Egyptian Outsourcing Companies Are the Most Affected by the Minimum Wage Increase… But!
Several experts and executives in Egypt’s outsourcing industry agree that local companies are the most impacted by the recent decision to raise the minimum wage from EGP 6,000 to EGP 7,000. They explain that this increase will affect their contract pricing with clients and lead to higher operational costs.
Last week, the National Council for Wages, chaired by Dr. Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, approved raising the minimum wage for private sector employees from EGP 6,000 to EGP 7,000, with the new regulation set to take effect in early March.
Kato: The Increase Is Reasonable and Aligns with Inflation Rates
Ramy Kato, Vice President of Customer Service at Telecom Egypt, stated that the impact of raising the minimum wage on outsourcing companies has two main aspects. The first is that some local companies may incur financial losses if they fail to adjust their contract pricing, especially since these agreements were made based on cost structures before the latest wage increase.
However, Kato noted that this impact might be limited since most salaries are already close to the new minimum wage due to annual salary raises by companies. He also ruled out any significant effect on offshore outsourcing providers, as their employees’ salaries are often much higher than the government-mandated minimum wage.
Kato emphasized that non-compliant companies may disrupt market pricing stability and should be held accountable to prevent harm to compliant firms. He also predicted that outsourcing service prices would rise, with the additional cost likely being passed on to the end customer.
He described the wage increase as reasonable and aligned with inflation rates.
Global Company Executive: Local Companies’ Profit Margins Will Shrink
A senior executive at a global outsourcing company stated that local call center service providers will be the most affected by the minimum wage hike, unlike global firms where starting salaries often exceed EGP 10,000.
He explained that most Egyptian companies in the sector primarily hire Arabic-speaking employees, who typically earn an average salary of EGP 6,000 per month. These companies, in turn, charge clients between EGP 10,000 and EGP 12,000 per employee for outsourcing services.
With the minimum wage increasing from EGP 6,000 to EGP 7,000, he warned that profit margins for Egyptian outsourcing companies will shrink.
Local Company Executive: We Are Assessing How to Handle the Decision and Its Impact on Growth Plans
Meanwhile, an executive at a local outsourcing company explained that raising the minimum wage from EGP 6,000 to EGP 7,000 will increase operational costs, forcing companies to explore ways to manage the new requirement.
He added that, unlike global firms, local companies are more quickly affected by financial changes, making it difficult to adjust new contract pricing—especially since some clients may resist price increases.
He also noted that many local companies are currently evaluating how to adapt to the decision and its potential impact on their future growth strategies.
