Inside Egypt rising outsourcing landscape
Over 100 people were there amid scraps of English conversations racing through the air.
"Sometimes it can get quite loud, but we've got used to it," Youssef puts his headphones aside, exhausted but grinning – he now has a 40-minute break.
"Today, for instance, I am sitting next to my friend, who is a doctor. Yesterday, I was sitting next to my other friend, who is an art student, so it's a very large scale of backgrounds and a variety of characters here. People are between the ages of 18 and 50 because no one is earning enough in Egypt right now."
Youssef, 26, himself a filmmaker, needs a break "from the rollercoaster ride of the creative industry."
What unites these people from different backgrounds is their desire for a secure job in a populous country facing some economic challenges.
In a country with over 23 percent inflation and an external debt of $152,9 billion, they are working in outsourcing, or more precisely, the "outside resource using" industry.
Egypt as global hub – how the business works: Part I
Egypt hopes to become a global and the most crucial hub in outsourcing in the Middle East by 2026.
The model works by outsourcing internal business areas. For example, companies in North America or Europe outsource some of their in-house departments, such as customer service, to countries with expertise in the language and content but do the job for significantly less money.
Due to the challenging economy and the great demand for jobs in countries such as India, the Philippines, or Egypt, people are willing to work for significantly less than in the company's home country. For example, in Germany, people get paid three times more than in Egypt.
The government's efforts to maintain hard currency influx into the country include increasing outsourcing exports to $9 billion over the next three years, with revenues contributing to the country's foreign exchange (FX) resources.
Outsourcing from an ethical perspective
"First of all, outsourcing is based on a justifiable international division of labour that legitimately aims to make a profit. There is nothing negative or reprehensible about it. Every company looking to survive the competition does that. And yet the model should not be callously executed at the expense of others," says Dr Andreas Suchanek, a German professor of business and corporate ethics, who is a member of the board of the Wittenberg Centre for Global Ethics Foundation and a former member of the German government's Corporate Social Responsibility Forum. He teaches at HHL University — Leipzig Graduate School of Management.
"You have to ensure that no subtle, unlawful, or unethical means are used to maximize profits, for example, putting undue pressure on employees or suppliers such as out-sourced call centre providers. As a consequence, the company operating the call centre is put under stress to somehow recoup this from the employees. Because they have little chance of putting up a good fight, especially if other people are keen on the job, employees are prepared to put up with a lot."
Suchanek continued that it is essential to protect the dignity of those who work in outsourcing by avoiding harming them.
A busy paradise – inside a call centre
Twenty-six-year-old Youssef, who works in the Smart Village as a customer service agent for an American client, has particularly good things to say about the support. "Health insurance, social security, good transportation to and from work – they take care of all these extra things." "Just don't underestimate how tough the job can be," he continued.
"You have to take an average of 40 or 50 different calls a day, with 40 or 50 different people of different backgrounds. And they're all complaining about problems they have. Some people who call us treat us like slaves. We should be serving them. They don't treat you like a fellow human being living on earth and doing your job. That's something that frustrates me sometimes, but when you look at the result, it's worth it," Youssef said.
The 26-year-old earns EGP 12,500 (the equivalent of €238) monthly and, with a bonus, could reach EGP 16,000 (€305).
Youssef says that with "an overtime request, you can bring that up to EGP 30,000 or even 40,000. " Overtime is voluntary in most companies.
German speakers highest paid – how the business works: Part II
However, German speakers earn the highest salaries in the Egyptian market. The basic salary for a German speaker with a language level of C1 or C2 is EGP 30,000 (the equivalent of €573).
In offshoring, outsourcing companies can charge German clients the highest margins, which leads to the highest profit.
The company determines the margins' level and provides no information about them. Neither state supervisory authority nor auditors regulate this because the state benefits from the model. The Information Technology Industry Development Agency (ITIDA) issues licenses to outsourcing companies that entitle them to work in the business model without bureaucratic hurdles.
ITIDA was founded in 2004 as the executive arm of the Ministry of Communications to develop the information technology sector at home and increase competitiveness abroad. The higher the number of employees and the number and level of margins due to higher salaries, the higher the tax revenue for the state, which recoups company compensation and employment taxes. Foreign companies are thus pumping "hard" currency in US dollars and euros into the market, a benefit to the Egyptian economy.
According to a strategy paper by ITIDA – whose CEO and press spokesperson declined to be interviewed for this research – the government is actively supporting expanding the outsourcing business model through various activities in the relevant economic sector: tax waiver (except VAT) over five years for qualified projects and 35-55 percent corporate tax refund paid for qualified projects with significant foreign currency investments.
Grants of up to EGP 5 million are allocated for cooperation between universities and information and communication technologies (ITC). Other activities include reducing bureaucracy and expanding infrastructure, expanding participation in international free trade agreements, and supporting training programmes that train students for industry requirements.
Need to be on track!
There is a buzz on the line; Amani Rabei is in the car between two appointments: "They are crucial, we need to keep them trained and we need to keep them engaged. We have a lot of engagement activities – Christmas, New Year – for the employee's well-being."
Rabei is chief growth officer in one of over 200 licensed outsourcing companies in Egypt. Her goal is to expand further into the European market. To do this, she needs more German-speaking graduates to work for her company, which must meet the demand from abroad and remain competitive with other outsourcing companies in the country.
To this end, she goes to universities to promote her company. The struggle begins with the job title itself.
"We have a lot of German speakers who don't want to work in this job because people do not take the person working at a call centre seriously."
"This is why the graduates feel it's a second-class job. But it's not. This is why we call it 'customer experience' or 'minimum contact centre'."
Rabei says that employees in the back office, for example, only answer emails and do not make phone calls. Ironically, however, she distinguishes herself between two classes of employees. "We have 80 percent doing calls and 20 percent of the people doing back office."
Framing pays off
Suchanek describes it clearly: "We are talking about framing, which is something that companies are constantly trying to do in all advertising – to use others for their purposes. What's important here is that no harmful lies are told. For example, don't promise things that you can't keep even if the law allows for such a lie because it is too clever."
At the same time, Suchanek expects every one of a certain age to have a certain amount of experience and maturity.
"We know how the game is played: When we see an advertisement where butter is advertised with a happy family on it, we don't automatically become happy in our family when we buy the butter."
However, the figures prove that Rabie's efforts and demands are right. Over 145,000 people currently work in Egypt's outsourcing market.
Even if the business model advertises itself unfairly, it remains an excellent opportunity to boost the Egyptian economy.
As Dr Zeinab Tawfik Elewa, professor at the Faculty of Economics and Political Sciences at Future University in Egypt, who researches outsourcing, formulates it:
"The global market in the outsourcing industry is currently one of the strongest global markets. So, outsourcing is an important source of national income in Egypt if it is well managed and supported where it yields a return that exceeds those of Suez Canal or tourism and others that are affected by the economic crisis."