Indian IT and BPO firms looking for new sources of affordable talent are expanding into Egypt -- Wipro's already doing some IT and BPO work there, as are Microsoft, IBM, Vodafone, Orange, Valeo and Teleperformance. So it's good to know that while Egypt faces significant social challenges, a recent study on economic freedom around the world finds that Egypt's business climate is improving.Egypt expects to generate $1.3 billion in outsourcing revenue in 2010, the head of the country's IT trade association told The Economic Times of India this week. That official also said that the IT outsourcing sector "has attracted local and foreign investments of more than $8 billion since 2006." I can buy the 2010 revenue projection, but I've gotta scratch my head a bit over the suggestion that investors have poured $8 billion into Egypt's IT sector in three years -- assuming more will be invested this year, that would yield a pretty crappy ROI if 2010 revenue reaches only $1.3 billion.

The Economic Times article said A.T. Kearney, Gartner, and Global Services-Tholons have all cited Egypt as an attractive outsourcing location, and said its strong points include a multilingual labor pool and relative proximity ("nearshoring") for Europe and the Middle East.

And The 2009 Index of Economic Freedom, a joint effort of the Heritage Foundation and The Wall Street Journal, ranked Egypt as #97 on a list of 179 countries. That might not seem like a ringing endorsement, but consider the placement on this index of business and economic freedom of two other countries regarded as outsourcing leaders -- India at #123 and China at #132 -- and a third said to be an up-and-comer in outsourcing: Vietnam, #145.

For more on the Egyptian IT trade association that was the focus of the Economic Times article, check out its Web site.