Market Overview Egypt's IT spending is expected to increase from US$1.3bn in 2010 to US$2.1bn by 2014. BMI forecasts that the Egyptian IT market growth will remain below pre-economic crisis levels in 2010, but economic recovery, tenders delayed from 2009 and higher incomes boosted by pay raises for civil servants and other groups should help to keep sales on an upwards trajectory. In 2010, a number of factors should help IT spending growth to recover to high single digits, including new hardware and software upgrade cycles, and sales of Microsoft's new Windows 7 operating system. Over BMI's five-year forecast period, Egypt will benefit from youthful demographics and improving ICT infrastructure, despite a number of constraints and a sub-optimal distribution network outside of Cairo. BMI projects a 2010-2014 IT spending compound annual growth rate (CAGR) of 12%, which puts Egypt in the top-tier of global IT growth markets. Computer penetration is forecast to rise from around 10% currently to about 17% in 2013. Opportunities will also be generated by Egypt's emergence as an outsourcing destination. Industry Developments In H109, the Ministry of Communication and Information Technology (MCIT) purchased more than 10,000 notebooks for distribution to students and teachers, in what was described as the largest computer procurement tender by a public body in Egypt. The MCIT has pledged further initiatives to further the use of technology in education. A number of policies have been implemented to attract foreign investment in IT outsourcing, including local employment subsidies, lower corporate taxes and deductions for training costs. In 2009, Egypt has made further progress, with Indian IT giant Wipro recently announcing that in future it would outsource 20% of its Indian and Middle Eastern software development work to Egypt. The Egyptian minister of state for administrative development has said that 200 government services will soon be available online through a new e-government portal. The portal will offer 70 services in both English and Arabic. According to the Ministry for Administrative Development, more than 20 government agencies currently offer services and licences online. Competitive Landscape In the PC segment, Fujitsu Technology Solutions was the winner in a 10,000 notebooks procurement by the MCIT. Meanwhile, HP planned to roll out new retail stores in Egypt in an attempt to tap into the growing retail segment. The company will open outlets within malls. In 2010 Microsoft hopes that sales of its Windows 7 operating system, launched in October 2009, will boost its sales in the Egyptian market. In Summer 2009 Microsoft continued to lay the groundwork for the new operating system launch and released the enterprise version of the software in August. Indian IT services giants have increased their presence in Egypt. Mahindra Satyam, the new brand identity of Satyam Computer Services, aims to grow its consulting and outsourcing businesses by 100% in the next few years, leveraging its Global Development Centre in Cairo's Giza Smart village. In May, Wipro announced that it was planning to save costs by outsourcing 20% of its Indian and Middle Eastern work to Egypt. Computer Sales Egypt's computer hardware sales are projected at US$821mn in 2010 and are forecast to reach around US$1.3bn in 2014. Annual computer sales could increase to nearly 470,000 by the end of BMI's forecast period. The launch of the Windows 7 operating system has the potential to help trigger a new cycle of hardware upgrades in 2010, although much will depend on business and consumer confidence. Egypt's IT market will stay hardware dominated, with spending on PCs sustained by initiatives like the 'Computer For Every Student' and 'PC for Every Home' programmes. Hardware accounted for an estimated 62% of Egypt's IT spending last year. Households account for 20-25% of unit sales, with almost 1-1.5mn households said to possess a computer at present. Software Ove

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Egypt Information Technology Report Q1 2010
Published on January 2010
Report Summary
Market Overview
Egypt's IT spending is expected to increase from US$1.3bn in 2010 to US$2.1bn by 2014. BMI forecasts that the Egyptian IT market
growth will remain below pre-economic crisis levels in 2010, but economic recovery, tenders delayed from 2009 and higher incomes
boosted by pay raises for civil servants and other groups should help to keep sales on an upwards trajectory.
In 2010, a number of factors should help IT spending growth to recover to high single digits, including new hardware and software
upgrade cycles, and sales of Microsoft's new Windows 7 operating system.
Over BMI's five-year forecast period, Egypt will benefit from youthful demographics and improving ICT infrastructure, despite a
number of constraints and a sub-optimal distribution network outside of Cairo. BMI projects a 2010-2014 IT spending compound
annual growth rate (CAGR) of 12%, which puts Egypt in the top-tier of global IT growth markets. Computer penetration is forecast to
rise from around 10% currently to about 17% in 2013. Opportunities will also be generated by Egypt's emergence as an outsourcing
destination. Industry Developments
In H109, the Ministry of Communication and Information Technology (MCIT) purchased more than 10,000 notebooks for distribution to
students and teachers, in what was described as the largest computer procurement tender by a public body in Egypt. The MCIT has
pledged further initiatives to further the use of technology in education.
A number of policies have been implemented to attract foreign investment in IT outsourcing, including local employment subsidies,
lower corporate taxes and deductions for training costs. In 2009, Egypt has made further progress, with Indian IT giant Wipro recently
announcing that in future it would outsource 20% of its Indian and Middle Eastern software development work to Egypt. The Egyptian
minister of state for administrative development has said that 200 government services will soon be available online through a new
e-government portal. The portal will offer 70 services in both English and Arabic. According to the Ministry for Administrative
Development, more than 20 government agencies currently offer services and licences online. Competitive Landscape
In the PC segment, Fujitsu Technology Solutions was the winner in a 10,000 notebooks procurement by the MCIT. Meanwhile, HP
planned to roll out new retail stores in Egypt in an attempt to tap into the growing retail segment. The company will open outlets within
malls.
