The unrest unfolding in Egypt put the country's outsourcing credentials at risk and might lead to more companies keeping their third-party work onshore, Ovum lead analyst Peter Ryan said yesterday.
"Many in the outsourcing community are pondering the demise of what appeared to be the next big thing in terms of location and in offshore services delivery.
"The virtual state of martial law imposed by the Mubarak Government not only impacts the ability of outsourcers to service their clients but also counters the pro-business message of openness that has been the watchword for foreign investment for the past several years," he said.
Vodafone New Zealand is one organisation that has had to rethink its call centre operations following the outbreak of violence in Egypt.
Vodafone has strengthened its call centre operations in Auckland while the violence continues. Mr Ryan said the largest question remained whether Egypt could recover its credentials, regardless of a change in government.
It was clear that the expression "business as usual" had no practical application for outsourcing work currently slated for Egypt.
Communications within, to and from the country had been minimal and staff were under government curfews restricting movements to and from work.
Those constraints were giving outsourcers in Egypt a significant amount of pain from the strain of fulfilling tactical process and ensuring that adequate labour and technology back-ups were in place, he said.
"Many service providers, as well as clients, are re-evaluating whether Egypt is still the right location for outsourcing deployments."
That was disturbing considering the large number of global companies that had set up in Egypt in the past several years, Mr Ryan said.
They included Sutherland Global Services, in Alexandria. Other IT vendors that had been investing in Egypt for longer periods could be affected severely in the coming months as clients became anxious to minimise offshore risk.
Microsoft had already begun to move some of its work out of Egypt, he said.
What had recently occurred in Egypt was certain to have ramifications for offshore outsourcing destinations around the world.
"Following recent border violence in Mexico and the 2009 terror attacks in Mumbai, the events in Egypt are certain to make outsourcers and their clients much more risk-averse than any time in recent memory and are likely to push many companies to choose the more secure, albeit costlier, option of keeping third-party work onshore," Mr Ryan said.
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