Tunisia as a nearshore location in software development? – The facts speak for themselves
Making the IT industry a favorable destination for foreign IT companies, Tunisia is actively implementing an ambitious digital plan to establish themselves with privileged investment conditions. It is an ideal platform to access neighboring markets such as Algeria or Libya, as well as other African or Middle Eastern markets.
The foreign companies that have chosen Tunisia as a location are mainly from nearshore or offshore countries. They have not only been able to expand their radius of action, but also to strengthen the competitiveness of their parent companies by reducing operating costs.
In addition, nearshoring can overcome the lack of IT professionals such as software developers in the country of origin. By working with Tunisian professionals and companies, jobs in the country of origin are strengthened and preserved, while at the same time making Tunisia a rear base.
What exactly characterizes the information technology sector and the software industry in Tunisia?
Why could working with a Tunisian IT service provider or Tunisian software developers be beneficial for you?
Find out in our blog post what the North African country with its IT sector offers to foreign companies and why it is a great nearshore location.
Here come the facts!
1. Tunisia is more progressive than you think!
The country has a pioneering role. Tunisia was the 1st Arab country to have abolished slavery in 1848, the 1st Arab country to have had a constitution in 1861, the 1st Arab country to have abolished polygamy in 1956 and the 1st Arab country to have kicked out its dictator in 2011.
With a school literacy rate of 96%, Tunisia is a leading country in terms of graduates: 500,000 students for a population of 10 million inhabitants, including 50,000 in ICT sectors, 60,000 multilingual graduates per year (61 % of women) including more than 20,000 scientific engineers.1
2. Tunisia is one of the most developed African countries in the IT sector
Tunisia is an exception in Africa, surpassing countries such as South Africa, Nigeria, Kenya, and even Algeria and Morocco where the population is much larger.
Among the employees and potential candidates, gender and social equality are evidently and astutely planned, reflecting unbiased male/female and age distribution.
There are many reasons for this success. Tunisia has invested in training its engineers in the public and private sectors, nearly 12,000 young computer engineers graduate each year from circa 50 institutions (including schools, public and private tertiary-level institutions and universities).
This quality education has benefited companies that position themselves in niche business segments, with quality services equivalent to that required in European markets.
Tunisian companies are trained according to European standards, which make the Tunisian site attractive for outsourcing, particularly for IT services and call center activities (219 service centers are installed on Tunisian soil).
The telecommunication sector (fixed line voice and data, wireless voice and data) represents 66% of the digital services sector in Tunisia and the hardware sector (resale of servers, PCs, tablets and screens) represents 24%.2
3. Tunisia is always ranked top 5
To illustrate the strength of the Tunisian IT sector and its top positions, it is best to look at the places Tunisia has been able to occupy in rankings in recent years:
1st best startup Visa program in Africa (Startups Without Borders (SWIBO) – 2020)
2nd number of graduates in science and engineering worldwide (Global Innovation Index, 2020)
2nd level of maturity of governments in the field of Artificial Intelligence in Africa (Government AI Readiness Index, 2019)
3rd most innovative economy in Africa (Global Innovation Index, 2020, WIPO)
4th competitiveness of skills in Africa (Global Talent Competitiveness Index, 2020, INSEAD)
4th terms of human development integrating the high category in Africa (Programme des Nations Unies pour le Développement (PNUD), 2019)
5th most competitive country in Africa (World Economic Forum, 2019)
5th best startup ecosystem in Africa (StartupBlink, 2020)
4. More than 2,000 companies are active in the IT sector
In 2017, Tunisia had nearly 2,126 companies active in the IT sector, excluding call centers. The sector employs an average of 11.5 people per company and a total of 24,451 people, in which 17,603 in the public sector.
These companies, which represented only 2.1% of total companies, represent now 10.7% of total foreign companies. In 2016, the turnover of these companies amounted to 2113 million DT (Tunisian dinars). That same year, they exported 867 million dinars, i.e. almost 41% of their turnover with good added value, good resilience and a survival rate after 5 years of 75%. The sector had an exceptional coverage rate of over 340%.3
The Tunisian IT sector is steadily creating jobs for qualified applicants. Nearshore and offshore companies are settling, including startups, SMBs and large enterprises.
There are very well-trained professionals on the labor market. Let’s therefore take a closer look at what qualifications they bring with them.
5. More than 10,000 graduates in fields related to the IT sector
Tunisia ranks first in North Africa in terms of quality of vocational training, graduates skills, and ease of access to skilled employees.
The cost of labor is a major competitive asset of the Tunisian market; the average annual cost of Tunisian engineers is largely competitive compared to the main competing destinations. The country has also a multitude of integrated and developed facilities aimed at promoting R&D, production and training activities.
