Iraq Taps on the Outsourcing Door with Caution: Infrastructure and Political Volatility are Key Challenges

As global interest in new destinations for IT and services outsourcing rises, Iraq has begun to appear on the map of emerging markets in this field, driven by the availability of labor and lower operational costs.

However, industry experts assert that the road ahead remains long due to infrastructure deficits and political volatility.

Fouad: Iraq is Still in the Early Stages

Shaimaa Fouad, CEO of Winners Outsourcing Services, said that Iraq is still in a very early phase of entering the outsourcing market compared to other countries that have made significant strides in the field, such as Egypt, Morocco, Tunisia, and Jordan.

She noted that the Iraqi market possesses some attractive qualities, primarily the abundance of human resources and the relatively low cost of operation, which could represent a potential draw for global and regional companies.

However, she pointed out that Iraq faces significant challenges currently preventing it from becoming a genuine competitor.

The most prominent challenges include weak technological infrastructure and unstable internet services, in addition to the security and political conditions that are still not fully stable, and the absence of organized government incentives—all essential elements that support the industry’s growth in more mature markets.

Fouad added that Iraq is not yet considered a major player, but it has started to pique the interest of some investors looking for alternative, low-cost destinations.

Nevertheless, she emphasized that Egypt still clearly holds the lead, possessing a developed infrastructure, qualified human capital, extensive experience serving global markets, and strong government support that has cemented its position as a pioneering outsourcing hub.

Regarding the likelihood of Iraq competing with Egypt in the future, Fouad clarified that this possibility is very weak in the short term (“3–5 years”).

However, Iraq might emerge as a regional competitor in some low-cost services in the medium term (“5–10 years”) if it succeeds in investing in education, language training, technology, and achieves greater stability.

In the long term, Fouad suggested that Egypt is likely to maintain its regional leadership thanks to its experience and service diversity, while Iraq might represent an additional option for companies seeking to diversify outsourcing destinations while benefiting from the cheaper cost advantage.

Al-Sobky: Egyptian Companies Should Explore Investment Opportunities in Baghdad

Dr. Ahmed Al-Sobky, Board Member and Head of the International Business Development Axis at the Information Technology Industry Chamber (CIT) of the Federation of Egyptian Industries, called on Egyptian outsourcing and call center companies to explore the promising investment opportunities, market size, and competitor landscape in Iraq.

He also urged them to assess the strength of the telecommunications infrastructure network, employee salary levels, and the availability of qualified human resources in the country.

Al-Sobky explained that the Iraqi and Libyan markets hold promising investment opportunities for Egyptian companies, but the economic and political conditions in Baghdad are more mature than in Tripoli, and IT services can be exported to both from Egypt.

He affirmed that Egypt and Iraq share a deep historical relationship, dating back to the dawn of civilization, considering the current political and economic ties between the two nations an ideal model for interaction between two sisterly Arab countries.

He added: “We felt the depth of this relationship in the warm reception of the Egyptian delegation, which included 22 technology companies, at Baghdad International Airport to participate in the ITEX Iraq exhibition from September 25th to 28th, right until the mission returned to Cairo.”

Al-Sobky believes that one of the most important organizational challenges Egyptian companies will face when deciding to expand into the Iraqi market is the procedures for obtaining entry visas.

He noted that the Chamber will cooperate with the Information Technology Industry Development Agency (ITIDA)—the executive arm of the Ministry of Communications—to find appropriate solutions through the intervention of state agencies, particularly the Ministry of Foreign Affairs, with the aim of overcoming any other administrative obstacles Egyptian companies might encounter.