In 2010 Microsoft hopes that sales of its Windows 7 operating system, launched in October 2009, will boost its sales in the Egyptian
market. In Summer 2009 Microsoft continued to lay the groundwork for the new operating system launch and released the enterprise
version of the software in August. Indian IT services giants have increased their presence in Egypt. Mahindra Satyam, the new brand
identity of Satyam Computer Services, aims to grow its consulting and outsourcing businesses by 100% in the next few years,
leveraging its Global Development Centre in Cairo's Giza Smart village. In May, Wipro announced that it was planning to save costs
by outsourcing 20% of its Indian and Middle Eastern work to Egypt.
Computer Sales
Egypt's computer hardware sales are projected at US$821mn in 2010 and are forecast to reach around US$1.3bn in 2014. Annual
computer sales could increase to nearly 470,000 by the end of BMI's forecast period. The launch of the Windows 7 operating system
has the potential to help trigger a new cycle of hardware upgrades in 2010, although much will depend on business and consumer
confidence. Egypt's IT market will stay hardware dominated, with spending on PCs sustained by initiatives like the 'Computer For
Every Student' and 'PC for Every Home' programmes. Hardware accounted for an estimated 62% of Egypt's IT spending last year.
Households account for 20-25% of unit sales, with almost 1-1.5mn households said to possess a computer at present.
Software
Overall spending on software remains rather low, being projected at US$187mn in 2010. The estimated 14% share of the total
Egyptian IT spending accounted for by software reflects the relative immaturity of Egypt's IT market. However, the domestic software
market is expected to grow at a CAGR of around 11% over the forecast period until end-2014.
Egypt Information Technology Report Q1 2010 Page 1/5

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One market driver has been a significant fall in software piracy, with the illegal software usage rate, as measured by the Business
Software Association, falling a further 1% to 59% in 2008. While large corporations have long understood the business case for
deploying technology, small and medium-sized enterprises (SMEs) are increasingly beginning to see such investments as important if
they are to avoid being overtaken by more tech-competent competitors.
Services IT services revenues are forecast at around US$327mn in 2010, accounting for about 25% of Egypt's total spending on IT. A
market CAGR of 14% is projected for the next period through to 2014. The Egyptian IT services market is dominated by demand from
government, finance and telecoms sectors, which account for more than half of total spending.
Other vulnerable sectors include construction and real estate. Government spending, the largest segment, is projected to be
maintained, or even increased, as a counter-cyclical stimulus to flagging domestic demand. One key driver is likely to be the
continued expansion of Egypt as an international outsourcing destination
E-Readiness
In 2008, Egypt continued liberalisation of the telecoms market, with the award of a second national fixed licence. This development,
which followed the award of 3G licences to three mobile telecoms service providers in 2007, is likely to drive new opportunities for IT
vendors. As well as generating additional spending on IT products and services from the telecoms sector, the spread of internet
should provide a boost to the PC market over the next few years.
A similar story could be told about broadband, although cost remains a big barrier to broadband subscription in Egypt. It has been well
documented that private broadband subscribers often club together with two or three neighbouring families to get a shared broadband
subscription and Wi-Fi router. More competition in the market should hopefully bring prices down in the future and lead to subscriber
growth.
Table of Content
Executive Summary ....5
SWOT Analysis............8
Egypt IT Sector SWOT......... 8
Egypt Telecommunications Industry SWOT ........ 8
Egypt Political SWOT........... 9
Egypt Economic SWOT....... 10
Egypt Business Environment SWOT ........ 11
IT Business Environment Ratings .12
Regional IT Business Environment Ratings ...... 14
Middle East Regional IT Markets Overview.........15
IT Penetration ....... 15
Market Growth & Drivers .. 16
Sectors & Verticals ............. 17
Market Overview........19
Government Authority......... 19
Hardware ..... 20
Software ....... 21
Services ........ 23
End-User Analysis 24
Industry Developments ....... 25
Industry Forecast Scenario ...........28
Table: Egypt IT Sector - Historical Data & Forecasts (US$mn unless otherwise stated) ... 30
Internet ........ 31
Table: Telecoms Sector - Internet - Historical Data & Forecasts ........ 31
Country Context .... 32
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Table: Consumer Expenditure, 2000-2012 (US$) ........... 32
Table: Rural/Urban Breakdown, 2005-2030 .... 32
Competitive Landscape ...33
Egypt's Internet Sector - Key Indicators .. 38
Macroeconomic Forecast ... 39
Table: Egypt ' Economic Activity ............ 41
Company Profiles......42
IBM Egypt .... 42
Raya Holdings ...... 43
Oracle .......... 45
HP .. 46
Microsoft ...... 47
Country Snapshot: Egypt Demographic Data.....48
Section 1: Population.......... 48
Table: Demographic Indicators, 2005-2030 ..... 48
Table: Rural/Urban Breakdown, 2005-2030 .... 49
Section 2: Education And Healthcare ...... 49
Table: Education, 2002-2005 .... 49
Table: Vital Statistics, 2005-2010 ............ 49
Section 3: Labour Market And Spending Power ............. 50
Table: Employment Indicators, 2001-2006 ....... 50
Table: Consumer Expenditure, 2000-2012 (US$) ........... 50
Table: Average Annual Wages, 2000-2012 ....... 51
BMI Methodology ......52
IT Ratings ' Methodology........ 52
Ratings Overview .. 52
Table: IT Business Environment Indicators ...... 53
Weighting ..... 54
Table: Weighting Of Components ............ 54
How We Generate Our Industry Forecasts ....... 54
IT Industry ... 55
Sources ........ 55
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