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The outsourcing market offers a vast opportunity for regions that are able to capitalise on it. Business process outsourcing (BPO) is estimated to become a $90 billion market worldwide over the next six to eight years, and Egypt is well positioned to take a good share of that. India continues to lead the outsourcing market, both in IT outsourcing and BPO. Our aim is to position Egypt as the India of the Middle East. Indian IT outsourcing firms, including Wipro and Satyam Computer Services, and global IT companies such as Teleperformance, Cisco, Google, IBM, Microsoft, Valeo and Oracle have already recognised Egypt’s potential and invested here, but why should other companies follow suit?

Egypt has some unique advantages as an outsourcing destination, such as a broad talent base, lower labour costs than in surrounding low-cost regions, time zone proximity with Europe and relative familiarity with Western culture over traditional outsourcing destinations like India and China.

An abundant talent supply

Our large annual graduate talent pool of over 300,000 graduates, including a 20,000 strong specialist workforce with engineering and computing degrees, has excellent multilingual capabilities in English, French, German, Italian and Spanish, in addition to Arabic. This positions us favourably amongst other emerging outsourcing destinations thanks to the diverse regions we are able to support with local language outsourcing services. In fact, a global study carried out by Global Services-Tholons ranks Cairo 11th in its list of the top 50 emerging outsourcing cities, citing our multilingual skill set and government-led initiatives amongst our strengths1.

This talent pool is something that the government is keen to cultivate, and has set up a number of initiatives to support it. These cover training and best practice sharing, for example through our Information Technology Institute (ITI, www.iti.gov.eg) in Cairo, which trains up to 1,000 people every year. Also, these initiatives include curriculum reform in five universities with the aim of producing more than 5,000 people annually, thus preparing our workforce of the future. Almost half of Egypt’s 74 million inhabitants are aged between 15 and 39, meaning we have a talent surplus for the next five years, and government-led initiatives such as the Egyptian Education Initiative (EEI, www.eei.gov.eg), E-Learning Competence Centre (ELCC, www.elcc.gov.eg) and Mobile IT Club (http://mitc.ictfund.org.eg)will enable us to support the outsourcing industry in the long term. This is in stark contrast to many other outsourcing destinations that suffer from high levels of attrition within their talent base.

Investing in a world class infrastructure

The Egyptian government has invested heavily in achieving world class infrastructure facilities to support the booming outsourcing market. We realised the need to establish a specialised and modern business park to be the flagship hub for ICT. The Smart Village in Cairo stretches over 600 acres and accommodates multinational and local telecommunications and IT companies, financial institutions and banks, together with related government authorities. Currently, over 13,000 professionals run the operations of more than 100 local and international companies and institutions at the Smart Village, and the number is expected to exceed 40,000 by the end of 2014. A second park is under construction in Cairo – the Maadi Contact Centre Park – which will house a further 45,000 employees specialising in serving the call centre industry.

Egypt also has the potential to become a multi-city outsourcing location. In addition to the excellent infrastructure, services and talent pool provided by our capital city Cairo, other cities will ultimately support our outsourcing market. These include: Alexandria, the country’s second largest city, which benefits from excellent connectivity thanks to its two airports and two ports; El-Mansura, an important commercial and industrial city; and Asyut, the home of the University of Asyut, one of the largest universities in Egypt.

Providing cost-effective outsourcing services

Despite our world class infrastructure and talent pool, Egypt remains a cost-effective destination for outsourcing services. Our structurally low cost of operations is at least 20 percent lower than other leading locations in Eastern Europe, North Africa and Asia, and we also have the world’s lowest telecom costs. In addition, our low wage inflation of just 5 per cent annually, compared to 10-15 percent in other locations, and low currency fluctuation of the Egyptian pound with respect to the US dollar, means that the costs of operating in the region will remain stable.

