When Geopolitics Freezes the Market: What the Iran War Means for Global Contact Center Location Strategy

A client operating in Egypt called us recently with a clear, unambiguous message: Everything is on hold.

Not paused for review. Not delayed pending more information. On hold. New facility decisions frozen. Expansion commitments deferred. Companies that were weeks away from entering the Egyptian market have stepped back entirely, waiting to see how the Iran conflict unfolds before committing capital to a region that is absorbing a geopolitical shock of the first order.

That conversation is playing out across Europe, the Middle East, and Africa (EMEA) right now. The Iran war, which escalated sharply in early 2026 following U.S.-Israeli military strikes on Iran, has injected deep uncertainty into one of the world's most actively growing offshore contact center markets at precisely the moment of peak momentum. 

Egypt alone was posting business process outsourcing (BPO) sector growth rates of 15 to 17% annually through 2025, according to the Information Technology Industry Development Agency. Concentrix had expanded its Cairo workforce to 22,000 employees. Sutherland named Egypt its third-largest global market by business volume, posting 30% growth in 2025. Alorica reported 700% business growth in the Egyptian market for the year. The country ranked 23rd globally on Kearney's Global Services Location Index.

That trajectory has collided with a regional crisis that stretches from the Persian Gulf to the Red Sea, and the shockwaves are reaching contact center markets across Africa, Eastern Europe, and the Western Hemisphere as companies reassess geographic risk and ask the question that always surfaces in moments like this: Where do we go instead, and how long does this last?

Site Selection Group has tracked these dynamics across multiple regional disruptions. The pattern is consistent. Understanding it is the difference between a panic-driven location decision and a strategic one.

Egypt: From the Hottest Market in EMEA to a Holding Pattern

The scale of Egypt's BPO ascent through 2025 deserves emphasis, because understanding how fast the market was moving clarifies what has been disrupted.

Egypt's contact center sector had become a genuine regional hub, not just a low-cost option. The government’s Digital Egypt Strategy projected that BPO would contribute 1.2 to 1.4% of national GDP by 2026. Workforce output was producing over 667,500 university graduates annually with multilingual proficiency across English, French, German, Arabic, and Spanish. The country held a Kearney GSLI ranking comparable to Southeast Asian heavyweights. The first Global Outsourcing and Contact Center Summit in Egypt convened in 2025, drawing senior decision-makers from across the global BPO industry. Egypt was no longer a market to watch. It had become a market to be in.

The macroeconomic damage since the Iran war began has been swift. Suez Canal revenues, which had partially recovered to around $4.1 billion in 2025 after falling from $10.2 billion in 2023 to $4 billion in 2024 during earlier regional tensions, are under renewed pressure as major shipping lines, including CMA CGM, Hapag-Lloyd, and Maersk, rerouted vessels around the Cape of Good Hope. 

Suez Canal traffic had fallen as much as 90% during prior Houthi disruptions, according to research group Jefferies, costing Egypt $800 million per month. More than $2 billion in hot money exited the Egyptian economy in the opening days of the conflict. The Egyptian pound declined more than 11% against the dollar in that same period, surpassing 52 pounds to the dollar. Israeli natural gas supplies, which had been providing roughly 15 to 20% of Egypt's consumption, were cut within 24 hours of the conflict beginning, forcing emergency procurement of LNG on spot markets at significantly higher prices.

For contact center operators and the companies that were evaluating Egypt, none of this translates to an immediate operational crisis. Existing operations are running. Talent is still there. Infrastructure is intact. What drives new contact center investment is confidence—confidence in currency stability, in energy supply, in the operating environment across the 7- to 10-year horizon of a meaningful commitment. That confidence is suspended right now. Companies with uncommitted capital are not deploying it into a market sitting adjacent to an active war zone, regardless of how compelling the fundamentals remain.

This is not unique to Egypt. It is the fundamental dynamic of geopolitical disruption on investment behavior, and history tells us exactly how it plays out.

The Arab Spring Precedent: How Long Does the Freeze Last?

Egypt has been through this before. In 2011, the Arab Spring brought down the Mubarak government and triggered years of political instability. GDP growth fell from 5.1% in 2010 to 1.8% in 2011, remaining below pre-revolution levels and averaging just 2.1% through 2013. Foreign direct investment dried up. The number of FDI projects announced in the United States targeting Egypt fell from 13 in 2011 to just three in 2012.

The contact center industry’s experience during the Arab Spring carries a critical distinction, however. Operations that were already established in Egypt experienced minimal direct disruption. Agents continued working. Client contracts held. The physical and operational infrastructure of a contact center proved remarkably resilient even through political chaos.

What the Arab Spring damaged, and damaged for an extended period, was the pipeline of new investment. Companies evaluating Egypt as a new location deferred those decisions, some for two to three full years, before confidence was sufficiently restored to move forward. The industry did not collapse. It stagnated precisely at the moment it was building serious international momentum, and it took nearly a decade to recover the growth trajectory that had been interrupted.

