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    Business Monitor International Report: Egypt IT Market on the Rise

    Date published: 3 February 2009

    Despite a general economic slowdown, the Egyptian IT market’s position within the Middle East and Africa (MEA) region is on the rise, with average market growth of 16% expected up to 2013, according to a recent Business Monitor International (BMI) report.

    BMI’s Egypt Information Technology Report – Q1 2009 projected an overall increase in IT market size from US$1.2bn in 2008 to around US$2.5bn in 2013.
    Based on the report, the main drivers of IT growth are the Egyptian government’s focus on promoting IT training, the establishment of new IT parks such as the one at Maadi, and the last witnessed boost in the country’s global outsourcing market through business process outsourcing (BPO) services.

    The report referred to the Ministry of Communications and Information Technology launch of the nationwide version of the "Egypt PC 2010 – Nation Online" initiative. The program aims to broaden computer and internet usage to new sections of Egyptian society, hence increasing spending on PCs. Egypt spent an estimated US$736mn of its 2008 IT budget on hardware, equivalent to 62% of IT spending, the report said.

    Egypt’s e-Readiness and the spread of internet are factors that have consolidated the country’s IT position. According to report, the introduction of 3G services in 2007 will drive new opportunities for IT vendors and generate additional spending on IT products and services from the telecoms sector.

    The report also stated that several international vendors have strengthened their position in the country’s PC market. HP, SAP, Oracle, Satyam and IBM have all expanded their operations in 2008 and are mining opportunities in the most profitable verticals.

    According to BMI, the future of Egypt IT market will belong to vendors capable of developing small to medium-sized enterprises (SMEs). This sector is likely to emerge as the main driver of enterprise application spending over the next few years. The entry of new telecoms service providers should spur spending on OSS and BSS systems as well as applications and service platforms.

    The report speculated that the fast-growing IT sector will create demand for larger projects, with larger customers becoming more demanding in terms of their IT expectations, particularly in sectors such as banking, which is increasingly looking to use IDC hosting solutions.

    IT services were worth around US$283mn in 2008, accounting for about 24% of Egypt’s total spending on IT. A market CAGR of 17% is projected for the next period through to 2013.

    In 2007, the Egyptian government has set an ambitious target for the country to capture US$1.1bn of the global outsourcing market by 2010. A number of contact centers, call centers and software development centers were set up in Egypt.

    Egypt has been making huge strides in the world of outsourcing and according to 2008 Yankee Group report, "Egypt is by far the Middle Eastern country currently best positioned to take advantage of the boom in outsourcing. It has a relatively young population, a multilingual workforce, a large and burgeoning talent pool and strong government support for outsourcing."

    Egypt was also named the Offshoring Destination of the Year 2008 by the UK's National Outsourcing Association (NOA) and was recently listed in Gartner's Top 30 global outsourcing destinations.

    About BMI
    Business Monitor International (BMI) is an international business specialized research firm that provides analytical information on global emerging markets in more than 125 countries worldwide. The firm publishes a comprehensive range of periodic reports that contain the latest data, forecasts and analysis on political risk, economic performance and outlook, business environment, finance and leading industry sectors on emerging markets. The firm was founded in 1984 and is based in London.

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