Automation threatens region’s outsourcing jobs

20 September 2017

Egypt retains top position as offshoring destination in the region

Automation could displace thousands of low-skilled jobs in the Middle East and North Africa (Mena) region’s business process outsourcing (BPO) market, according to a new report.

The 2017 Global Location Services Index, published by US-based consultancy AT Kearney, indicates that the rise in automation as well as the large number of graduates in fields related to BPO in countries like Egypt, the region’s top outsourcing destination, exert a strong pressure on low-skilled jobs.

“We are now far enough into the trend toward automation to see that substantial job loss is inevitable in all countries involved in the BPO industry, as hundreds of thousands of low-skilled and repetitive jobs are replaced by automation,” says Arjun Sethi, partner and global head of AT Kearney’s Digital Transformation Practice and co-author of the study.

This trend does not bode well for Egypt’s economy, which has made BPO and information and communicaton technologies  (ICT) a key pillar of its economic strategy.

The outsourcing sector accounted for $1.5bn of Egypt exports in 2014, the latest year where official figures are available, and supports at least 90,000 direct jobs.

Despite the threat posed by these new trends, Egypt retained its position as the Mena region’s number one outsourcing destination in the latest index. It ranked 14th globally, trailing Mexico and one rank ahead of Bulgaria.

AT Kearney says Egypt graduates an estimated 500,000 students annually in IT and other BPO-related fields. This, in addition to the rise in automation, adds pressure on the country’s low-skilled jobs.

Morocco, UAE, Tunisia and Jordan ranked 27th, 32nd, 35th and 47th, respectively on the global index.

The report said automation could put up to one million jobs in four countries at risk over the next five years.

It also estimates a 1:4 ratio between new job creation and jobs lost with the sector.

As a result, the consultancy firm is understod to engage firms in deciding which pieces of the BPO value chain should use automation and where it is helpful to retrain low-skilled staff into higher-paying jobs.

India, China and Malaysia retained their position as the world’s top three BPO locations based on this year’s index.

The index measures each country’s performance against three parameters namely financial attractiveness, people skills and availability and business environment.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications