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Was Egypt oversold as top offshoring spot?

Patrick Thibodeau | Feb. 2, 2011
Egypt's rapid descent into chaos contrasts with what analysts said just before it happened

Long-term historical trends "can give us a rough sense of the likelihood of unrest in different places -- very unlikely in, say, Demark, very likely in Somalia," said Morris. But they can't help predict "the specifics of what will set off violence, when exactly it'll happen, or why some particular event like Mohamed Bouazizi burning himself in Tunisia will bring the Egyptian government to the verge of collapse, while the Libyan and Syrian rulers have survived, so far, anyway," he added.

At this point, in its still unsettled state, anything seems possible for Egypt. But even if it emerges quickly from its problems it's unlikely that its outsourcing operations will enjoy a smooth recovery, according to Leslie Willcocks, director of The Outsourcing Unit, a research arm of the London School of Economics.

Egypt's "outsourcing initiative was part of a much bigger economic development initiative, and it was all 'owned' by an inner group within the government and related agencies," Willcocks said by e-mail. "Any handover of ownership of these projects is likely to be very disruptive, and will slow the processes in hand."

"Any new government would be foolish to throw away the advances made," he said. "But worse things have been done in other countries as a result of political upheaval."

Emerging markets "are by their nature risky in some regard," said Ian Marriott, a Gartner analyst, who worked on the firm's list of the top 30 offshore outsourcing destinations. He cited riots in Indonesia and Thailand, gang violence in Mexico and bombings in India as examples of continuing global volatility.

Marriott said that, in its analysis of Egypt, Gartner's report did mention the uncertainty of the country's politics and noted that there was an upcoming election that young people weren't likely to trust. "We called out to the extent that we could that there is a degree of political instability there," he said.

But you can't "get too far into the politics," Marriott said. "You have to make a balanced business decision."

 

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