ble of Contents
IT Future in Egypt
(Model of workforce demand and supply in the IT field)
Eng. Naglaa Hassan Zaky Eng. Zainab Mohamed Mahmoud
IT Specialist ,The Egyptian Cabinet, IT Specialist ,The Egyptian Cabinet,
Information & Decision Support Information Technology Institute (ITI)-
Center(IDSC) , IDSC,
Master Student in System Dynamics, Master Student in System Dynamics,
University of Bergen University of Bergen
Postal Address: 11 Kolyate El-Tarbiah Postal Address: 14 Abou Rabia st.,
El-Raydiah St. El-Haram, Giza, Egypt Omrania Gharbia, El-Haram, Giza,
Phone: +2(0105600792) Egypt
E-mail: Naglaa_h@yahoo.com Phone: +2(0101475063)
E-mail: zaynabm@ hotmail.com
Nowadays, the IT environment is becoming more and more attractive for Egypt's
youth as a promising field which lead to increase the number of IT trainees therefore
the number of IT workforce in Egypt's market is increasing too.
The question is: Does the IT market demand is equal to the increase in IT workforce
supply in Egypt's IT market?
A very important factor we should take in consideration is how much the quality of the
trainees meet the international quality of the IT to reach the goal of exporting and make
a leap in IT industry. So it’s important for us to have an overall and accurate
understanding of the effects of excess training programs relative to the projects
available in the IT market in Egypt. System dynamics is considered a methodology that
bridges the gap between understanding the structures and understanding the behavior.
System dynamics enable most people to describe and analyze a system, based on an
intuitive system understanding, and more to use system dynamics promote our intuitive
system understanding. So the purpose of our model is to use system dynamics to build a
simulation model that will help us to understand the IT market situation in Egypt in next
few years according to the market demand and supply.
1. Introduction
1.1 Historical background
Egypt, through its ancient history which extends over 3000 years BC has been
witnessing massive information flows through different means since the era of
the Pharaohs. Walking through history, life and development along the Nile was
paralleled by a different type of an information society. This included inscription
on stones, papyrus papers, Rosetta stones and the establishment of the library of
Alexandria which was considered in ancient Egyptian history, the first largest
and famous library world-wide. During the middle ages, Arabic manuscripts,
documentation on Papyrus together with documentation on "Parchemin" which
is a form of leather became one of the most common means for information
dissemination. In the modern age, printing and publishing of paper started in
Egypt during the 19th century which has witnessed the first publishing of the
first Egyptian journal in 1826. A few years later in 1830, Egypt witnessed the
establishment of the first national archive system.
During the 20th century and prior to 1985, a number of characteristics identified
the status of the "information society" in Egypt. It was characterized and
perceived as follows;
+ datarich... information poor,
accumulated bureaucracy ... red tape,
computers viewed as ends ... not means,
islands of innovation ... no bridges,
focus on technical issues ... not decision out comes,
poor multi-sectoral coordination,
no synergy between information and socio-economic development
strategies; and,
+ Brain drain.
Since the mid 1980s, the government of Egypt has established a nation-wide
information project targeting:
1. Achieve a leap in IT industry.
2. Exports.
3. Job opportunities for Egypt's youth.
Which achieved by:
1. The build-up of information infrastructure.
2. Focus on people as a vital resource in Egypt.
1.2 Building Egypt's Information Technology Human Resources
The focus on people were shaped and put into perspective through the
establishment of several national and regional training and professional
development institutions governed by the Cabinet of Egypt which encourage the
private sector to join the training field. These institutions over the last decade
helped design and deliver professional and academic educational development
programs in information technology. The objective was to introduce and diffuse
cutting-edge information technology into various organizational levels and
business development activities. Such effort has resulted in training over 50,000
individual in 5,200 professional and academic programs serving around 800
government, public and private sector entities.
1.3 The Purpose of the Research
Nowadays, the IT environment is becoming more and more attractive for
Egypt's youth as a promising field. Which lead to increase the number of IT
trainees therefore the number of IT workforce in Egypt's market is increasing
too.
The question is: Does the IT market demand is equal to the increase in IT
workforce supply in Egypt's IT market?
