The call center industry was one of the trademarks of Egypt’s development strategy throughout the 2000s. Experts pointed to it as the poster-child for the country’s expansion opportunities in the tech and communications industries.
But the growth of this sector has been stymied, by the country-wide economic slowdown of the past two years, and was hit particularly bad by the former government’s five-day communication blackout during the 18-day uprising that led to the ousting of former President Hosni Mubarak.
As Egypt struggles to recover from a series of economic setbacks, some are looking to businesses like call centers and other tech businesses to act as a catalyst for job creation and economic expansion.
Egypt Independent talked to two call center managers about how they envisage their business going forward, what they see as obstacles to growth, and how they handled the five-day-long internet and mobile lockout by the government in January and February 2011.
A high-growth industry
Infrastructure improvements and the free-market business environment of the past decade, as well as a strong governmental backing, helped the information and communication technology industry achieve a 15 percent annual growth.
This 5000-company strong sector generated LE47 billion in revenues in the 2010/2011 fiscal year, making up 4.3 percent of the GDP. It employs more than 200,000 people.
The rapidly expanding mobile and internet sectors are the main engines of the sector’s growth. In July 2012, there were 31 million Internet users in the country, up from 10 million in 2007. Mobile penetration exceeded 110 percent in July 2012, up from a meager 40 percent in 2007.
The call center industry emerged as one of the fastest growing subsectors of the ICT industry. Its annual growth from 2005-2011 was nearly 50 percent, experts say. Call centers brought in US$1 billion in annual revenues in 2010.
Xceed, founded in 2001, is an Egypt Telecom-owned call center that demonstrates the speedy success of call centers in Egypt. It saw annual growth rates between 30 and 50 percent between 2003 and 2008, said Adel Danish, president of Xceed.
However, the global crisis that started in 2008 has slowed the sector’s growth, and the company also struggled to keep open during the unrest and protests. It stayed functional during the blackout, though, because the company relies on optic fiber landlines, not an internet connection, to operate.
“Our major problem during the revolution was to make sure our agents were able to go to work safely,” said Danish.
Most call centers operate 24/7, and the weeks-long long curfew prevented workers from coming to work for their night shifts.
Bigger companies fared better. They obtained special authorizations from the authorities to allow their agents to come to work during the curfew. Their larger workforce also gave them more flexibility.
Workers living far away or in more dangerous neighborhoods would work during the day, while the others would come by night.
Some smaller businesses, like Danish’s took a live-in approach.
“We made arrangements so that our agents could sleep, eat, have showers and have their clothes cleaned inside our facilities,” said Danish.
He said the past 18 months have made him hopeful for the coming period, considering that the company has largely managed to hold onto its clients throughout the unstable time.
“Our customers all perfectly understood the situation and have maintained their contracts with us,” said Danish.
Other call centers had a rougher time.
The Vodafone call center, based in the Smart Village, was servicing Vodafone customers in New Zealand. The blackout has had dramatic consequences for the company.
Customers from New Zealand had difficulty understand how the decision of the Egyptian president to cut the internet could prevent them from reaching their customer service. The company had to redirect calls toward its New Zealand call centers, according to a January 2011 story published in the New Zealand Herald.
Vodafone first presented this solution as temporary, but the persisting instability led them to officially move the call center back to New Zealand in March 2011, according to an April 2011 report by the New Zealand Herald. Around 120 people were laid off.
A risk with returns
Naos Marketing, a growing call center, took an unusual path. Its founder, Nadine Barbier, arrived in Cairo in the early 2000s, when she was working as a consultant on a European project. After the project’s completion, she decided to stay in the country and launch her own consulting company. At first, it specialized in business development and marketing.
“We just had a small call center for our market studies,” she said.
Nadine then took a risk that would eventually lead the company to success.
“I decided to develop in outbound activities, this means that we don’t call the customers of our clients, but we call potential customers to sell the products of our clients,” she said.
This activity is considered as risky by many call centers because it involves very short term contracts, making it difficult to adjust human resources accordingly, especially for small companies like Barbier’s.
However, the change in business had one advantage, the importance of which couldn’t be predicted back in 2009.
“We had to stop our activities during the revolution”, said Barbier. “But since we are calling potential customers and not actual customers, it did not cause any problem for our client.”
The French company Naos was doing work for did not suffer significantly from the blackout and the company was able to return to normal activity once a degree of security returned.
Once qualified as one of the most promising outsourcing destination in the world along with India or Mexico, being ranked as high as fourth in the A. T. Kearney Global Services Location Index 2011, Egypt lost most of its appeal for Western investors amid the unrest of the past two years.
And Egyptian call centers are now struggling to find new foreign customers, as the reputation of Egypt as a stable business environment has been severely damaged.
“Everybody is affected” said Danish. “But we have managed to deepen our relations with our old customers.”
Barbier has decided to build a client base inside the country, instead of abroad.
“Since the end of our contract with our French customer, we exclusively work with Egyptian companies,” said Barbier.
Though the return of foreign customers remains uncertain, both Xceed and Naos are still expanding. Xceed had double-digit growth figures in 2011 and 2012, according to Danish. Naos recently announced a new large contract with Mobinil.
“We had just two employees in 2009,” said Barbier. “Now we have more than 700 seats. The call center activity has grown so fast that I had to stop my consulting activities.”
Both say the future is promising.
“Egypt benefits from unique advantages: a large, multilingual and motivated pool of talents, important bandwidth, good infrastructure and strong governmental support,” said Danish.
The problems are related to how Egypt appears to foreigners, he said.
“If there is no news from Egypt in international media for the next six months, our image will gradually improve,” he said.