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International -- Int'l Business: EGYPT
THE BITS AND BYTES ALONG THE NILE (int'l edition)
Egypt leads the Arab world in cranking out software
In sprawling, dusty Cairo, the expansive, green campus of Sakhr Software's development center comes as a shocker to visitors. Inside three modern buildings, 300 programmers dressed in jeans and sport shirts are turning out a wide range of programs for the fast-growing Arab computer market. "It's time the Arab world had some cutting edge software," says Sakhr's general manager, Ashraf Zaki.
Sakhr is just one of dozens of small companies turning the land along the Nile into a new center of software activity. Egypt now boasts some 4,000 programmers. Perhaps 2,000 work at companies turning out Arabic word processors, educational software, and customized business applications. Most of the rest work at banks and other companies, largely in Cairo and Alexandria.
WAGE GAP. While not huge, the work force is large enough to give Egypt leadership of the Arab world. Regional and even international software companies are setting up operations in Cairo to take advantage of the abundant and inexpensive computer talent in Egypt, where a programmer makes just $3,000 a year. "The savvy and low cost of Egyptian programmers make the country very attractive for developers," says Abdel Aziz Ismail, the Cairo-based director of the Middle East office of computer consultants International Data Corp. (IDC). At the same time, such top foreign players as Lotus Development Corp. and Oracle Corp. are luring talented Egyptian programmers to their U.S. operations with salaries 10 times higher than in Egypt.
Growing strength in software is a bright spot in a country that doesn't have many of them. For several years, Egypt, with a population of 61 million, has been plagued by slow economic growth and a smoldering insurrection by Islamic militants, who have killed police, government officials, writers, and Western tourists. Egypt's per capita income is only about $750 per year.
Compared with that of Western countries or even Israel, with its $1 billion market, Egypt's software output is small, totaling $30 million last year. What's exciting is that the Arab software market--$75 million last year according to IDC--is growing at a heady 35% per year.
With sales of more than $7 million, Sakhr heads the field. The company, which is Kuwaiti-owned, moved to Egypt from Kuwait City after Iraq invaded the sheikdom in 1990. Its software strengths, especially in speech recognition, are attracting foreign interest. Sakhr recently signed a $4.5 million contract to develop speech products with Belgium's Lernout & Hauspie. Taiwan-based Acer now bundles 30 Sakhr Arabic titles with every personal computer it sells in the Arab world. It works the other way, too. Davidson & Associates Inc., the Torrance (Calif.) educational software company, has licensed Sakhr to produce an Arabic version of its Math Blaster.
While precise figures are hard to get, the top Arab software market is Saudi Arabia, followed by Egypt and the gulf countries. Lots of the work in Cairo goes into creating customized accounting packages and databases for business. Microsoft Corp. dominates the off-the-shelf market, but 90% of all software in the region is pirated, cutting into profits. Egyptian developers and foreign producers are pushing for tougher antipiracy laws.
As their confidence grows, some Egyptian companies are starting to go after non-Arab markets. DMS, with a staff of 150, is now selling a sophisticated dental program in Britain, which offers a computer-generated 3-D panorama of a patient's mouth. "We see England as the gateway to Europe," says DMS President Madgy K. Khairallah.
TRAINING. Many observers give a lot of the credit for Egypt's budding information technology industry to Hisham El-Sherif, a former intelligence officer who has a PhD in engineering from Massachusetts Institute of Technology. In 1986, he persuaded the government to found an agency that has since created 60 computer training centers. Each year it pays for 200 university graduates to go through a nine-month advanced software course. "We hit on a national interest," says Sherif. "There is a concerted effort to make information technology drive Egypt into the future."
Thanks to a few visionaries such as Sherif, Egypt has dreams of challenging India, the developing world's leader in contract programming, for work from Microsoft, Lotus, Oracle, and other giants. In addition, the Israeli computer industry, short an estimated 1,000 programmers, is considering striking up a collaboration with Egypt. It looks as though embattled Egypt has latched on to a growth industry.By Kirk Albrecht, with Sarah Gauch, in Cairo