Egypt unrest threatens status as rising outsourcing star
It's been touting itself as an offshore IT services alternative to other countries
CIO - What happens if the country you outsource to suddenly goes dark?
Early adopters of Egyptian IT and business process services are finding out today. Egypt's government reportedly blocked all Internet and cell phone service overnight Thursday as anti-government protests continued in the North African nation.
This political unrest and network shutdown come just three months after Egypt's information technology minister announced that the country wanted to boost its annual outsourcing industry revenues from slightly more than $1 billion to $10 billion by 2020, by investing $15 million to bolster local IT businesses and intellectual property protection.
Egypt's concerted effort to brand itself as an offshore IT services alternative appeared to be working: Many outsourcing analysts have recently been calling the country of 80 million a credible outsourcing option, particularly for European companies in a similar time zone.
[Where are today's riskiest outsourcing locales? See CIO.com's "Offshoring: The 25 Most Dangerous Cities for Outsourcing in 2010."]
The European Outsourcing Association named Egypt its 2010 outsourcing destination of the year. "Egypt is a rising destination and well suited to support multinational corporations for their Africa and even Middle East operations," said Atul Vashistha, CEO of offshoring consultacy NeoAdvisory. "We see capabilities in both call centers and IT."
Among the services industry companies with significant operations in Egypt are HSBC which has a global service center to support its Middle East Operations, Alcatel-Lucent which sources technical support for its Africa, Middle East, and South Asia locations, Indian outsourcer Wipro which operates a local IT service center, and IBM which operates a nanotechnology center.
Timing Will Matter
The turbulence could have an impact on the country's reputation as an outsourcing destination if its lasts beyond the weekend, says Anand Ramesh, global sourcing research director for outsourcing consultancy Everest Group. "Given that Egypt is an emerging geography, it heightens concern around risk, as opposed to more established location like India or the Philippines. The degree of sensitively to risk in emerging market is much higher," Ramesh explains.
"If it dies down over the weekend and quickly stabilizes, many will view this as a one-off event," Ramesh says. "If it persists beyond that, it would raise concerns much more significantly."
Others are less optimistic about Egypt's ability to recover from the damage to its reputation. "The rolling wave of social and political pressures that has now hit Egypt will take them off the list of rational choice for an offshore location when compared with established locations such as India or emerging locations such as Uruguay," says Ben Trowbridge, CEO of outsourcing consultancy Alsbridge.
Most offshore outsourcing hot spots carry some degree of geopolitical or location-specific risk, such as the 2008 terror attacks in India and the current narco-violence in Mexico.
- Internet shutdown 'will never happen again,' says Egypt's IT chief
- Social networks credited with role in toppling Egypt's Mubarak
- Google exec freed from Egyptian custody
- Why there's no such thing as an 'Internet kill switch'
- Amid protests, Egypt's tech chief goes to work
- Egyptian activist: Internet shutdown backfired
- The Internet kill switch that isn't
- Blocking Internet cost Egypt at least $90M, says OECD
- Update: Egypt restores links to Internet
- Egypt reverses 'kill switch' to restore Internet access
- Big Data, Big Mess: Sound Risk Intelligence Through Complete Context This paper examines the insecurity of the small businesses in the supply chain and offers tips to close those backdoors into the enterprise.
- Using Cyber Insurance and Cybercrime Data to Limit Your Business Risk This paper examines the challenges of understanding cyber risks, the importance of having the right cyber risk intelligence, and how to use this...
- 5 Tips to Secure Small Business Backdoors in the Enterprise Supply Chain This paper examines the insecurity of the small businesses in the supply chain and offers tips to close those backdoors into the enterprise.
- Confront consumerization with convergence Virtualization expert Elias Khnaser spotlights the security, compliance, and governance issues that arise when enterprise users "consumerize" with shadow IT and public cloud...
- NSS Labs & Cisco Present: Evaluating Leading Breach Detection Systems Today's constantly evolving advanced malware and APTs can evade point-in-time defenses to penetrate networks. Security professionals must evolve their strategy in lockstep to...
- Will the Real Endpoint Threat Detection and Response Please Stand Up? This webinar explores new technologies & process for protecting endpoints from advanced attackers as well as the innovations that are pushing the envelope... All IT Outsourcing White Papers | Webcasts