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Ericsson, Hewlett Packard and IBM were all
quick to open their own offices. Local ICT
companies, frequently offering business
process outsourcing (BPO) services, also
moved into the Smart Village. One example
of the trend would be Xceed, the Call Centre
arm of Telecom Egypt.
But what exactly drove the company to
outsource its business processes to Egypt?
»For one thing, Egypt is located in a favourable
time zone, which is particularly useful
for Call Centre services«, explains Rabah
Khoury of Xceed, »We can serve the needs
of European customers in one shift and
American or Asian customers in the other.
Another bonus is that it is only a quick flight
away from many different locations.« The
fibre-optic cables connecting Africa, Europe,
Asia and even Australia, also run
through Egypt.
The Mubarak government invested heavily
in the industry following the launch of
its master plan for telecommunications in
the year 2000, with the result that it is now
based on fibre-optic cables that can be connected
to the international ones. It was an
investment that came back to haunt the regime.
Egypt’s high-quality connectivity was
what helped the protest movement grow, so
in desperation the government then put a
stranglehold on almost all internet traffic.
Apart from the assurance of the Smart
Village owners that they can guarantee
normal operating conditions under any
circumstances, the low running costs make
Egypt an attractive business location.
According to a study by the World Economic
Forum, this outsourcing destination
with average operating costs of USD 14,700
per year is cheaper than either the Philippines
or India.
In 2004 the »Information Technology Industry
Development Agency« was created
within the Ministry for Telecommunications.
This agency not only ensured that ICT
companies benefited from discounted land
prices and tax breaks, but also initiated some
new laws, including the »e-signature
law«, making transactions possible with just
electronic signatures.
One of the things that drove the young people
onto the streets is also of huge benefit to
the ICT business – the fact that highly qualified
employees are cheap to employ here
due to the oversupply of trained IT specialists.
More than half of the Egyptian population
is under 25 years of age. Every year
some 330,000 young students graduate
from its universities – including over 90,000
majoring in subjects relevant to the ICT sector.
The official unemployment rate is 9.4
percent.
A programmer earns an average of USD
157,000 a year, which makes Egypt more
cost-effective than all of the Eastern European
ICT destinations; only India is cheaper,
and the same principle applies to Call
Centre services.
The president‘s son
played big business
Many young Egyptians have strong ties to
Europe and learn various European languages
from an early age. While in India many
people can only speak English as their
foreign language, Egyptians often have a
working knowledge of Spanish, French,
Italian or German. Furthermore, Egyptian
Arabic is the dominant language of films,
music and television in the entire Arab region
and is therefore understood everywhere.
Xceed sends its Call Centre agents
on special training courses to ensure they
speak European languages with no foreign
accent. »Customers in Europe should not
be able to tell they are talking to an Egyptian«,
is the company policy.
After numerous national and international
banks acquired office space in the Smart
Village, a small financial district has emerged
within a garden landscape. »There are
green spaces and lakes here that can also be
used as water reservoirs to put out any fires«,
explains the woman giving investors a guided
tour of the village. »You forget the fact
that the entire complex is basically located
in the middle of the desert, with all this
MONEy AND POwER
green around you.« Although the Smart
Village Company claims it wants to demonstrate
its care of the environment, visitors
cannot see much evidence of that yet.
The overthrown Mubarak and his son Gamal,
who stood for the big business policies
of Egypt, also used to enjoy taking visitors
on guided tours of the complex.
The government wanted to ensure even
more local firms thrived in the ICT domain,
by offering them special incentive programmes.
It had signed agreements with international
ICT firms like Nortel, Atos Origin and
Siemens to transfer their technologies to
Egypt and, in return, benefit from modern
infrastructure at a discounted price. The
long-term goal behind this was to diversify
the country’s sources of foreign exchange.
The other measures taken to promote the
ICT sector can also be seen in this context.
Egypt has a negative balance of trade, and
a large proportion of its foreign exchange
comes from the volatile business of oil and
gas. And the main sources of income for
foreign currencies so far – tourism and the
Suez Canal – are highly susceptible to global
fluctuations.
The economy under Mubarak was to be
liberalised within the framework of a fiveyear
plan, which included the removal of
various taxes and customs duties. It was
hoped this would encourage direct foreign
investment and more exports. Apparently
the government saw the ICT sector as a
particularly profitable branch of industry,
for the subsidies certainly flowed freely.
But it was only the already privileged Egyptians
who profited from the boom: the
small upper class, opportunistic businessmen
and the apologists of the regime. Many
of the companies represented in the
Smart Village, who also invested in it, belong
in whole or in part to Gamal Mubarak
himself, or to his relatives and close friends
or entourage – including Gamal Sadat, the
son of Murabak’s predecessor Anwar al-
Sadat, who was murdered in 1981. What
will become of those shares in companies
located in the Smart Village is still a long
way from being decided.
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