The next India? Egypt's software dream

Michael.Minges@itu.int

December 2000

Egypt’s dream is to become a leading software exporter, much like India is today. This is not totally unrealistic given that there is some evidence of an emerging Egyptian software industry. In 1999, the value of the Egyptian computer software market was estimated at around US$ 50 million. This is less than what Microsoft makes in one day but for a country with a per capita GNP of around US$ 1’400, an illiteracy rate of 45 per cent and where around one fifth of the population is classified as below the poverty line, it is not bad. Furthermore, Egypt does have some advantages. There is a major need to Arabize software for the Middle East region, a potentially large market with some 175 million speakers, the sixth most spoken language in the world. This is an area where Egypt feels it could excel. The same way that it leads the Arab world in producing media content — books, films and broadcasting — it feels it can lead in electronic content development.

In order to complete this dream, Egypt realizes that it must devote considerable resources to educating and training IT professionals. Even though it can boast of a over a dozen universities and some 200’000 computer trainees, it knows it needs to do much more to compete in the world market. Most university graduates do not have specialized computer skills and most trainees are learning basic application packages or simple skills such as data entry. Egypt has only 5’000 skilled computer workers such as programmers and system engineers.

Human resources figure strongly in the country’s National Plan for Telecommunication and Information which states: “Human resources are considered the most important component in the communication and information industry.” The Plan calls for the creation of an Egyptian Software Export Development Organization to help push software exports to US$ 500 million in five years. In order to achieve that, the nation will need 30’000 IT specialists. It proposes the establishment of a National Institute of Information Technology capable of graduating 5’000 students a year. This is a five-fold increase over current IT training capacity of 1’000 students a year. The government plans to spend over US$ 100 million through June 2002 on human resource development projects in the high tech sector.

Egypt knows that it cannot become a software powerhouse with only its own resources. In that regard, it struck two deals in April 2000 with major multinational ICT companies to strengthen training capacity. The Ministry of Communications and Information Technology signed an agreement with Cisco to train 1’000 students a year.

[1] Two training academies will be established in Egypt that could later become a hub for Cisco training in the Arab and Africa regions. The first stage began in May with Egyptian instructors being trained in Cisco centres in the US and Europe. A second deal was forged with IBM.

[2] The US computer giant will contribute over US$ 44 million and train 3’000 Egyptians a year in 6-month courses at IBM training centres in Egypt. The top ten per cent will be trained a further six months at IBM computer labs around the world.

It is ironic that at the same time that Egypt is attempting to develop its computer software industry, it is accused of having one of the highest piracy rate in the world. According to the Software and Information Industry Association, some 75 per cent of all software in Egypt is pirated.

[3] This is not surprising considering the relatively high price of packaged software compared to income and explains why freeware such as Linux is so popular in emerging economies. Furthermore, lest self-righteous software police complain too vociferously, alleged Egyptian software piracy amounts to a mere 0.3 per cent of the world total. Nonetheless, the government is taking steps to curb even this. Copyright laws are already on the books so the problem has more to do with enforcement and awareness plus realistic pricing by multinational software firms. To tackle the latter, a deal was forged with Microsoft.

[4] In return for more stringent enforcement, Microsoft has agreed to produce its products locally at lower prices. Microsoft will also help Egyptian software companies develop applications for export to other Arab countries and the rest of the world.

Part of India’s success is explained by familiarity with the English language. This is not only important to sell applications to the large Anglophone market but also to understand software, most of whose inner workings and documentation is in the English language. One problem is that English is mainly only understood by Egypt’s elite. To battle that, the government has made English language courses a mandatory part of the university curriculum. However that may be too late to acquire intuitive understanding; the government might explore introducing English training earlier in the educational process. Another Indian strength has been its ability to leverage on contacts made overseas through Indians studying and working abroad. In this area, Egypt plans to send its best IT students to other countries for further studies. In a related move, a US bi-lateral development assistance project has targeted a number of Egyptian software companies to help them develop software for Irish companies.

[5] An Irish consulting company has been hired to represent the companies, market their software and provide sales leads. The irony here is that only a decade ago Ireland embraced ICT as a means to boost its economic development and to reduce unemployment. This has been so successful that Ireland itself is facing a shortage of some 10’000 programmers by the year 2000.

One consulting group has proposed that Egypt, along with Jordan and the United Arab Emirates (UAE), pool their human resources.

[6] Jordan, like Egypt, is vying to become a regional IT hub while the UAE has the highest Internet penetration in the Arab region and is also trying to become a regional hub, through its own Silicon Valley, Dubai Internet City. Instead of competing with each other, it suggests that Jordan and Egypt cooperate to market their lower cost IT workers to computer companies in the UAE.

There are no shortage of proposals, plans and agreements for turning Egypt into a regional software centre. Bold forecasts are being made with one Egyptian claiming the country will “be the next Singapore or India in the IT field…Watch for the ‘Made in Egypt’ in the technology field…Egypt is planning to build a true IT industry for software.”

[7] But before it gets there, it has a long way to go. India already exports some US$ four billion of software a year, a figure that even under the most optimistic scenario, Egypt would still not reach in a decade. Others caution that Egypt should not just mimic India but should focus on the regional market for Arabic software and value-added applications such as “e-government and Web-enabled government services.”

[8] Egypt faces tough choices but before it decides, it must build up human resources. That will not happen overnight. Therefore the government cannot afford to deviate from its intended IT training plans if Egypt stands half a chance of becoming a global software player in order to dramatically boost its economic development.

Egypt’s Computer Software Dream

Source: Egyptian Ministry of Telecommunication and Information. National Plan for Telecommunication and Information.