Because the Egyptian government understands the importance of the IT industry to the health of its growing economy, we offer tax breaks and other financial incentives to attract international companies to set up call/service centre and BPO operations in the country. Our commitment to economic reform makes Egypt an increasingly attractive prospect financially. The recent economic reform programme has seen corporate tax rates cut from 42 percent to 20 percent, and thanks to our tax, customs and financial sector reforms, Egypt was named as the leading global economic reformer by the World Bank in its ‘Doing Business 2007’ report.

A leading outsourcing destination

The national ICT sector is emerging as a role model of deregulation and privatisation as well as a catalyst for reform in other sectors. The sector has managed to maintain growth rates of up to 20 per cent, and attract local and foreign investments of more than $8 billion over the past three years. In a study by AT Kearney, Egypt is ranked 13th in providing IT offshore services worldwide, above Eastern European locations such as the Czech Republic, Hungary and Poland, as well as other Middle Eastern and African locations such as South Africa and Tunisia.

Local, regional and international companies, including Unilever, Orange, Vodafone, Proctor & Gamble and Sun Microsystems are already investing in outsourcing services in Egypt. These provide valid evidence on the capabilities of the Egyptian outsourcing sector. With Egypt’s IT sector forecast to grow from $889 million in 2006 to $1.3 billion in 2013, we are confident that we will be able to cement the country’s position as a leading emerging outsourcing destination.

The Information Technology Industry Development Agency (ITIDA) is a government body affiliated to Egypt’s Ministry of Communications and Information Technology. It was established to encourage the development of Egypt’s IT industry, with a particular focus on outsourcing services. It is tasked with attracting foreign direct investments to the IT industry and maximising the exports of IT services and applications.

The adoption of shared services programmes among European governments is going to accelerate over the next few years, according to new research by Ovum, a global advisory and consulting firm.

"While the market is still in its early days, certain forward-looking governments in Europe are tackling the issue head-on as a means to both cut costs and improve public service delivery to their citizens," says John O'Brien, senior analyst at Ovum.

According to the consultancy, European governments are under real pressure to perform. "For many governments there is a growing need to respond to new socio-economic challenges," says O'Brien. "These include finding solutions to the impact of an ageing population, increased international competition and now a more difficult economic environment."

Opposition is starting to recede among the more forward-looking Western European governments of Germany, France, the Netherlands and the Nordic markets of Sweden, Norway and Finland. Ovum believes these governments will present greater potential opportunities for suppliers of shared services over the next few years as investments are made in governmental modernisation and transformation programmes.

But considerable barriers remain, which could restrict progress. Some European governments for example still remain resistant to change, and most have yet to develop coherent strategies for shared services adoption. Consequently, there is much to be done to raise awareness over the next few years. This will provide suppliers with an early opportunity to consult, educate and advise government organisations on future shared services investments.

Software and IT suppliers with prior experience in implementing successful programmes will be at an advantage to help shape the opportunity. However, the cultural challenges will also present opportunities for consulting suppliers that can offer the softer skills to help shape the right environment for shared services. These include:

· local knowledge and local customer relationships

· knowledge of the target market and its drivers

· an understanding of the customer's specific pain points

O'Brien concludes that "before shared services can really take off in the European public sector, governments must establish the right environment and remove long-standing organisational blockers. Departments that have traditionally worked in silos will need to change their working practices and begin sharing information and resources."

A copy of the report is available to subscribers here: The future of shared services in the European public sector.

Recruitment process outsourcing (RPO) is growing rapidly and has the potential to be a multibillion dollar market, taking advantage of the trend towards single process deals in human resources outsourcing. This is according to the latest report by independent market analysis firm Datamonitor. The report Opportunities for Recruitment Process Outsourcing in a Changing HRO Market estimates the global RPO market in 2007 was worth $720 million and forecasts it will grow by 22% in 2008 to $880 million, and surpass the $1 billion level in 2009.

