Abstract

Focusing on Egypt, the following section demonstrates how nearshoring can work in practice, and outlines what is needed to foster a more enabling nearshoring environment in the Netherlands. The analysis draws on two separate research missions during which the Clingendael team interviewed various stakeholders across the public and private sectors of both Egypt and the Netherlands.

The first part of the research examined the Egyptian context, highlighting both the opportunities and barriers. The second part shifts to practical implementation and the measures needed to scale up and operationalise nearshoring. In this context, two complementary strategies emerge. The first taps into the pool of talent already present in Egypt with the help of local intermediaries. The second aims to expand the pool of ICT professionals that Dutch firms can tap into by investing in recent Egyptian graduates. This is to be done through targeted training and upskilling, geared at enhancing their employability in both Dutch and international markets.[1]

Context

Government

Egypt is rapidly positioning itself as a competitive hub for ICT services, offering a range of advantages for international companies. As earlier research has shown, Egypt offers a strong foundation for ICT nearshoring.[3] The country combines a large pool of well-educated, often English-speaking ICT professionals with competitive labour costs and time zones closely aligned with the Netherlands.

The country’s ICT sector is not only long established but continues to expand rapidly: it grew by 14.4 per cent in 2023/24 and accounted for 5.8 per cent of GDP in 2024.[4] Recognising the sector’s strategic importance, the Egyptian government actively supports firms that nearshore to Egypt, framing ICT as a key driver of sustainable growth. This allows Egypt to retain its skilled professionals while they contribute to the domestic economy and generate foreign exchange earnings.[5]

Crucially, unlike other industries that have strong involvement of large state or military conglomerates, growth in the ICT sector is largely private sector driven, making the sector particularly attractive for Dutch SMEs. Moreover, it is expected that the sector will remain relatively open to foreign players in the future, as the government relies on ICT to attract foreign investments and reinforce Egypt’s image as a forward-looking, globally connected economy.

Egypt’s ICT talent

A major strength of Egypt’s ICT sector is its steady pipeline of new talent: around 50,000 ICT graduates enter the labour market annually.[6] This consistent inflow of skilled workers supports sector growth while reducing concerns about potential brain drain.

Interviews conducted with recruiters, trainers and nearshoring companies during a recent study tour (July 2025) confirmed that many companies are highly motivated to engage in nearshoring opportunities.[7] Many firms are struck by the relatively limited presence of Dutch companies in the local tech sector, especially when compared with neighbouring Germany. From interviews with established developers with experience in companies operating internationally, we learned that international roles are valued not only for their higher pay and prestige, but also for the structured work environment they provide, with clear task division and set working hours.[8] Multiple respondents noted the benefit of working fully remotely and being able to live in a more affordable city and avoid traffic, specifically in Cairo.[9] For many employees, receiving salaries in a foreign currency – or in Egyptian pounds pegged to foreign exchange rates – offers financial stability in an otherwise volatile economy. In return, Egyptian ICT workers demonstrate strong client commitment and a clear willingness to adapt to expectations, often viewing such opportunities as a pathway to professional advancement and personal growth.

Beyond its workforce, Egypt has developed a vibrant and dynamic ICT business ecosystem, with numerous firms already serving international clients. These include North American and European markets – notably Germany – as well as Gulf countries such as Saudi Arabia. Egyptian ICT companies specialise in tailoring their services through three main models: staff augmentation, freelance matchmaking and full-service ICT solutions.[10] Many complement these services with intercultural communication and soft-skills training to prepare employees for international collaboration with American or European clients.[11] Others have established mentoring networks in which staff with more specific international experience train those with less experience.[12] Importantly, all these companies offer flexible arrangements that lower barriers to entry and address clients’ hesitation, allowing Dutch companies to start with an individual or with small teams, and scale operations up or down depending on needs. Some barriers outlined in earlier work have thus proved to be largely addressed. This talent ecosystem is supported by robust digital infrastructure, including 17 submarine internet cables linking Europe and Asia through Egypt.[13]

Egypt has developed a vibrant and dynamic ICT business ecosystem, with numerous firms already serving international clients.

Against this backdrop, nearshoring within partnerships with Egypt is strongly welcomed by Cairo, as well as by the private sector, which could feature as a constructive element in bilateral discussions, including on migration cooperation.

Key barriers and solutions

Despite Egypt’s strong potential in the ICT sector and its potential to meet Dutch labour market needs, collaboration has yet to gain real momentum. Hesitation stems partly from a lack of trust among Dutch companies in the strategy of nearshoring, often rooted in unfamiliarity or prejudice. Additionally, there are alternative barriers preventing nearshoring from taking off properly in the Netherlands. These barriers, and recommendations for how the Dutch government can address them, are outlined below. Effectively facilitating Dutch companies to nearshore would provide greater credibility for including nearshoring as a tool within bilateral dialogues and partnerships.

I. Uncharted territory

Dutch firms interested in nearshoring to Egypt face challenges in identifying reliable partners. Previous matchmaking initiatives lacked continuity and trust-building mechanisms, resulting in untapped potential on both sides. Some also misfired by pairing Dutch firms seeking to sell products in Egypt with Egyptian companies primarily focused on providing ICT nearshoring services, creating a mismatch of expectations. In addition, these programmes often overemphasised basic business process training in Egypt, overlooking the fact that Egyptian ICT companies are already capable and well established.[14]

A more effective approach is to treat Egypt not as a secondary entry market for products, but as a strategic technology partner and ally in advancing digital cooperation and building sustainable bilateral ties while addressing Dutch labour shortages.

