Egypt’s “Magic Portal”: Hosting Tech Giants’ R&D For A Leap Into Innovation
Hosting the research and development centers of global technology and telecommunications companies is one of the most crucial pathways for the state to localize technology and transfer knowledge to the Egyptian market in the coming years.
It aims to build a business environment that fosters the sector’s development at all levels by innovating local technologies that generate added value in terms of hard currency revenues and build research capabilities that transform education strategies, innovate new goods and services, and also boost investment in research and development and manufacturing.
The state is focusing on this direction by working to provide the necessary conditions to attract global companies to establish regional research centers in Egypt after years of missed opportunities.
This involves providing an encouraging business environment, advanced digital infrastructure, flexible administrative systems and intellectual property rights protection legislation, a developed educational system enhanced by advanced research, development, and innovation centers, flexible legislation ensuring freedom of research and development, alongside increasing government spending on scientific research and adopting effective policies to discover and retain innovators.
Egypt: Home of Innovation
Egypt is home to over 80 companies in the field of engineering research and development, exporting high-value technological services from Egypt through tens of thousands of specialized engineers. This has given Egypt some distinction in the field of semiconductors, particularly embedded software for automobiles, which the state is banking on to increase the number of research centers for global companies specifically operating in the Egyptian market.
For their part, experts and analysts stated that providing a favorable climate for research, development, and innovation is a prerequisite for attracting these centers. However, they added that a strong negotiating power is also needed to pressure global companies to establish research and development centers within Egypt by granting them tax privileges and exceptional investment incentives, especially since the Egyptian market is one of the largest consumer markets in the region and possesses a large and diverse young human capital.
Experts pointed out that the top 6 technology trends for 2025 should shape our approach in attracting these centers and their related activities. These include: Artificial Intelligence, Spatial Computing, the Smart Device Revolution, the Radical Transformation in the IT Sector, Cybersecurity and Future Challenges, and Updating Core Systems with Artificial Intelligence.
They also indicated that this direction fundamentally requires providing multiple funding sources, establishing and developing advanced research centers and laboratories equipped with the latest technologies, offering legal and administrative advice to research projects, encouraging cooperation with companies and industrial institutions to adopt and practically apply research findings, increasing research and development investments in promising sectors and advanced industries, and establishing a mechanism to measure the economic returns of research and development and investment in it.
The year 2025 is expected to witness a significant transformation in the IT market, with global spending increasing by 8% to reach $3.6 trillion, driven by the growth of data centers and the adoption of artificial intelligence technologies. Artificial intelligence is leading the scene, with estimates projecting its size to reach $243.7 billion.
Egypt aims to reach $8 billion in the value of its digital and technological exports in the next fiscal year, with the presence of 175 global companies employing more than 145,000 specialists. This has driven the growth of Egypt’s outsourcing exports to various countries worldwide by 54% in one year, covering diverse fields ranging from call centers to higher-value services such as electronic circuit design, semiconductors, and embedded software for automobiles.
Strong Supporting Environment Required
Maged Mahmoud, Director of the Center of Excellence at Dell Technologies in Egypt, stated that increasing the number of companies operating in the field of engineering research and development, as well as the establishment of specialized research centers by global companies in Egypt, requires a strong supporting environment that includes regulatory improvements, investments in technological infrastructure, and specialized training programs. Additionally, cooperation between universities and the private sector must be strengthened to stimulate innovation, with clear national-level programs in this direction that establish an identity and also enhance Egypt’s position in innovation and research indicators.
He added that the Egyptian government has strongly supported the technology industry pathways over the past years through strategic investments and regulatory improvements, which enhances the attraction of global companies and their research and development centers. He noted that the government has launched numerous skills development programs to ensure a constant flow of qualified professionals, and this commitment to nurturing talent has been a key factor in expanding the scope of outsourcing businesses and providing Egyptian professionals with the necessary expertise to excel in the global market.
Mahmoud pointed out that the Egyptian market, with its human and technical capabilities, is capable of generating innovation and registering patents, confirming Egypt’s potential to drive technological progress. He emphasized the need to increase specialized centers in high-value technological services to enhance innovation and product development, thereby strengthening Egypt’s position as a regional and global technology hub.
Clear Support Vision
Mohamed Abdeen Mohamed Abdeen, co-founder of Corporate Stack, believes that the Egyptian state is working to implement a clear vision to support the digital economy by allocating equipped technology zones and providing attractive investment incentives, alongside establishing strategic partnerships with global companies. He added that this direction requires effective coordination between the government, universities, and the private sector to ensure a stimulating environment for research and development, thereby strengthening Egypt’s position as a regional hub for technology and innovation.
Regarding the incentives provided to global companies, Abdeen said that they include tax exemptions, regulatory , and government support for applied research, in addition to joint funding with the private sector. The state also provides qualified personnel from Egyptian universities and accelerates customs procedures and licenses for technical equipment, reducing obstacles to the establishment of these centers.