In 2008, more than 9,500 of these graduates came from computer science and communication courses, compared to 1,769 in 2002. Tunisian engineers are recognized as having international-level skills.
Thus, Tunisian developers have acquired the know-how that is exported to different regions of the world. They shine in:
- Design, prototyping, programming, testing, and project management
- Technical fields: .Net, Java/J2EE, IBM, Oracle, and Microsoft system software, embedded electronic systems, telecommunications programming
- Standard concepts: ERP, BI, CRM, HR, Global banking, embedded software, e-business, e-learning, etc.
- Functional areas: supply chain, finance, management, banks, telecommunication etc.
- Sectors: services, banking, administration, industry, distribution, retail, life sciences, energy, and utilities, tourism
6. Employees in the IT industry speak three languages
Most employees in the IT sector are not only very well educated, but also speak at least three languages. In addition to Arabic as a native language, these are French and English, which are mastered at a very good and fluent level.
Mastery of French in Tunisia is excellent, according to the French International Organization, it is much higher than that found for example in Morocco, Egypt, or Romania. On this basis, a certain number of publishers have emerged in Tunisia. Many French-speaking companies have located IT activities in Tunisia or entrust specialized Tunisian companies with development or test work.
However, there are also very good opportunities for non-French companies to enter the Tunisian market or work with Tunisians due to their Arabic and English language skills.
7. The Tunisian government has created a variety of financial incentives and invested massively in infrastructure
The IT sector is one of the priority sectors mentioned in the new investment law. It benefits from a significant investment of around 6.300 billion TND for the period 2007-2011 against only 430 million dinars during the period 1992-1996.
This strong growth is mainly due to the strengthening of the infrastructure, in particular, that of telecommunications which, moreover, has experienced the active participation of the fabric of private companies.
Investment benefits include:4
- Total exemption from profit tax for ten years for export income and five or ten years (depending on the priority of the zone) for projects located in regional development zones.
- Total exemption from duties and taxes for export companies for imports of equipment necessary for their activities.
- Suspension of VAT on local acquisitions of equipment necessary for the activity of totally exporting companies.
- 25% coverage of the cost of technology expertise training (up to 250,000 TND).
- Exemption from income tax in proportion to export turnover for partially exporting companies.
- Payment by the State of the employer’s contribution to the legal social security system for 7 years for the recruitment of higher education graduates.
Moreover, Tunisia is aiming to position itself as a regional technological hub. The Tunisian authorities have drawn up several national strategic plans, the most recent one is “Digital Tunisia 2020” national plan with an overall of 5.5 billion dinars for the period 2014-2020 (1/3 public, 2/3 private), aiming to make Tunisia an international digital reference and to promote ICTs as an essential lever for the socio-economic development of the country.5
In addition, the plan aims to create 95,000 jobs over 5 years and will increase exports from 1 to 6 billion dinars in 2020. The plan has three main components:
- The development of broadband infrastructure, estimated at €721 million.
- The development of e-services for a total cost of €270 million with a focus on e-government, e-health and e-education.
- The knowledge and innovation industry supported by “Smart Tunisia” program, with a fund of 1.4 billion dinars for the period 2014-20 and which ultimately aims to create 50,000 jobs. The program is intended to encourage the establishment of companies in the sector of outsourcing (offshoring) and co-location (partnership between a private Tunisian and a foreign company).
Finally, it should be noted that the implementation of the strategy is ensured by the “Strategic Council for Digital Economy”, chaired by the Head of Government, and composed of seven ministers (finance, social affairs, education, development, industry, employment, trade), six contractors and three technical experts.
8. The ICT sector contributes to more than 7.5% of the national GDP
Information and communications technology is a sector with high value added. Tunisia has invested massively in this sector since 2000 to boost its economic growth. Accordingly, the growth rate of this sector has developed impressively.
The sector has an average annual growth rate of 11% between 2009 and 2014, and growth of 7.7% between 2015 and 2016. Over 1,800 companies operate in the sector, spread mainly over the Great Tunis area and the coastal cities, and employ nearly 80,000 people. In addition, the sector represents 20% of exports in the service sector and about 3% of the country’s total exports (1 billion TND). This amount has not changed since 2011, which therefore shows the resilience of the sector during crisis.6
According to the National Institute of Statistics, in 2018 the sector already contributed to 7.5% of GDP and employed more than 86000 people.
9. Its geographical location makes Tunisia an ideal nearshore location
Tunisia has a rich cultural history that embraces the customs and traditions of all Mediterranean countries spanning three continents: Africa, Europe, and the Middle East.
Its centralized geographic location and ideal climate have made Tunisia a haven for travelers from all directions seeking a commercial exchange, contact, and prolonged sojourn from ancient times to the present. To wit: the tourism sector constitutes a major source of national revenue and has maintained its status and allure despite being dented by world events in recent years.