Recommendations:

II. Intercultural communication

Good communication between Dutch companies and remote workers is critical. Cultural differences and limited face-to-face exchange can lead to misunderstandings and miscommunication. Nearshore staff may lack familiarity with Dutch workplace norms and expectations, while Dutch firms may have limited awareness of Egyptian business practices.

Recommendations:

III. Harmonisation of regulations and legal uncertainty

Many Dutch companies lack sufficient knowledge of Egypt’s existing regulatory framework, creating uncertainty around compliance with labour rights, taxation and contractual obligations. Without local expertise or trusted intermediaries, this legal opacity acts as a barrier to engagement.[18] Similarly, companies may lack knowledge on mitigating strategies to ensure cyber security within nearshoring. Risks of insider threats, data leaks, espionage and misuse of system access are heightened when remote staff have unrestricted access or rely on personal devices with inadequate security measures.[19] Effective mitigation therefore requires robust access controls, including the use of company-issued equipment.

Recommendations:

Cross-cutting Recommendation:
Several of the above recommendations can be addressed through the establishment of a Dutch Desk, akin to the desks established in Kenya, Ghana, Nigeria or Ivory Coast. The establishment of such a desk strengthens Dutch-Egyptian collaboration in the ICT sector by acting as a central hub that connects and supports businesses across borders. Acting in close collaboration with the Dutch embassy and partners such as RVO and Invest International, the Desk could provide practical tools for cross-cultural cooperation, guidance on compliance and local regulations, and connect Dutch companies with vetted Egyptian partners. The Desk could also maintain registries of trusted providers and Dutch firms with relevant experience, helping companies navigate the local market and build sustainable partnerships. To ensure both sustainability and shared ownership, the Desk could be funded through a mix of public and private contributions.

IV. Talent mismatch

A final challenge is the potential mismatch between supply and demand. Dutch ICT firms mainly seek mid- and senior-level professionals and are often searching for the ‘perfect’[23] candidate. Due to structural and demographic challenges, however, the Dutch talent pool is shrinking and therefore cannot meet this demand. Egypt, by contrast, produces large numbers of ICT graduates every year but many lack the experience Dutch employers require. This may create a paradox: Dutch firms hesitate to hire inexperienced staff or juniors but, without investment in training or career development, the shortage of experienced professionals will only deepen.

Recommendations:
The Dutch government could help bridge this gap by facilitating targeted training programmes tailored to the needs of Dutch firms. By preparing Egyptian ICT graduates for work within Dutch companies, such programmes would expand the pool of qualified candidates. It would also strengthen the diplomatic embedding of nearshoring initiatives by creating career opportunities for graduates at risk of under- or unemployment.

To enable effective training programmes, the following steps should be taken:

Path(s) forward

Our research mission to Egypt has shown that the foundation for ICT nearshoring is already partly in place. Several Dutch and Egyptian companies have developed concrete business plans to facilitate nearshoring initiatives. However, targeted government action is needed to scale these initiatives up and translate them into sustained and large-scale implementation.

The first step is awareness and outreach. Many Dutch businesses, particularly SMEs, remain unaware of the opportunities to hire remote ICT talent from countries such as Egypt and are unfamiliar or hesitant to engage with these markets. They need to be made aware of the opportunities and advantages of hiring remote tech talent from these countries.

Nearshoring should therefore be presented not as a last resort, but as a strategic response to the ‘skills race’, enabling Dutch firms to address structural ICT labour shortages while fostering sustainable employment abroad. Positioned in this way, nearshoring can be seen as a driver of long-term competitiveness rather than a fallback measure. To shift perceptions[26] and prompt companies to explore this option, a national information campaign through business associations is needed. This campaign could be undertaken with the support of RVO and Invest International.

At the same time, an equally important step is to build trust and reduce perceived risks on the Dutch side. This could take the form of a pilot initiative, in which a company acts as a Dutch frontrunner, supported by an experienced Dutch and Egyptian intermediary with expertise in setting up nearshoring arrangements. The pilot would generate lessons learned and create a visible proof of concept that reassures SMEs and demonstrates the mutual benefits of this model.

Building on this pilot, the Dutch government, RVO and the Dutch Embassy in Cairo can then move from isolated measures to a coordinated scale-up with ICT-focused trade missions and targeted networking events, connecting Dutch SMEs with vetted Egyptian partners and talent pools.

Finally, for these efforts to succeed, nearshoring must be embedded in a coordinated, cross-ministerial approach that explicitly connects ICT-migration, trade and development policies. Breaking down silos is essential if nearshoring is to move beyond isolated experiments and evolve into a strategic pillar of bilateral cooperation, helping to address Dutch labour shortages, creating targeted employment abroad in partner countries, and building and strengthening durable partnerships.

Nearshoring must be embedded in a coordinated, cross-ministerial approach that explicitly connects ICT-migration, trade and development policies.