A very important factor we should take in consideration is how much the quality
of the trainees meet the intemational quality of the IT to reach the goal of
exporting and make a leap in IT industry.
So it’s important for us to have an overall and accurate understanding of the
effects of excess training programs relative to project available in the IT market
in Egypt.
System dynamics is considered a methodology that bridges the gap between
understanding the structures and understanding the behavior. System dynamics
enable most people to describe and analyze a system, based on an intuitive
system understanding, and more to use system dynamics promote our intuitive
system understanding.
So the purpose of our model is to use system dynamics to build a simulation
model that will help us to understand the IT market situation in Egypt in next
few years according to the market demand and supply.
2. Model Overview
2.1 Model Assumptions
Due to the limited project time, the following assumptions are made to simplify the
model. Furthermore, this simplification can help us to focus on the main driving force
and feedback structure in the IT market workforce demand and supply which presented
by different sectors in the model.
@ GDP Growth Fraction is constant value and the fraction of IT investment is
constant.
@ The cost of each project will be considered as a constant. To be able to determine
the number of projects available in the market each month.
@ The Target Average Project Waiting Time is constant (Average time for a project to
wait for implementing before attrition ) to make us able to calculate the actual
projects available in the market
@ Minimum Project Completion Time is constant (Time needed to complete project
implementation ) to determine the projects completion rate
@ Average Training Time is constant to determine the number of IT workforce
graduated from the training programs.
2.2 Conceptual Model
To keep the underlying structure of this model clearly and understandable, a coarse
causal loop diagram will be used in the following analysis. All the unimportant
relationship in this model is hidden and only the most critical feedback structure will be
shown.
2.2.1 Main sectors in the model
As shown in the figure below the model contains six main sectors that are interacting.
These Sectors are:
* IT Investment Sector
* Projects Sector
* Workforce Sector
« Wages Sector
¢ IT Training Sector
* Training Quality Sector
We will discuss those sectors in the next pages.
2.2.2 IT Investment Sector
IT Investment sector where we calculate how much we invest in the IT field. This value
is calculated as a fraction of GDP of Egypt. Its important is to be used to determine the
size of projects available in the market this done in the project sectors.
2.2.3 Projects Sector
Projects sector is the part of the model dealing with the available projects in the IT
market and the projects currently implemented by the current workforce. So it is used to
determine the workforce demand in the IT market.
2.2.4 Workforce Sector
The workforce sector is containing the total available workforce in the IT market and
the desired workforce which the market demands for the available projects.
The Gap between them is the main consideration of our model because it is present the
relationship between the IT market workforce demand and supply.
2.2.5 Wages Sector
This sector is the main effect of the training needs in Egypt because as wages increase
as attractiveness to the IT field increase. The wages is determined by the ratio of
available workforce to the desired workforce in the market. As this ratio increases the
wages is decreases and vise versa.
2.2.6 IT Training Sector
The training sector shows the effect of attractiveness on increasing the people demand
on IT training. As we mentioned in Wages Sector attractiveness increases as wages
increases and vise versa.
Also we take in our consideration the training capacity (maximum numbers of trainees
can be trained in the market) and how long does the market take to change its training
capacity according to the training demand. So, training sector is the source of IT
workforce supply in the market.
2.2.7 Training Quality Sector
The training quality sector is measure the quality of graduated trainees relative to
quality reference value. The training quality determines the productivity of the
employee which affects the projects completion rate. It is considered as a factor to
determine the desired workforce in IT market.
2.3 Causal Loop Diagram
Investment in
Training 4
(=A
Training Caj Tafa —
+
+ Gy Projects
Wages
Trainees
Workforce Supply + w Ms) Demand £
Desired Projects
mea Gap Capacity
i
“Available
Workforce Desired
pata
Training Quality Training Quality Loop
a}
+
Productivi
In the causal loop diagram, there are mainly two reinforcing loops and one
balancing loop. The reinforcing loop R1 is Workforce Demand. The higher the projects
the market has, the more workforce demand, which raise the IT wages in the IT market.
The balancing loop B1 is called workforce supply in which the IT training increases the
available IT Workforce to fit the workforce demand. The third reinforcing loop R2,
called training quality loop, which concern about the training quality and how it affects
the productivity to determine the IT workforce demand. In the following we will
mention them in more detailed.