According to the report, demand is predominantly from Fortune 1,000 companies in the US, but the market is growing rapidly in the UK and continental Europe and is beginning to gain traction in the Asia Pacific region.

However, the predictions come at a time when many businesses are facing the prospect of redundancies, as the 'perfect storm' of the combined credit crunch and soaring food and energy costs are hitting many sectors hard – in some cases, very suddenly.

While RPO vendors claim to reduce costs by up to 40% in some cases, it is the lure of recruiting a higher quality workforce that has been driving growth, says Datamonitor. Nevertheless, the growth forecasts themselves are extrapolated from 2007 data and presumably do not factor in the effects of a precipitous decline in the Western economy.

Although the strategic importance of recruitment means quality will remain of utmost importance, says the analyst firm, it is likely in an economic downturn that it is those who can deliver on both quality and price that will succeed.

“Despite the expectation that outsourcing will thrive as companies search for ways to cut costs, increased unemployment will result in lower business volumes which will be reflected in the variable price nature of RPO contracts. But, this will be mitigated by the increasing demand for RPO from new clients,” says Patrick O'Brien, IT and BPO analyst at Datamonitor and author of the report. “For RPO to continue its rapid growth in the near term, vendors may have to go to market by pricing more aggressively as recruitment will need to be seen as a primary function for easy cost reduction among company processes.”

RPO vendors are split over the use of offshore provision. Many players have little experience or understanding of how to derive the fullest benefits from RPO, while others see it as unworkable in recruitment services which require constant contact with both the client organization and, using the client’s brand, with candidates.

Approximately half of RPO vendors have some offshore workforce, mainly carrying out tasks around name generation, sourcing, early screening of resumes and other administrative duties. A few have moved tasks which involve contact with the candidate offshore as per customer demand.

“While there is a lot of resistance from vendors, the increasing competitiveness of the market and the growing focus on cost cutting in the economic downturn will push vendors into examining ways in which to begin to increase the use of offshore delivery,” says O'Brien.

The first half of 2008 has seen a wave of acquisitions as vendors attempt to build out their recruitment expertise, technology capabilities and geographic footprint. A number of competing vendors still need to broaden their capabilities, and many of the larger vendors are looking to expand further overseas.

Some companies have put forward global request for proposals (RFPs), but these have subsequently been split into regions and handed to different vendors. The one-vendor global deal has not arrived yet, but a number of vendors believe that a breakthrough will occur in the next 12 months. The key reason for the break-up of global RFPs has been the fact that vendors do not have the capabilities to deliver on an international basis. Many have taken heed and are busy investing in international expansion, acquiring companies, building a global set of processes and forming partnerships with vendors in other regions.

Despite awareness of the information security risks associated with outsourcing projects and well publicised cases of data loss or theft, many companies still ignore the potential problems until it is too late. That is the warning highlighted by the Information Security Forum (ISF) – an independent organisation with some 300 major business and public sector Members from around the world.

“The potential to cut significant costs and increase speed to market clearly make outsourcing and offshoring an attractive proposition,” says Simone Seth, author of a new report published by the ISF. “But without the right level of security expertise from the outset to fully identify information risk, there will always be important gaps in the business case. If the necessary controls are not budgeted or put in place to mitigate the risks, it can have serious consequences and even threaten the long term success of the outsourcing project.”

The ISF’s research shows that information risk management is often integrated as an afterthought, and information security professionals become involved too late in the lifecycle. This can often be explained by a lack of awareness at the highest levels and a failure to understand the importance of information risk management through all stages of an outsourcing project.

“Failure to involve information risk managers at the start of a project and through its lifecycle increases the enterprise’s exposure to risk; whether it’s data theft, information leakage or disputes that may arise from questions of ownership of intellectual property,” says Simone Seth.

