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Al-Ahram Weekly 3 - 9 February 2000 Issue No. 467 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 3 - 9 February 2000 Issue No. 467
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Special Profile Travel Living Sports People Time Out Chronicles Cartoons Letters In search of strategies
By Sayed-Amr El-Hamamsy *
I recently participated, with two colleagues, in a fact-finding mission about Information Technology, e-commerce and e-business opportunities in Egypt. Our company, one of the largest in the world, is in the midst of a massive globalisation and e-business drive. We visited four academic institutions -- Cairo University, the American University in Cairo, the Information Technology Institute and the Regional Information Technology Institute -- and six IT companies. We were assessing technical skills, the availability of human resources, the network and computing infrastructure, the research capabilities and the business climate.
El-Hamamsy
We generally concluded from the visit that a solid foundation of an IT industry exists in Egypt. The young IT graduates from the different institutions are as good as any in the world. They are versed in some of the most modern tools, methods, languages and algorithms. They are extremely hard working. We saw projects presented to us at ITI that were completed in a two-month period by small teams of students. The range of the projects and the level of excellence achieved in them are quite impressive.
Cairo University has a new computer science faculty with a graduating class of about 250 students, in addition to the older computer engineering department in the Faculty of Engineering. The American University has a small computer science department of high quality. Because AUC students are steeped in American culture, they possess the ability to identify opportunities in the US and build successful business relationships. AUC also has the infrastructure to get and manage research grants from abroad.
The small companies we visited were highly varied, but all seemed extremely competent in their respective areas. Several companies do offshore work for international companies, and are clearly able to compete and win on the world stage. They follow modern software development techniques and use the most modern tools available. Other companies focused on Arabisation of programmes and on translating legacy code written in Cobol and other languages to modern programming languages like Java and C++. Several companies were expert in the design of web sites and in networking.
Networking and communication infrastructure is also available -- but at a price. The cost of the highest speed network connections remains prohibitive. On the other hand, the government has a lot of tax incentives in place for people starting new companies, providing tax exemptions lasting from five to 20 years. The government plans to upgrade the Internet connections and lower prices further. Egypt appears further ahead in this area than India, but more is needed.
Given the availability of human resourcs, of networking capabilities, and of access to modern software tools and advanced hardware, why hasn't Egypt become a major source of offshore software development? In my opinion, the main reason for this is that the IT industry in Egypt is still small, fragmented and weak in marketing. The magnitude of the different efforts is below critical mass. The number of IT graduates is much less than in India, for example, and the number of companies and their sizes is also small. New IT graduates are numbered in the hundreds, yet even then they do not always find employment utilising their skills. There is also a general lack of marketing and sales skills in the industry. There appeared to be no concerted strategy or effort to penetrate US or European software markets. The focus, at best, is on local, Middle Eastern and African markets. Industry-wide information flow, sharing of ideas and best practices is lacking and there exists a general misconception that the competition is local -- whereas in reality it is global.
There are several models of success in the IT industry. The Indian model relies on low cost, highly capable labour to become the offshore software factory of the world. In Israel, the model relies on a combination of creativity and relatively low cost labour to create a high value-added software industry. Many products are conceived, designed and produced in Israel by small companies, similar to the small startups that fuel the economy in the US. An example is ICQ, a company that created an Internet chat programme purchased by America OnLine for $378 million. Egypt should use its human resources, low cost of labour and closeness to Europe in a hybrid of the Indian and Israeli models.
Egypt needs a dynamic business environment -- composed of large, established companies and of startups -- that encourages and rewards entrepreneurship. The industry should consolidate existing companies to create large companies with muscle, while simultaneously encouraging startups with creativity and speed. Startup companies are one of the major engines of growth in the IT industry. Finance sources for startups -- venture capital, capital markets and finance institutions -- needs to be made available. Access to these funds should be simplified and the information disseminated widely. A lively merger and acquisition market would also help consolidate the industry so that it reaches critical mass.
The education system should encourage creativity from the earliest years. In addition to the acquisition of knowledge, students should be taught to find creative solutions and to research topics using libraries and the Internet. The focus in technical schools must expand from the purely technical to cover all aspects of business, including basics of management, finance and how to write and present business plans. The industry would benefit from more people comfortable with the idea of developing new products and bringing them to market.
Research and development at the leading edge of technology has to be brought up to international standards. Establishing clear, simple rules for funding will encourage academic and industrial research. Professors should seek external funding from local and foreign businesses. Their salaries should increase with the grants they obtain. The state funding organisations similar to the US National Institute of Standards and Technology (NIST) and the National Science Foundation (NSF) would support advanced academic and industrial research. Tax breaks for creating new businesses can be gradually phased out in favor of tax breaks for research. Egypt would also benefit from a foundation similar to the Israeli BIRD foundation which provides funding for joint research and development between American and Israeli companies.
The importance of marketing and sales cannot be overemphasised. In a business sense, the best technical breakthrough or invention is not worth a lot if it does not reach its customers. A well-designed product meets the customers' needs and is purchased by these customers. Marketing identifies these needs and defines the product specifications. Sales people ensure that customers know about the product and purchase. A larger number of highly skilled marketers, sales people and managers is needed.
A strategic plan for marketing the Egyptian IT industry to the world would provide the context for all these efforts. Every person in this industry has to become a marketer for the whole industry. To be effective everyone must have knowledge of the whole industry. Information about the industry and its capabilities has to reach the potential customers. Israel has used approaches and methods that have been very successful. Egypt can adopt the same ideas with equal success. Finally, to state the obvious, the Internet itself is the best tool for collecting and sharing the information, and for advertising the capability of the Egyptian industry to the world.
These suggestions are intended to spur debates and discussions leading to the implementation of new ideas that take the IT industry to the next level. I believe that this is an area in which Egypt can excel -- and can provide one of the major engines for growth and prosperity as we enter the 21st century.
* The writer is manager of the Magnetic Resonance Imaging Programme at General Electric's Corporate Research and Development Centre in the United States. The views expressed here are those of the writer and do not represent General Electric.