R1: Workforce Demand loop
The Investment in IT in our model is the
factor that determines number of projects
in the IT market. The more Investment in
IT, the large number of Projects.
Therefore Desired Projects Capacity in
the market goes up, and also the Desired
Workforce goes up. So the actual
workforce demand pushed to a further
high level and the Gap in workforce
increases. As the demand of workforce
increase Wages in IT field will increase
relative to other careers which will affect
the attractiveness of people to the IT field
more and more and that will increase the
Investment in IT field. So this is
reinforcing process.
B1: Workforce Supply loop
This part is responsible of supplying workforce to
the market after training. When people are
GDP
Attractiveness 3%
Investment in
+
Projects
Wages An)
oe +,
Workforce Demand
Desired Projects
Capacity
Workforce Gap
+
Ne aa
Workfore
Desired
Trining Cofecity
Attractiveness
attracted to the field they join training programs A
and also the government will help to increase the
Training Capacity, so the Trainees will increase
and the Available Workforce will increase. That
Workforce Supply +
will affect the Gap in Workforce because the IT
market now is saturated or even overloaded so
the Wages will decrease and according to that the
Attractiveness to the IT field will decrease. So
this is a balancing process.
R2:; Training Quality loo
If people are attracted to the filed so
much and the Training Capacity increase
more and more that will affect the
Quality of the Training process and the
Quality of the Workforce in the market.
So the Training Quality will decrease
and the Productivity also will decrease.
While the Projects development depends
on the productivity, the Desired
Workforce will increase. As in the
Workforce Demand loop the Wages will
increase and also the Attractiveness
which affects the Training capacity and
the Training Quality will decrease in
reinforcing process.
Workforce Gap
+
Available _
Workfore
Training Copbcity Attractiveness
Wages
Training Quality Loo
Training Quality is Quality Len *
\ Workforce Gap
4
Productivity
Desired
‘Workforce
3. Stock and Flow Diagram
In our model we have the following sectors:
IT Investment
Projects
Wages
IT Training
Training Quality
Cue cor
1. IT Investment
‘owth Ratd ime_To_Adjust_To_IT
IT Investment
<
Fraction_Of_GDP_In_IT
Investemnt_in_IT
GDP_Growth_Fraction!
GDP
Explanation of Concepts and Assumption
GDP
init =225*10°7
flow =+dt*GDP_Growth Rate
unit $/month
Fraction_Of_GDP_In_IT
Fraction of GDP used in the IT investment
init
flow
unit
= +dt*IT_Growth_Rate
Dimensionless
=Final_Fraction Of GDP_In IT
Investment in IT
aux =GDP*Fraction Of GDP_In IT
unit $/month
2- Projects
Projects
It
erceived_Project_Delay
EffWaitingTipf@OnP rbjectattritionF raction
TargetAveP rojectW aitingTime
\ =
. Perceived_Pofential Projects
< AveP rojectiff aitingtime
ag ProjectAttritionR a
Pfojects ntial_P rojects
Completion Rat i ProjeCthdmisionk ate Projects Rate
Workforc’ ’
, Average_Project_Cost fee
? eset COST Investemnt_in_IT
Projects_Capi
TargetP roject TargetAveP rojectTime
i
nS
Productivi maa
jesiredP rojectCapacity
Desired Workforce wi
TargetAveP rojectWaitingTime
Explanation of Concepts and Assumption
Potential_Projects
The available projects in the IT market
init Potential_Projects = Projects_Rate*TargetA veProjectW aitingTime
flow Potential_ Projects = -dt* ProjectA ttritionRate
-dt* ProjectA dmissionRate
+dt* Projects Rate
unit project
Projects
The current running projects by the working workforce
init Projects = Projects_Capacity*Minimum_Project_Completion_Time
flow Projects = +dt*ProjectA dmissionRate
-dt*Completion_Rate
unit project
Perceived_Potential_Projects
aux Perceived_Potential_Projects = DELAY INF(Potential_Projects,
Perceived_Project_Delay)
unit project
Projects_Capacity
The number of projects that can be implemented with the available resources per month.
