IT Market Size

    The overall size of the Egyptian information technology (IT) market is commonly believed to be US$300M (for comparison, the IT market in Israel and Saudi Arabia is approximately $1.2B for each country). (Harvard Study)

IT Market Characteristics

     The market in Egypt is characterized by very rapid trend transfer whereby customers are consistently looking for the latest models and most modern technology. Present growth trends are in the widening utilization of LAN/WAN, client-server solutions, and the gradually increasing importance of quality and service, integrated solutions and turnkey projects.
 
     Across the board, demand is marked by a lack of confidence in "Made in Egypt" products. As sales of IT products depend strongly on customers' confidence, foreign companies often opt for direct sales.  

     A particularly notable characteristic is the undervaluation of software development in the Egyptian market.  Software’s lack of a tactile presence leads to an unfavorable valuation when compared to hardware.  Egypt’s high software piracy rates furthers this perspective of software as a public good.

IT Market Demand 

    The government is presently the largest single buyer and user of IT in Egypt, accounting for one quarter of Egypt’s total demand. (WHERE FROM?)
In terms of sales, the banking sector follows the government as the most important customer. The private sector and individuals fall into third and fourth place respectively. Private sector and household demand is primarily for downsized systems, while government requirements are still based on centralized systems and therefore entail client-server solutions. (Egypt & Middle East)

IT Segment Profits

   Profit margins in the hardware sector are under competitive pressures and are currently averaging between 10-15 percent.  Software companies can realize margins of 30 percent through Arabization operations and up to 40 percent in networking--currently the most profitable IT business in Egypt. Against this background, hardware companies are tending to offer total solutions to the client by coordinating subcontractors. Fifty percent of revenues in the hardware segment derive from turnkey projects today.(Harvard Study) 

Future Growth

    The expectation for growth in the domestic marketplace for IT products and services is in the 35% range. This represents very soft demand in the local market for services and products. Most of the demand is also at the high end of the marketplace, where multi-national firms are providing most of the services.  If this demand remains soft, without any stimulation from either government or industry, there are few reasons why leading and emerging companies should invest time trying to develop the domestic marketplace.(Harvard Study)