That is the more relevant parallel for today. The freeze is not in operations. It is in decisions: companies weeks away from entering Egypt, expansion commitments being finalized, investment queued and ready to deploy. That pipeline is paused. Based on historical precedent, it will remain paused for at least 12 to 24 months from the point at which the conflict trajectory stabilizes enough that corporate risk committees will approve new country entry.

Morocco and Tunisia: Beneficiaries with Limits

Morocco and Tunisia are the natural first markets companies consider when Egypt creates uncertainty. Both serve a similar buyer profile: primarily European companies seeking French-language, Arabic-language, and multilingual contact center capacity. They also have mature BPO ecosystems with established infrastructure.

Morocco has built one of the most formidable nearshore platforms in the EMEA region. An estimated 100,000 contact center workers are employed across captive and BPO operations. The industry has been growing at 15% annually. Morocco ranked 28th globally on Kearney’s GSLI and second in Africa. Casablanca, Rabat, Fez, and Tangier all have modern business park infrastructure. Major global operators, including Intelcia, Majorel, Webhelp, and dozens of European-owned captive operations, are embedded in the market. Morocco’s BPO sector contributes approximately $1.4 billion annually to the national economy, with projections reaching $2.5 billion by 2026.

Critically, Morocco is geographically and geopolitically removed from the direct conflict. It is not a Gulf energy importer to the same degree as Egypt, does not have the same remittance dependence on Gulf labor markets, and does not share Egypt’s Israeli gas dependency. The impact from the Iran war on Morocco will be mixed, affected by higher global oil import costs, but partially offset by rising fertilizer prices, as Morocco is one of the world’s largest exporters of phosphate-based fertilizers. Morocco’s political stability has been among the most consistent in the region. For companies that were evaluating Egypt and are now reconsidering their EMEA strategy, Morocco is the most direct substitute.

Tunisia’s position is more complicated. Tunisia appears particularly financially vulnerable to the conflict's secondary effects, in which higher energy import costs compound already strained public finances and elevated government debt. Tunisia’s BPO sector is estimated at approximately $2 billion, with digital services contributing roughly 7% of GDP, built primarily to serve the French-speaking European market. Existing operations will persist and remain viable. New investment, however, will face greater scrutiny from corporate risk committees during a period of regional instability, and Tunisia has less financial buffer than Morocco to absorb the economic pressure.

Sub-Saharan Africa: The Structural Case for Kenya and South Africa

The Iran war’s reach does not extend operationally to Kenya or South Africa. That geographic separation is precisely why both countries are positioned as structural beneficiaries of the current reallocation of contact center investment.

South Africa operates the most mature BPO market in Sub-Saharan Africa, with an estimated 300,000-plus contact center employees. Kenya is established as the primary East African hub for English-language outsourcing. Both markets offer substantial cost advantages over U.S. and European alternatives, strong English proficiency, cultural alignment with Western service expectations, and time zone compatibility for both European and—depending on shift structure—North American clients.

Site Selection Group has published extensively on Africa’s contact center growth potential. The continent’s BPO workforce is estimated at 750,000 to 1.2 million workers, with projections suggesting the workforce could more than double by 2030. That growth was already underway before the Iran war. What changes now is the competitive urgency of the decision.

Companies that were considering Sub-Saharan diversification as a future initiative should consider accelerating that evaluation. The talent and real estate advantages in South Africa and Kenya are real. The pipeline of global operators moving into those markets is building. Companies that secure positions in those markets ahead of the accelerated demand that EMEA uncertainty will generate will find themselves in a better position than those who wait for the situation to fully resolve.

Eastern Europe: What the Russia-Ukraine War Taught Us

The Russia-Ukraine war of 2022 provides the most direct historical template for understanding what a major regional conflict does to contact center markets in its vicinity and how the industry adapts.

Ukraine, before February 2022, was one of Eastern Europe’s most significant IT and BPO delivery centers. Ukraine, together with neighboring nations, employed around half of the 1.5 million IT and business services professionals working in nearshore Europe, according to Everest Group. That capacity did not disappear—it relocated. The conflict triggered significant workforce migration toward more stable countries, including Poland, Romania, and Hungary. BPO companies that had been operating in Ukraine migrated delivery capacity westward. Operations that were still taking place from western parts of Ukraine were limited. Most IT services had pulled out of Russia, and that work also moved to Poland and Romania.

The broader Eastern European BPO market was not destroyed. Poland, Romania, and Hungary all absorbed significant investment and talent flow that had previously been directed at Ukraine. The industry proved adaptable. But timing mattered substantially: companies that had already built positions in Poland or Romania before 2022 were in a far stronger position than those scrambling to rebuild their delivery geography after the invasion began.

The lesson is consistent with what we are observing in EMEA today: Geopolitical disruption does not destroy the contact center industry. It relocates it. The question is whether your organization is positioned ahead of that relocation or behind it.