aux Projects_Capacity = Workforce* Productivity
unit project/month
Target Project
Number of projects can be implemented in the average project time
aux TargetProject = Projects_Capacity*TargetA veProjectTime
unit project
Desired Project Capacity
aux DesiredProjectCapacity =
Perceived_Potential_Projects/TargetA veProjectW aitingTime
unit —project/month
Desired_Workforce
The required workforce for the available projects in the market.
aux Desired_Workforce = DesiredProjectCapacity/Produtivity
unit person
Average Project Waiting Time
Average time for a project to wait for development before its attrition .
aux AveProjectWaitingTime = Potential_Projects/ProjectA dmissionRate
unit month
Effect of Waiting Time On Project Attrition Fraction
aux EffWaitingTimeOnProjectA ttritionFraction =
GRA PH(A veProjectW aitingT ime/T argetA veProjectW aitingTime, 1,0.2,[0,0.02, 0
.05,0.13,0.25,0.5,0.68,0.8,0.86,0.9,0.93"Min:0;Max:1;Zoom"])
If the Average Project Waiting Time is more than Target Average Project Waiting
Time, the Effect on Project Attrition Fraction goes up. If the ratio is 2 then 50% of
projects will attrite. If the ratio is 3 then 90% of projects will attrite. And that is our
assumption.
Output (E ffwaitingT imeOnProjectAttritionFraction)
1.0-
0.2-
0.04 1
1.0 3.0
Input OX
AveProjectWaitingTime/TargetAveProjectWaitinaTime =|
P|
Now we want to adjust the actual IT Workforce according to the demand of Workforce
In the market.
Workforce
O
Workforc
\ dj_Workforce_Rate
A
Desired_Workforce
Explanation of Concepts and Assumption
Time_to_Adjust_Workforce
Workforce
Number of workforce required for the current running IT projects in the market. Its
value is a part of the Available_workforce.
init | Workforce = Desired_Workforce
flow Workforce = +dt*Adj_Workforce_Rate
unit person
3- Wages
Wages
Effect_of_Wages_on_Attractivenes:
Reference_Wages
Average_Wages
re
7
Wages_Ratio
L—_
Available_Workforce AS
Ai
Desired_Workforce
L )
Explanation of Concepts and Assumption
Wages
Wages in the IT field which is determined by the demand and supply of IT Workforce
in the market.
aux Wages = Reference _Wages*(Desired_Workforce/A vailable_ Workforce) “1.2
unit $
Wages_Ratio
aux Wages Ratio =Wages/Average_Wages
Effect_of_Wages_on_Attractiveness
aux “Effect | of Wages. on_Attractiveness =
GRAPH(Wages_ Ratio,0,0.5,[0,0.3,1,1.3,1.44,1.59, 1.75,1.85,1.92,1.96,1.98,1.98
,1.99"Min:0;Max:2;Zoom"])
If Wages Ratio is greater than 1, Effect on Attractiveness goes up; If Wages Ratio is
less than 1, Effect on Attractiveness goes down.
Output (Effect_of_Wages_on_Attractiveness}
2.0-
Input 0}:
Wages_Ratio 4]
4- IT Training
IT Training
AccptableWaitingTimeforTraining 'T-WorMote_ Attrition Rate
—
TrainingCapacity
TrainingCapacity Workforce
Average_Training_Time
Explanation of Concepts and Assumption
Potential_Trainees
Number of people wants to join the IT field and tend to join training programs.
init Potential_Trainee =9
flow Potential_Trainee = -dt*Potential_Trainees_A ttrition_rate
-dt*Training Admission_Rate
+dt*Training_Rate
unit person
Trainees
The number of trainees each time unit which determined by the training capacity
available in the IT market
init Trainees =Actual_Training_Capacity*Average_ Training Time
flow Trainees = +dt*Training Admission_Rate
-dt*Graduation_Rate
unit person
Available_Workforce
Total IT workforce in the market which include the working workforce and unemployed
workforce
init Available Workforce = Workforce
flow Available Workforce = +dt*Graduation_Rate
-dt*IT_Workforce_Attrition_Rate
unit person
Fraction Attrition Of Potential Trainees
aux FractionA ttrOfPottrainees =
RefFractionA ttrO fPottrainees* EffW T OnFractionA ttrOfPottrainees
Effect of Waiting Time on Fraction Attrition of Potential Trainees
aux EffWTOnFractionA ttrOfPottrainees =
GRA PH(WaitingT ImeforT raining/A ccptableW aitingTimeforT raining, 1,0.2,[0,0.
