Internet shutdown in Egypt creates supply chain risks

The recent internet shutdown across Egypt caused country-wide disruptions in outsourcing operations and created risks to supply chains.

The Egyptian Government shut down the internet on 27 January for nine days to limit protestors’ ability to use social networks to organise.

Microsoft and Hewlett-Packard (HP) are two of the larger companies that outsource in Egypt, however it has been revealed that Microsoft shifted some work (mainly call-centre services) out of Egypt after the country shut down the internet.

This is a major blow especially given the hard work that Egypt has done over the past few years to position itself as a viable outsourcing destination. Only last month, it announced plans to double outsource revenue by 2015.

The shutdown has also caused supply chain risks to other countries.

“Some countries had problems accessing their software and others could not contact their partners in Egypt,” Robert Mares, CEO at denQers BV, said.

“I think the lesson learned here, especially in terms of outsourcing offshore, is that companies should always consider the risk that political development in other countries has on their supply chain,” Mares said.

Just as companies have contingency plans in place for when a fire occurs, they should plan for a disaster similar to what is happening in Egypt.

“You must always take these risks into account, on both outsourcing and day-to-day operations,” Mares said.

“Some companies didn’t think about the impact an internet shutdown had on their company until the situation in Egypt changed things so drastically,” he said.

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