The favorable conditions created for foreign companies in various industries have led to many investments. The geographical location also plays a very important role.
Tunisia is in the same time zone (Central European Time) with many European countries, and there is no changeover between summer and winter time. Software developers and IT staff working for European companies, or their Tunisian branches work the same hours.
But not only the time zone plays into the country’s hands, also the travel times are very short. Within 2.5 hours you can reach Tunis by plane from Frankfurt or Paris.
This makes Tunisia an ideal nearshore country for European IT and software companies that want to outsource company divisions or services.
10. Salaries are internationally competitive
Since the IT graduates are in great demand not only in the local labor market but also internationally, IT jobs in Tunisia have become one of the highest-paid. Within this sector, competition is also notable.
By international standards, however, they are more than competitive. Let’s take a closer look at the salaries of IT specialists:
- Entry level: 1.300-1.750 TND
- Junior 1.500-1.800 TND
- Middle: 1.700-2.200 TND
- Senior: 2.200-3.500 TND
- Lead: 3.000-6.000 TND
Converted into euros, this means that IT job salaries range from EUR 450 for an entry-level employee to up to EUR 1,900 for a lead developer.
11. Tunisians know remote work and are highly motivated
Tunisians are no strangers to working with foreign companies. Since the end of the 90’s, Tunisia started to become an important IT pole in the north African region, but the apogee started from 2005 after the organization of the “World Summit of Information Society”.
Tunisian IT specialists are used to working with companies and colleagues based in different countries.
Since the pandemic situation in 2020, remote work has become one of the many advantages enjoyed by the employees in the IT sector, allowing them freer control of time and less stressful condition without the need of presence at a specific work location.
Due to the facilities of remote contact these employees have also become adept at agile processes for quicker peer consultation and more targeted solutions to problems that may arise.
For foreign companies, therefore, the question of whether Tunisian developers can be integrated into their own software development processes does not arise. They will hardly notice any differences in the way they work.
Besides the advantage of remote work, the employees are highly motivated because of extra perks and privileges such as meal coupons, company transportation, team-building opportunities, gym membership, and yearly faith bonuses.
12. Several “success stories” and international champions have emerged in recent years
Many renowned international companies are represented on the Tunisian market. We present some of them here as examples.7
Linedata is a creator of global solutions dedicated to asset management, insurance and credit professionals, with 20 offices in 50 countries around the world, in 2004, the group has established itself in Africa with the opening of an office in Tunis, and their activity is entirely dedicated to the export of management ERP to Europe and Africa.
VERMEG, one of the leading companies in the Tunisian economy was created in 1993 to meet the digital transformation needs of the insurance and finance sectors. Today, the company has more than 500 customers in more than 40 countries and employs more than 1,100 people, 20% of whom are dedicated to R&D activities. VERMEG is considered the European market leader in life and health insurance management software.
Sopra HR Software, a subsidiary of Sopra Steria, offers complete HR solutions perfectly suited to the needs of Human Resources Departments and is considered a leader in the Human Resources sector in Europe, the Middle East and Africa. In 2006, Sopra Steria, expanded its activities to Tunisia through the establishment of a center of excellence, operational expertise and project execution, a service center, and a R&D center for innovation and the development of new solutions.
Sofrecom Tunisie, founded in 2011, is one of the youngest subsidiaries of Sofrecom and now has more than 550 engineers and experts. In Tunisia, the company which specializes in consulting and engineering for the telecommunications sector is considered a center of development and expertise for service and information system platforms whose activities are perfectly complementary with the activities of the group’s other North African subsidiaries.
Conclusion: Tunisia deserves a closer look as a nearshore country!
Tunisia is not necessarily the first country that comes to mind when thinking about outsourcing IT services or software development. The country has invested a lot in its infrastructure and training of professionals.
Investment incentives, tax advantages, highly educated professionals, a constant stream of new IT graduates and low salaries: all this speaks in favor of the country!
nearshorefriends has been active on the Tunisian market since the beginning of 2022. We were able to successfully integrate Tunisian software developers into projects and teams of our customers. Talk to us if you want to know more about this fascinating nearshore country.
References
- Tunisian Software Qualification Board: https://www.tsqb.net/ ↑
- Ambassade de France en Tunisie: https://www.tresor.economie.gouv.fr/ ↑
- Forum Ibn Khaldoun pour le development, 28/09/2020 ↑
- Foreign Investment Promotion Agency Tunisia: http://www.investintunisia.tn/ ↑
- Ambassade de France en Tunisie: https://www.tresor.economie.gouv.fr/ ↑
- Ambassade de France en Tunisie: https://www.tresor.economie.gouv.fr/ ↑
- Tunisian Investment Sector: https://tia.gov.tn ↑
