Egypt could emerge as the surprise outsourcing destination next year as the country seeks to ramp up its investment in infrastructure and skills to support the industry.

The Egyptian government is looking to build on the success of its Smart Village technology complex which now houses 20,000 employees.

The country hopes to have a second complex operational by next year, according to Amin Khaireldin, an advisor to the board of directors at the Egyptian IT Industry Development Agency.

Khaireldin argued that Egypt's advanced telecoms infrastructure, convenient geographical location for western Europe, and large IT talent pool have drawn big names like Wipro, Satyam, Vodafone and Oracle to set up offices in the country.

"Vice presidents of large corporations are talking to us and we are very busy with diligence," he said. "Egypt is becoming identified more and more as a good outsourcing destination because we have the talent pool with multilingual skills, which is open to other cultures and which views the job as aspirational. "

Peter Ryan, lead analyst with Datamonitor, agreed that Egypt offers an excellent infrastructural and geographical location for companies looking to outsource or offshore. He also highlighted the "superb" language skills and large IT graduate population as reasons why Egypt could thrive over the coming 12 months and beyond.

Egypt may get the best results by positioning itself as a nearshore alternative to places like India and South Africa for firms based in western Europe, although Ryan warned that it may struggle against stereotypes.

"The opportunities are significant, but one of the biggest challenges will be the perception of the country as [dangerous for foreigners]," he said.

"There are huge opportunities for outsourcing companies next year to recoup their investments because firms want to cut overheads [by outsourcing], but there will be challenges too."

Key among these challenges will be the financial instability of some sectors, and the potential for firms to decide that the reduced volume of business they are doing may not warrant outsourcing some functions at all, he said.