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Egyptian Unrest Puts Call Centers To the Test
Companies scramble to relocate outsourced operations in the wake of violent political protests
For the rest of the March 2011 issue of CRM magazine please click here
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Amid growing protests calling for an end to the 30-year reign of Egyptian President Hosni Mubarak, and a subsequent shutdown of the government-run Egypt Telecom—which provides the bulk of the country’s telephone and Internet services—companies that outsourced some of their call center operations to Egypt had to scramble to find other, more stable locations from which to conduct business. For many, that meant pulling up stakes quickly and relocating to India, the Philippines, or Africa.

H. Karthik, research vice president in the Global Outsourcing Area at the Everest Research Institute, says Egypt has for the past two or three years been growing as a preferred offshoring location for companies. He puts Egypt’s growth in the industry at about 50 percent per year and estimates the total workforce to be about 20,000 strong. Egyptians working in outsourced call centers specialize mostly in technical support for companies like Microsoft, Oracle, IBM, Google, Vodafone, Intel, HP, and Novartis. Other companies with outsourced call centers in Egypt include Allianz, France’s Neuf Telecom, Unilever, Valeo, and General Motors.

Some of the larger outsourced contact center providers in Egypt include XCeed, Raya Call Centres, and Stream Global Services, each of which has opened contact centers with more than 1,000 seats within the past year or two.

For companies outsourcing to Egypt, cost has been a big factor. According to a 2009 Datamonitor report, call centers in Egypt operate at 54 percent of the cost of U.S. inbound voice-based customer care agents. Egypt’s costs are less than in other growing locations, such as Eastern Europe, Canada, and Mexico, and only slightly more than in India.

According to Karthik, Egypt became a desired outsourcing destination because it offers a workforce of well-educated young people who are familiar with English and European languages (namely French, German, Italian, Spanish, Greek, Russian, and Portuguese), as well as a stable economy and infrastructure. The country’s location also works in its favor—a flight from Europe to Egypt takes three or four hours, while a trip to India could take up to 18 or 19 hours. Its time zone similarities with Europe mean that Egypt’s working hours are akin to those of European companies.

Moreover, since the 1980s, Egypt has had a certain degree of political stability, and the government has supported the outsourced call center industry with tax credits and incentives, an adequate infrastructure and regulatory framework, and a system of formal training and accreditation.

The recent unrest, which kicked off in late January, “was sudden and unexpected,” Karthik said, and that’s why things were so chaotic.
Huge international companies spend lots of time and money on site selection before deciding to set up a call center abroad, but certain events cannot be anticipated. That’s why, as a rule of thumb, outsourcing consultants tell clients always to expect the unexpected.
That’s a risk all companies face when outsourcing. Similar massive, country-wide service disruptions in the past have included the typhoons in the Philippines; a military coup in Thailand; earthquakes in Chile; the terrorist attacks in Mumbai, India; and the swine flu outbreak in Mexico. But the companies that survived those crises planned and put into place investments and resources to manage such risks. They had well-crafted disaster recovery and business continuity plans ahead of the crisis. For most, a few phone calls to call center managers in the backup sites were all that was required.

Most of those companies also have headcount caps at each call center and could reroute overflows to alternate sites at a moment’s notice.

The call centers that suffered the most during the crisis were the smaller, local operations that could not simply reroute calls elsewhere. “The large international companies have very large disaster recovery plans in place and could move fairly easily without much disruption,” Karthik says. Single-sourced Egyptian companies didn’t have that option, and “I would suspect that, internally, these companies could not operate,” he adds.

For Karthik and others with their eye on the region, the long-term effects of the political unrest could be great. “New investments in Egypt will be impacted, and if the crisis is prolonged, some operations could be permanently moved to other outsourced locations,” Karthik says. “How long they’re gone depends on the political situation and how mission-critical they are. If it’s a 24/7 operation, it might be more difficult to come back” to Egypt when the situation is resolved.

Egypt’s political upheaval was inspired in large part by the toppling of  the government of Tunisia—another hot outsourcing market—in mid-January. That had some people speculating that it could lead dissidents in other Middle Eastern countries to call for the ouster of their governments as well. Karthik does not see that as something that would threaten the call center industry further. “If you look at the current climate beyond Egypt, there aren’t many call centers there,” he says.


News Editor Leonard Klie can be reached at lklie@infitoday.com.


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