These centers, according to Abdeen, contribute to linking scientific research with industrial needs and developing local technological solutions that meet market demands. They also stimulate entrepreneurship and reduce dependence on imports, creating added value and promoting advanced industries in Egypt.
He adds: “Egypt includes leading research centers such as Valeo for automotive technologies, Vodafone Intelligent Solutions, as well as IBM and Microsoft centers. These centers have contributed to creating job opportunities, exporting technical services, and enhancing Egypt’s position as a regional destination for research and development.”
According to Abdeen, the centers focus on developing technologies that meet local needs, such as digital transformation in government services, education, and healthcare, water and energy management technologies to improve the use of natural resources, smart agriculture to enhance productivity and food security, intelligent transportation systems to address traffic congestion, and cybersecurity to protect digital infrastructure.
Abdeen draws attention to the fact that political stability and international relations directly affect the attraction of investments, as global companies prefer safe and stable environments. The US-China conflict also provides a golden opportunity for Egypt to become a neutral region attracting investments from both sides, especially with companies’ tendency to diversify supply chains.
However, Egypt faces challenges such as a shortage of specialized skills, bureaucracy, and weak infrastructure in some areas, in addition to the need to strengthen intellectual property protection and improve the quality of technical and research education.
He adds: “Ensuring the sustainability of these centers requires developing a long-term strategy for research and development, with continuous government support, updating laws to protect innovation, involving the private sector in the research process, and developing educational curricula to keep pace with market demands.”
Incentives For Innovation
For his part, Essam El-Gohary, information systems consultant and member of the scientific board of the National Planning Institute, said: The step of reaching out to global technology and telecommunications companies to establish research centers in Egypt is a very important step, and we have numerous incentives that can be offered to these companies, foremost of which is the human element. Egypt has the human resources that qualify it to establish these centers. Reality confirms that the human element is a source of strength in Egypt, and we have personnel publishing in the best international journals, and there are 150,000 Master’s and PhD graduates.
Therefore, it is natural for the Ministry of Communications to seek to convince global companies to establish centers in Egypt, as we have the technical capabilities and personnel.
He added that these companies can be incentivized by providing the locations where the centers are established alongside tax exemptions, and that science faculties in Egypt in various fields should showcase their capabilities as they also possess competencies. He pointed out that the most important challenge is the lack of marketing for the possibility of establishing these centers in Egypt.
Major Investments Could Be Attracted
Walid Gad, Chairman of the Information Technology and Communications Chamber, said that the human element in Egypt is ready to absorb all technologies and innovate in them significantly, which is what companies operating in these fields, whether global or local, need. Therefore, major global investments can be attracted in these fields, especially since the work environment in the technology sector in Egypt enjoys acceptable levels of incentives and policies, as well as low levels of wages compared to neighboring countries, which is how India managed to create a pioneering experience in this sector.
He pointed out the necessity of working to bring about an educational and cultural revolution related to the sector through an educational organizational structure that encourages the widespread dissemination of technological education and increases awareness of the importance of technology in stimulating economic growth rates and providing job opportunities for youth, in parallel with adopting financial and monetary policies that promote the funding of startups and entrepreneurial projects, which highlights the attractiveness of the Egyptian market and its increasing potentials in the technology sector.
Gad pointed out that the transformation of the technology sector in Egypt to new levels of growth and the injection of significant investments in modern technology fields such as artificial intelligence, the Internet of Things, data, and cybersecurity requires doubling the number of workers in the sector and equipping them with the necessary skills, which the Ministry of Communications is working on through numerous programs.
He noted the need to also work on innovating more modern and specialized financial mechanisms for this sector by establishing specialized investment funds that also finance training and qualification operations through partnerships with companies operating in the telecommunications and information technology field by allocating a portion of their profits to this area within an integrated developmental framework and not on the basis of social responsibility and support.
More Spending on R&D Needed
Mohamed Azzam, information technology expert, said: Enhancing Egypt’s capabilities to export high-value technological services requires unconventional steps, including significant spending on research and development. We do not have large capabilities to do so. China, for example, spent more than $550 billion over the past years to achieve the recent breakthrough.
Therefore, we must specialize in one type of technology, invest in it, excel in it, and become a country famous for it, for example, the field of artificial intelligence in the agricultural sector. We must have a footprint in one field and have the ability to spend on it, as this will enhance exports, in addition to paying attention to research and development, because any advanced technology currently is the result of research and development, and the countries that have progressed have done so.
Azzam points out that the most important element in creating a supportive environment for innovation is education and hosting advanced research centers, also in unconventional ways. Investment must be made in distinguished talents and enrolling them in American and international universities to gain sufficient experience, and then return with innovative ideas and launch startups that support technological exports.
He added that most students in American universities are from East Asian countries, and these talents have developed distinguished technological research that has transformed into companies that contributed to achieving a technological leap, stressing that moving away from traditional ideas will contribute to achieving that leap in Egypt.