02,0.05,0.13,0.25,0.5,0.68,0.8,0.86,0.9,0.93"Min:0;Max:1;Zoom"])
If the Waiting Time for Training is more than Acceptable Waiting Time for Training,
the Effect on Fraction Attrition of Potential Trainees goes up. If the ratio is 2 then 50%
of potential Trainees will attrite. If the ratio is 3 then 90% of Potential Trainees will
attrite.
Output (EfWT OnFractionAttrOfPottrainees)
1.0
0.8
0.6
0.44
0.2-
0.04 1
1.0 3.0
Input 4):
WaitingTimeforT raining/AccptableWaitingTimeforTrainin |
: Ey
Now we want to adjust the Training Capacity according to the demand of training in the
market. Here the most important parameters are the desired Training Capacity and the
Waiting time for training.
Training Capacity
De
Desired/'rajning_Capacity
Potential Trainee
TimeToChngT Capacity
RefTimeToChngTC
Explanation of Concepts and Assumption
TrainingC apacity
Maximum number of IT trainees can be trained in the market
init TrainingCapacity = Desired_Training Capacity
flow TrainingCapacity = +dt*Change_Training_Capacity
unit person
Desired_Training_Capacity
aux Desired_Training_Capacity =
MAX (0,Potential_Trainee/A ccptableW aitingT imeforT raining)
unit person
Time To Change Training Capacity
aux TimeToChngTCapacity =RefTimeToChngTC/EffWTOnTimeT oChngCap
unit month
Effect of Waiting Time on Time To Change Capacity
aux EffWTOnTimeToChngCap
GRA PH(WaitingTimeforT raining/A ccptableW aitingT imeforT raining, 1,0.2, tL 1
04,1.08,1.13,1.21,1.27,1.36,1.46,1.6,1.81,2"Min:1;Max:2;Zoom"])
If the Waiting Time for Training is more than Acceptable Waiting Time for Training,
the Effect on Fraction Attrition of Potential Trainees goes up exponentially.
Output (EffwTOnTimeT oChngCap)
2.07
“1.0 3.0
Input 0):
WaitingT imeforT rainina/AccptableW aitingT imeforT rainin 4)
i es
5- Training Quality
rc
Training Quality
Le
7
L
=
=
Effect_on, Quality Average_Training_Tim
7
Reference_Quality a TrainingCapacity Trainees
IndigSted_Quality “Els
O
fning_Quality
Change_Quality Ra
r
Lo4 Productivity
Average_Training_Time
Potential_P roductivil
Explanation of Concepts and Assumption
Training Quality
Indicate the quality of Workforce
init Quality = Indicated_Quality
flow Quality = +dt*Change_Quality_Rate
Effect_on_Quality
The effect of the ration between the capacity of training and the actual trained persons
on Quality.
aux Effect_on_Quality =
GRAPH(Training_Ratio,0,0.25,[1.5,1.44,1.37,1.23,1,0.51,0.25,0.13,0.04,0.04,0.
02"Min:0;Max:1.5"])
If Trainees/A verageT rainingTime “Graduation Rate” is greater than Training Capacity,
Effect on Quality goes down;
If Trainees/AverageTrainingTime “Graduation Rate” is less than Training Capacity,
Effect on Quality goes up. We assume that the maximum Effect of Quality is 150%.
Output (E ffect_on_Quality)
1.5
1.0-
0.5-
0.04 1
0.00 2.00
Input [s):
[Trainees/Average Training Time)/TrainingCapacity =|
Indicated_Quality
aux Indicated_Quality = Effect_on_Quality*Reference_Quality
Productivity
Number of Projects a person is developing per month.
