Presented by:
Walid Gad
Chairman of the Egyptian Hi Tech Association
(EHITA)
EHITA
• An NGO representing 80 medium and large
companies in the areas of IT H.T. our
members are major companies in the S/W
development, system integration,
telecommunication and electronics area.
EHITA’s Mission
To participate in setting the ICT
strategy for Egypt.
Subject today is:
The review of the IT services in Egypt and the
possible effects of the liberalization of this
sector and benefits to the IT sector if our
request for liberating other markets were
achieved.
IT Spending in Egypt
US $ Million
Hardware
Packaged
Software
Services
Relative weights of Computer Services Sub sectors
%
%
%
%
%
%
IT Consulting
Implementation
Support Services
Operation Management
Training & Education
Slice
Share of Computer Services Users
%
%
%
%
%
%
%
%
Financial institutions & Banking
Industrial Sector
individuals
Consulting
Commercial & Trade Sector
Educational institutions & research
Tourism Sectors
Other Services
Relative Importance of Factors Affecting Demand in Various
Sectors (%)
Financial,
Brokerage
&Consulting
Trading
Other
Services
Industrial
Quality/
Reputation
35
25
40
30
Price
25
35
25
35
After Sales
Service
25
20
25
20
Terms of
Payment
12
16
8
10
Others
3
4
2
5
100
100
100
100
Factor
Total
Foreign Companies in Egypt
• Always been in Egypt.
• Formal presence since the twenties before that cross border.
• Enjoys all the benefits of the Egyptian Companies.
• Only restriction is on owing land, importation and some limitation
on employing foreigners.
• But this this not unique to the IT sector.
Foreign Companies in Egypt
• Have represented a major pull of the IT society in
Egypt, by bringing in leading edge technologies,
training and developing staff.
• Most of the large Egyptian Companies are managed by
Egyptians that worked trained and developed in
foreign companies.
• Associations allow foreign companies to join as much as
they do for Egyptian Companies.
Percentage of Value of Services , 2002
%
IT Consulting
Implementation
National Domestic Sales
National Exports
Support Services
Operating management
Multinational Domestic Sales
Training & Education
Multinational Export
Investment in Computer Services
US $ Millions
Egypt
Indonesia
Israel
Malysia
Arabia
S. Africa
Turkey
The following summarizes the economic impact of
computer services:
Direct
Indirect
Total
Value added (Value
Added Coefficient)
0.8
0.65
1.45
Employment
(Number of
employees)
1.0
6.00
7.00
50
200
Exports ($ million)
250
Strengths, Weaknesses, Opportunities, and
Threats Analysis
Strengths
• Lack of barriers to trade in IT
• Growing demand resulting from large-scale
projects in the financial, telecommunications,
energy, and manufacturing sectors as well as an
increasing level of automation in the government.
• A young, educated labor force and a low cost of
labor.
Strengths
• Egypt’s strategic location as the gateway to the
Arab and African markets
• Time zone difference between Egypt and North
America enable a second work shift for North
American companies.
• A majority of computer services providers know
both English and Arabic.
• Access to a high-speed communications network.
• Investment incentives and tax exemptions.
·
Weaknesses
• Lack of business development services in the
computer services industry.
• Shortage of IT graduates with managerial and
entrepreneurial skills who can fill the market
needs.
• Focus by the private sector and public
procurement sectors on price in general rather
than quality of service.
• Lack of financial schemes to support start-up
computer services companies (particularly for
small and medium enterprises).
Weaknesses
• Lack of individual consumer base for computers
and computer services.
• High price sensitivity for SMEs in computer
services purchases.
• General bureaucracy and difficulties in licensing
companies (for all types of businesses).
• Lack of targeted export promotion program.
Opportunities
• Development of a clear and flexible strategic vision for
Egyptian computer services through a joint public–
private sector endeavor that will be reviewed on an
ongoing basis.
• Creation of the Pyramids Smart Village to centralize
Egypt’s qualified labor and infrastructure to compete
globally in the free market.
•
Implementing training programs to increase the
number of qualified computer services providers.
Opportunities
• The currency devaluation— a short term
opportunity— could help companies promote
exports while protecting providers of local
services sector (if companies act immediately).
• Creation of a national legislative environment to
encourage foreign direct investment in the sector.
• Attracting international producers interested in
subcontracting
programming
of
tailored
applications.
Opportunities
·
Providing online content for the Middle East and
North Africa.
· Growing demand for application development,
hardware and software installation,
system/network implementation, and network
integration from Egyptian companies needing to
improve their operation systems.
· Going beyond the Arab markets to build a strong
presence in the European and American markets
for more and faster transformation of technology.
Opportunities
• Establishing an export development organization
responsible for promoting computer services
exports and assisting developers and producers
in marketing services globally.
• Making funds, aids, and financing facilities
available to the local industry.
• Establishing R&D base depending
academic and research institutions.
on
the
Threats
• Widening supply gap in well-trained human
resources due to the ongoing brain drain.
• Fear of foreign competition leading to reactionary
protectionism while the computer services sector
(and all IT sectors) thrives on the global exchange
of ideas.
The WTO GATS Negotiations
Modes of supply
Market Access
National Treatment
Cross border supply.
Consumption abroad.
Commercial presence
Presence of national persons.
Recommendations
Considering:
•
The strengths and weaknesses of Egypt’s
computer services market.
(2) The critical role of free trade, including Egypt’s
membership in the WTO Information Technology
Agreement, in ensuring access to global
technology resources in the development of a
vibrant global IT industry.
Recommendations
3) The number of countries that have taken
commitments and benefited (or not been harmed)
by the commitments.
(4) Egypt’s strong and vibrant IT computer services
sector.
It is recommended that Egypt undertake full and
binding obligations to trade in computer services.