Information mangers need to identify all outsourced processes, operations and technology and agree business criticality levels through all four steps that comprise an outsourcing lifecycle: Prepare, Implement, Operate and Review. Information risk managers are also able to add contractual clauses that relate to information security regulatory requirements and offer additional protection from a legal standpoint. It is also important to understand regional compliance requirements and regulations as well as the wording of contractual terms to prevent future disputes over the ownership of intellectual property and the transfer of data.

Typical risks at implementation and operational stages that can occur if the right controls are not effective, include fraud, data theft or hacking that can lead to data loss and confidentiality breaches.

The ISF is a not-for-profit international association of some 300 leading international organisations, which fund and co-operate in the development of practical, business driven solutions to information security and risk management problems.

French IT services company Atos Origin recently announced that it has been appointed by France's National Secure Credentials Agency to manage the development and rollout of the biometric passport system in France.

The new passport, which is the result of a European Union directive, is expected to improve personal security and reduce fraud. The introduction of a biometric passport is part of France's modernisation strategy and secure identity programme, and will see Atos working with identity systems supplier Sagem Securite.

The value of the contract was not disclosed, but it is clearly an ambitious programme and an important win for Atos. Under the deal, Atos and Sagem Securite will deploy nearly 5,000 data acquisition and processing systems in 2,000 French town halls and 350 prefectures and sub-prefectures before June 2009, making it possible to include fingerprints on passports.

Cynics might say that being French helped Atos and Sagem win this contract, which has clear national security implications. However, both companies have a good track record in the area of security and identity globally.

It is not a surprise to see Atos winning a biometrics contract: the company has extensive expertise and relationships in this field through its UK public sector business. It undertook a biometric technology trial for the UK Passport Service and defined an implementation strategy, framework and business case for the rollout of a citizen multi-application smartcard in Scotland.

It also has strong relationships with GCHQ and the Border and Immigration Agency and, as IT partner for the Olympic Games, has security-specific offerings high on its agenda.

Despite these existing relationships with key UK public sector security and identity organisations, it missed out on the e-Borders contract and has failed to win a framework contract as part of the procurement for the national ID card scheme (CSC, EDS, Fujitsu, IBM and Thales were the successful suppliers here).

So it is likely that Atos is hoping that this flagship project in France will prove a useful reference site as it looks to grow its security and identity business across Europe. Biometrics will increasingly become important to many European governments as a way to monitor the flux of populations. If Atos can deliver this project successfully, to time and to expectations, then it could put itself in a strong position to meet future demand for these capabilities.

Atos' next major opportunity to demonstrate its security and biometric credentials could be the Olympic Games. As the official IT partner to the International Olympic Committee since 2002, Atos plays a key role in the supply of IT systems and services during the Olympic Games. With the threat of terrorism ever present, a large part of the IT requirements will be focused on security, and in particular identity management.

The NHS Connecting for Health (CfH), a division of the health service charge with implementing the National Programme for IT, has appointed IT health specialist, CSA Waverley, as a specialist SME supplier for its Additional Supply Capability and Capacity (ASCC) framework.

The framework agreement will see CSA deliver and manage a large range of end-user and other hardware services and provide ongoing consultancy services.

The deal has been implemented to aid the NHS CfH in its delivery of the National Programme for IT and to help it comply with a range of wider NHS business requirements.

The NHS Connecting for Health (CfH), a division of the health service charge with implementing the National Programme for IT, has appointed IT health specialist, CSA Waverley, as a specialist SME supplier for its Additional Supply Capability and Capacity (ASCC) framework.

The framework agreement will see CSA deliver and manage a large range of end-user and other hardware services and provide ongoing consultancy services.

The deal has been implemented to aid the NHS CfH in its delivery of the National Programme for IT and to help it comply with a range of wider NHS business requirements.

London’s Metropolitan Police Service (MPS) and the Metropolitan Police Authority (MPA) have taken on Steria to transform the MPS’s Human Resources (HR) function.

The contract will support a significant improvement in the delivery of the MPS’s HR service, and will drive cost savings through the creation of a new HR Service Centre in Central London and implementation of HR business partnering.