aux Productivity = Quality*Potential_Productivity
unit — project/person/month
4, Simulation and Behavior Analysis
Our model focuses on the IT market situation in Egypt in next few years according to
the workforce demand and supply. The workforce demand in the IT market (Desired IT
workforce) depends on the investment in IT which determine number of IT projects in
the market (see IT Investment and Projects Sector in the model). On the other hand the
workforce market supply (Available IT workforce) is introduced by IT training which is
affected by wages in IT field. The following graphs will show demand and supply in IT
workforce:
== 8.8210
-2- 20,800,000
= 4.4010 Ap Investemnt_in_IT
-z- 10,400,000 Desired_Workforce
sr
This graph shows the investment in the market during the 200 months we can notice
that the IT investment is going up because it is a fraction of the GDP as the GDP
increases the Investment increases too especially it is a new field in Egypt and the
market contains many projects need to implement. So, as investment in IT increases the
projects in IT market increase according to this increase the desired workforce to
implement these projects will increases too. In another word as investment increase the
desired workforce increases as shown in the graph which represent the IT workforce
demand.
On the other hand, the main factor affect the attractiveness to the IT field to supply the
market demand is the wages. As we mentioned before it is a new field in the Egypt
market so the wages go up in that field relative to other fields in the market. This is
shown in the next graphs:
— (1,400
sim; (20
+ 680.0 Wages
+> 09 —z- Effect_of_ Wages_on_ Attractiveness
300,000+
200,000
= Available_Workforce
Desired_Workforce
100,000 Zz -
We can find from the graph that the wages is going up in the first 45 months this is
because the desired workforce in the market is larger than the available workforce
which mean the workforce demand is larger than the supply. From what we mentioned
before as wages increases, the attractiveness increases so more people attend training
programs to join the field which lead to increase the available workforce until it reach
the desired workforce. But the available work force is keep going to exceed the demand.
As the supply (Available workforce) is larger than the demand (desired workforce) the
wages decrease after 70 months from the simulation and the effect of wages on the
attractiveness decreases.
The previous results come from running the model for 80 months (where months are
our time unit). When we increase our simulation time to 200 months we have the next
graphs
+ 1400
+r 20
+ (680.0 Wages
an) —7- Effect_of Wages_on_Attractiveness
25,000,001
20,000,001
15,000, 00
Available_Workforce
10,000,001 .
7 Desired_Workforce
5,000,000.
We can find from the graphs that when the wages decrease, the attractiveness decreases.
While the desired workforce is going up with the IT investment, and the available
workforce is keeping go up but because of the attractiveness reduction it becomes less
than the desired workforce leading to reduce workforce supply than the demand. So
the IT wages will increase again causes attractiveness increases which increase
available workforce (workforce supply) to meat desired workforce (workforce demand)
after 120 month.
If we compare the wages curve with the available workforce, we can see that the
changes of available workforce always occur later than do the changes of wages. This
is due to the delay between these two variables. Also this delay causes wages to
oscillate.
As a result of wages oscillation the curves of available and desired workforce keep
going up and crossing each other several times when the workforce demand and supply
are equal.
5. Conclusion.
The model presented in this paper was designed to show the usefulness of the system
dynamics approach in investigating the IT market future in Egypt. The paper shows the
integration of feedback depending decision variables into IT market demand and supply.
The Attractiveness to the field which is affected by wages plays an effective role in the
IT market.
The Attractiveness to the field affects the supply of workforce so that the supply goes
up to reach the demand. And as the gap goes down the wages goes down too which
affect the Attractiveness to the IT field and that in turn will reduce the supply and build
the gap again.
Finally, When the workforce supply becomes more than the demand that may cause
crises in the IT market in Egypt so the training should be planed according to the market
demand.
6. References
Ministry of Communications and Information Technology, Egypt
http:/Avww.mcit.gov.eg/
The Information Technology Landscape in Egypt
http://www.american.edu/carmel/rk8183a/sources_links.htm
The Birth of Egypt's Information Society
http://www.journal.au.edu/ijcem/sep97/article2.html
Home page of Telecom Egypt Training Sector
http://www.telecomegypttraining.org/Emain.htm
The Country & People of Egypt
http://www. hejleh.com/countries/egypt.html
Egypt Economy
http://www.newafrica.com/economy/egypt.asp
ITU Telecommunication Indicators, Egypt Profile
http:/Avww. itu.int/joumal/200102/E/html/indicat.htm
Intemet Society in Egypt
http://www ise.org.eg/
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