egypt, Xceed supports the ambulance services, a government complaint line, the tourist visa website, Egypt’s National Services, and the customer service for utilities in the New Urban Authority.

Overall, the company manages nine languages, including Russian and Portuguese, from seven sites in Cairo and upper Egypt. These centers are typically in dedicated technology parks such as the Smart Village on the outskirts of the capital and Maadi Contact Center Park in Cairo.

COVID-19 challenges and overcoming security reputation

In response to COVID-19, the Egyptian CX services industry, which had experience in BCP from the 2011 political disruption in the country, reverted to WAH, operating under lockdowns and night curfew. In April, ITIDA sampled 19 companies, 11 of which migrated 100% of their staff to WAH, with the remaining eight migrating 50-90%. For example, Xceed used its in-house remote applications and VPN to transfer 75-80% of the employees to home work. For those clients whose infrastructure did not allow distributed workplaces, Xceed rented small locations such as hotels, where the agents could live and work in social bubbles. The company also began supporting the national virus hotline.

The slowdown of the travel industry in the country also freed multilingual resources and opened up new demographic segments such as middle-aged agents speaking French. Xceed tapped into these resources and enabled digital recruitment, starting in March. For the company, WAH created other benefits such as lower attrition and higher adoption of split shifts to handle higher volumes with the same employees.

At the national level, the pandemic triggered the acceleration of the government service digitization plan for 2020, which targets automation of registries and public services for real estate, supply, and traffic documentation services such as driving license renewals.

Positive outlook

The Egyptian government is expanding the national infrastructure, opening four technology parks outside the capital in cities such as Sadat, and is currently developing the purpose-built new administrative capital where Xceed plans to open a new site. It is increasing the average internet speed of the country, investing $1.6bn, and trying to reach 20 Mbps by the end of 2020.

In parallel, the government passed a new data protection law, aligned closely with the regulatory framework of GDPR, improving the support position for EU.

To expand the talent pool, the Egyptian Ministry of Communications and Information Technology is running programs to train students in digital skills as well as campaigns with information on career development in BPS. ITIDA is organizing other talent development initiatives such as a software engineering competence center for engineer certification, and is implementing a national program, Next Technology Leaders, to train 10k people in ML, DL, and AI, with around 5.3k trainees already graduated.

The agency is also fine-tuning its incentive scheme, and from June is allowing companies to benefit from financial support for telecom operating costs as well as training costs for their existing employees (as opposed to new hires only).

For Xceed, by the end of 2020, the company expects to return more employees to the centers and keep ~20-30% in WAH. In terms of growth opportunities, the company is seeing continued interest from the Middle East, returning demand from the U.K., and new interest from Continental Europe and the U.S.

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