The changing O&O landscape the importance of talent and government support

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To be attributed to Dr. Hazem Abdelazim, CEO of ITIDA
 
 
Over the past five years, the IT outsourcing and offshoring industry has grown significantly and it is expected to grow even further in the coming years. As a result, the landscape of the outsourcing and offshoring industry has changed, rapidly expanding from IT to other sectors including banking, human resources and even pharmaceuticals. It has grown geographically – once heavily connected with India, outsourcing has now become a global phenomenon with countries in Africa, the Middle East and Latin America all emerging as outsourcing hot-spots.
 
With so much change happening, ITIDA brought together thought-leaders from some of the world’s biggest organizations including McKinsey, NASSCOM, Credit Suisse and IBM, at a workshop on Global ICT Services Sourcing Post-Crisis in Sharm el-Sheikh. Topics discussed included current trends and the prospects that lie ahead in the international sourcing of ICT services. We also talked about how industry stakeholders have reacted to the economic crisis and how the industry is being re-shaped.
 
Cost-competitiveness remains a big attraction for western companies looking to outsource and this was evident from the presentations given by some of the industry’s leading bodies, but increasingly, talent is becoming a key factor in investors’ decision-making process. We firmly believe that for emerging markets looking to establish themselves as a global destination, talent must be nurtured through training, education and government support. It is the human capital element that is increasingly being recognized by both investors and service-providers alike as being the back-bone of successful outsourcing.
 
A recent report by India’s NASSCOM highlighted that between 2004 and 2008, the global IT sourcing market grew to $93 billion, and the addressable market is likely to increase from $500 billion in 2008 to a staggering $1.5 trillion by 2020. This is no surprise, as investors and service providers are increasingly recognizing the benefits associated with outsourcing. Low operational costs, good infrastructure and skilled workforces are some of the factors attracting investors to the O&O industry.  
 
Alongside the booming growth of the industry, the overall landscape is being shaped by the needs of investors. Three significant trends that emerged from our workshop as affecting the landscape are multi-servicing, multi-shoring and competency-sourcing:   
·         Multi-servicing: No longer is the O&O industry being dominated by IT services – it is expanding vertically, tapping into other sectors such as healthcare, business, finance and travel. Also different countries are increasing their services offering, thereby influencing an investor’s decision of where to locate. 
·         Multi-shoring: The number of countries emerging as O&O destinations is growing, providing an expanding range of services. This is especially true for developing countries, which are recognizing the positive attributes associated with outsourcing and what it can do for their overall economic, social and educational development.
·         Competency-sourcing: This is perhaps the biggest change to the O&O landscape. Investors are recognizing the diversity of skills and competencies across the globe and there is a move towards capturing the benefits of such localized talent. Similar to multi-servicing, different countries are becoming synonymous with certain skills which are proving increasingly attractive for investors. Examples of such localized skills include administration, research and analytics, financial planning and IT support.
 
With the O&O industry growing, investors are naturally looking more closely at the skills base being offered by locations and what other benefits they have available. Talent is wielding a significant influence on investors’ decisions along with government support, cost-competitiveness and infrastructure.
 
In order for any country to succeed, particularly in the area of talent, it must have strong government support. A good education system, supported by government training initiatives, is one of the main ways countries are nurturing talent. It is through providing dedicated training programs, encouraging further education in the IT and outsourcing industry and encouraging local and multinational companies to invest in skills that countries can truly become global players in the O&O market.
 
However, government support should not end there. Gaining support at one level in the O&O industry often means that other areas will be included. Indeed, the role of the government is proving vital in supporting the development of the O&O industry. Benefits of such backing include the development of software technology parks, tax exemptions and venture capital support. Government support does not stop at tangible benefits – it is becoming widely regarded that a nationally branded outsourcing operation goes a long way in attracting investors.  
 
Here in Egypt, we receive great support from the government to develop and expand our ICT sector. Investment in training, education and the overall industry means we are able to grow our industry extensively. Several recent industry reports have declared the Middle East and North Africa region as an emerging area of excellence in the O&O industry, with Egypt firmly leading the way. It offers a large, multi-skilled, multi-lingual talent pool, strongly supported by the government through the Ministry of Communications and Information Technology (MCIT) and, of course, the Information Technology Industry Development Agency (ITIDA).
 
Egypt’s talent pool is becoming widely recognized within the O&O industry for its diversity, language capability and readiness.  Egypt delivers a large number of graduates annually, with a strong command of foreign languages and high employability skills, making them highly sought after by investors. Such talent is fostered by government support which drives innovation, research and development, human capital development and IT specific talent programs, not to mention direct university curriculum interventions.
 
ITIDA’s support also infiltrates into the wider IT O&O industry, promoting investments, supporting research and development and helping increase exports. Such government support has resulted in excellent IT infrastructure, including the development of Smart Village and wide cable connectivity.   
 
What makes Egypt stand out even more in the O&O industry is the fact that not only does it possess a great talent pool and benefit from exceptional governmental support, but it also offers low operational costs, great accessibility and a convenient time zone with key trading markets. It is these factors, that I believe, positions Egypt as a prime site of investment in the IT O&O industry and one which will receive much interest over the coming years. 
 
The landscape of the O&O industry is changing, as investors seek to optimize the different skills and competencies on offer across the globe. The combination of talent and government support is proving to be most important within this and is likely to dictate the decisions of investors. Egypt’s embodiment of this powerful combination, together with other attractive features, positions it as a leader in the O&O industry, and is certainly one to watch. 
 

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