The Western Hemisphere: Venezuela, Nicaragua, and the Limits of Political Risk

The Iran war’s disruption of EMEA is also prompting companies to reassess their overall geographic concentration risk, and that reassessment includes the Western Hemisphere, where two cautionary precedents are directly relevant.

Nicaragua

Nicaragua was, through approximately 2017, one of the most compelling emerging contact center markets in Central America. Low costs, a growing bilingual workforce, government investment promotion through ProNicaragua, and major operators, including global BPO providers, had established a meaningful presence. Then the Ortega regime’s crackdown on protests in 2018 and 2019, which killed 355 people and ushered in sustained authoritarian repression, effectively froze new investment. BPO companies became reluctant to discuss their Nicaragua presence publicly. Scheduled site visits from potential U.S. clients were canceled. ProNicaragua was eventually eliminated, removing the government interface for investment promotion entirely. Today, approximately 31 companies generate around $224 million in contact center exports annually, a sector that survived but never recovered its pre-crisis growth trajectory. Nicaragua’s English proficiency and cost advantages remain. What was destroyed was investor confidence, and political risk of that nature, once established, is extraordinarily difficult to rebuild.

Trinidad and Tobago

Trinidad and Tobago presents a different and more current dynamic. The island sits seven miles off the Venezuelan coast and has been drawn into the escalating U.S.-Venezuela conflict in ways its government did not anticipate. Trinidadian citizens were among those killed in U.S. military strikes on suspected drug trafficking vessels in October 2025, and the country’s government alignment with Washington has shifted Venezuela’s posture from friendly neighbor to adversary. Trinidad and Tobago had been developing a modest BPO sector based on English proficiency, North American cultural affinity, and a strategic Caribbean location. That development trajectory is now complicated by a regional conflict it cannot control and a geographic exposure it cannot change. The country also relies on Venezuela for natural gas, adding an energy vulnerability layer to the political uncertainty.

Venezuela

Venezuela itself has generated economic migrants and refugees at a scale that has reshaped the labor markets of its Caribbean and South American neighbors for a decade—7.9 million Venezuelans have fled since 2015. The economic collapse and political authoritarianism that drove that migration have made Venezuela nonviable as a contact center location for the foreseeable future, eliminating what might otherwise have been a compelling nearshore market from the conversation.

What This Means for Your Organization Right Now

The practical guidance varies depending on where companies are in their contact center decision process.

If you have existing operations in Egypt: Continue. Established contact centers are operational, and the workforce remains in place. Currency depreciation actually improves your cost position as a foreign-currency buyer of Egyptian labor. Do not make reactive decisions based on short-term market volatility. Plan for the pipeline disruption to persist for 12 to 24 months and model accordingly.

If you were evaluating Egypt as a new location: Redirect that analytical effort. Morocco is the most direct substitute for companies serving European and EMEA markets. For North American English-language requirements, South Africa and Kenya warrant parallel serious evaluation. Do not assume that being a few months late to Egypt’s recovery means the opportunity is gone. The fundamentals that made Egypt compelling will reassert themselves, but the timing of that recovery is genuinely uncertain.

If your EMEA concentration has been exposed as a risk: Use this moment to accelerate Sub-Saharan diversification that was already on your strategic roadmap. The competitive window to establish positions in South Africa and Kenya ahead of accelerated demand is open now.

If you are an international BPO provider reconsidering your geographic footprint: You are not alone. We are in active conversations with EMEA-based providers exploring U.S. domestic expansion as a direct response to regional instability. The U.S. contact center market is large, underserved in certain segments, and accessible to providers with strong English-language proficiency and the cost structure to compete. For providers from Egypt, Morocco, or South Africa who already serve U.S. clients offshore, entering the U.S. domestic market is a logical hedge, and the current environment has made the conversation urgent.

The Fundamental Pattern

Every contact center location strategy built around cost arbitrage accepts some degree of geopolitical risk. That has always been true. Egypt, Morocco, Tunisia, Ukraine, Nicaragua, and Trinidad — each of these markets offered compelling economics that existed within a geopolitical context. The companies that built durable offshore operations did so not by ignoring that risk but by structuring their portfolios to tolerate it and having a clear contingency framework before the crisis arrived.

The Iran war is a real disruption. Its duration and full economic impact remain uncertain. But the contact center industry has navigated the Arab Spring, the Russia-Ukraine war, the political collapse of Nicaragua, and the Venezuelan economic implosion. The industry adapts. Talent does not disappear. The economics that made these markets attractive before disruption largely reassert themselves after stability returns.

What determines whether your organization emerges from a period like this in a stronger or weaker position is almost entirely a function of how clearly you understood your geographic risk exposure before the crisis—and how intentionally you respond now.

Site Selection Group advises corporations on domestic and global contact center location strategy, including market evaluation, risk assessment, and outsourcing. For a confidential consultation on how current geopolitical developments affect your contact center footprint, contact us.