Hi, I am Omar and I have been interested in entrepreneurship for a long time.
During my master’s studies at Grenoble Ecole de Management in France, I have decided to research startups located in Egypt. My focus was to unearth the challenges of recruiting, maintaining, and developing talent. In this bite-size article, I am gladly sharing the main findings with Startups Galaxy. They are the result of secondary research, and primary research based on interviews with Instabug, Bey2ollak, Rakna, Dopay, Rise Up, A15, and AUC Venture Lab, conducted in 2017.
First, where does Egypt stand in the MENA startups ecosystem? The ecosystem can be geographically divided into 3 areas; talent areas (tech-savvy and skilled workforce), market areas (big population and strong demand), and capital areas (easy access to finance). Egypt enjoys many factors cementing it both as a talent area and as a market area. However, many challenges exist. People related challenges are among the top of them.
1. Social culture
33% of startups in Egypt have difficulty attracting talent interested in working for them; especially finding employees who are independent (able to work without supervision) and motivated. Furthermore, some age brackets (senior talent) are hard to chase and hire due to irrelevant channels used, and due to an existing polarized culture gap. Entrepreneurship and startups are not as much publicized from one end, and are culturally resisted on the other end.
2. Recruitment process and international talent
Many startups lack a full recruitment process. It does not have to be necessarily formalized, however it should measure both technical and personal aspects. Moreover, startups need to be more aggressive and creative in recruiting. As much as it is healthy that Egypt hires locally (number 1 in the region when it comes to local hires; 99% of hires are its citizens), the market could benefit from an international and exposed workforce. Unfortunately, many administrative (bureaucracy) and economic hurdles exist.
Heavy foreign recruiters in the region (UAE and KSA) believe that, just after their local workforce, the most skillful workforce is located in Egypt. This positive reputation is a double-edged sword; it results in a heavy regional brain-drain outflow to the Gulf, and an international one to Europe and USA. The reasons for this brain-drain are related to improving the quality of life and increasing income.
55% of Egyptian startups face competition from well established corporations when it comes to attracting workforce. This is partially due to perceiving corporations as safe (especially for senior talent), and partially due to benefits considered costly to provide by Egyptian startups, especially during early phases (above average pay, insurance, training allowance…). Nevertheless, inter-startups rivalry exists. For instance, some talent would prefer working for an already established startup with a product launched in the market rather than an early stage startup still developing an MVP. 24% of startups in Egypt consider other startups and SMEs as their main competitor in attracting employees.
5. Compensation and benefits
Even though most of the salaries are below average in Egypt, many startups remain confident in their pay, especially after taking into consideration the low cost of living. 53% of the workforce in MENA – including Egypt – is willing to accept a low salary in exchange for a bigger equity. Only 20% of startups in Egypt offer stock options, which is a relatively low number. Many startups do not offer a diversified compensation and benefits plan. The focus remains largely and solely on monetary compensation in the form of salary.
6. L&D and performance
56% of the workforce in MENA – including Egypt – is willing to work for less salary if they receive good training opportunities. However, most Egyptian startups perceive learning and development (L&D) as a luxury with low returns rather than a necessity. L&D is often limited to attending public events, and accessing online learning content. Moreover, performance management is not defined and many startups do not set measurable KPIs. Formal tools and procedures need to be put in place in order to objectively measure performance.
The previous were the main challenges in a nutshell. Things have evolved in the last 3 years. Startups and talent in Egypt are getting wiser, and more experienced by the day. However, many of the people related challenges remain the same. Fortunately, there are different ways to tackle them, some already put in place by startups. Perhaps, we can mention them in another article? Stay safe everyone.