The MPS expects to generate significant efficiencies to release additional funds for front line policing. In addition, the new system will help the MPS improve the quality and consistency of the service, bring the ratio of HR professionals to employees in line with the public sector, and more effectively support the strategic aims of the organisation.

The programme, which goes live in Autumn 2009, will ensure the provision of a more efficient and effective HR service to the MPS’s 55,000 employees. Steria’s implementation team will begin working on-site this month to begin the next phase of the Transforming HR programme. Steria will also provide ongoing support for the technology implementation for two years after the service has gone live. The Shared Service and business partnering model that underpins the new HR provision will comprise of: 

- A 24/7 Advisory Centre: which will be the primary point of contact for employees, managers and external contacts to obtain HR advice and guidance through a single telephone number and email address 

- An Expert Centre: qualified teams to manage the main administration and case management responsibilities and respond to queries that have been escalated from the Advisory Centre 

- Business Partners to support the MPS’s strategic HR and organisational objectives 

- Strategic HR Advisors who will support the Business Partners working closely with line mangers advising them on policy interpretation and delivering solutions which enable them to achieve their business objectives 

- A Strategic Centre: which will design and implement HR programmes, processes and policies; manage consulting projects; and monitor the compliance and effectiveness of HR strategies, policies and standards 

- Operational Support Teams managed by the HR Shared Service Centre, providing face-to-face support for managers relating to performance issues, absence management, and recruitment interviews

Martin Tiplady, HR Director, Metropolitan Police Service, commented: “The HR requirements of the MPS are different to those of other organisations. Finding a strategic partner that understood the unique needs of our service, from the organisational structure to our culture, was vital. Steria demonstrated not only the capability to work with us through the changes that the upgrade to our service would create, but a genuine ability to deliver real cost and efficiency benefits, and the best possible HR service for our employees.”

The service provided by the Service Centre will benefit the MPS’s workforce by providing timely access to consistent and relevant information through the organisation’s intranet. The new self-service functionality will be a vital step forward in enabling managers to view and approve requests for job or personal circumstance changes for their employees. Steria will also manage the deployment of Oracle’s Human Capital Management, iRecruitment and Learning Management software as part of the new HR service, and the software company’s applications will also underpin the technology in the new Service Centre.

The Canadian subsidiary of Unisys, Unisys Canada, has won a contract from NEC Corporation of America to provide outsourced IT support services for 470 7-Eleven retail convenience stores throughout Canada.

Under the contract terms, valued at approximately $6 million, Unisys Canada will provide maintenance and support services for IT back-office equipment, on-site wireless networks, point of sale (POS) and inventory ordering systems for the 470 Canadian 7-Eleven retail stores from Ontario to British Columbia. In addition, Unisys will provide deployment services for new systems that 7-Eleven rolls out to its stores for the next three-years.

Sharon Stufflebeme, CIO for 7-Eleven, commented: “Unisys outsourcing expertise combined with NEC’s retail solution integration skills will assist us in growing our 7-Eleven business in Canada. We’ll be able to serve our customers more effectively and efficiently through enhanced in-store technology support.”

As part of a global alliance between the two companies, Unisys is the preferred provider of technology support and maintenance services for NEC in markets outside Japan.

The Directorate General for External Relations, the body responsible for the external policy of the European Commission has signed a four year ITO deal with Fujitsu Services.

The deal will allow the Directorate to deal with various new organisational changes including the increased workload of its delegations. The new contract covers the supply of IT services, the management of the helpdesk, infrastructure management, user support and the management of the projects of the Delegations of the European Commission across 5 000 users and 134 Delegations worldwide.

According to Yves Schellekens, Managing Director Fujitsu Services Belgium and Luxembourg, “This new contract will allow us to pursue and develop our activities among the European Institutions, which, for Fujitsu Services, represent a strategic sector of activities”.

The contract will start on the 1st of June 2008.