The it outsourcing market - France (2024)

1.2 A fast-growing global market

The global outsourcing market can be measured by ACV (***), which refers to the value of outsourcing contracts for the management of information systems. In ****, all IT outsourcing contracts worldwide were worth ***.* billion US dollars, with the market estimated to reach *** billion US dollars in **** and *** billion US dollars in ****.

Indeed, the global outsourcing market is characterized by strong growth, with market specialists forecasting annual growth of *.**% between **** and ****, taking the market to **** billion dollars by ****. It should be noted, however, that this dynamic is the result of the sector's dynamism after the COVID-** crisis, and excludes the effects of the war in Ukraine, which are already being felt on the market in ****.

Annual value of outsourcing contracts Worldwide, ****-****, in billions of US dollars ISG Outsourcing Index The impact of the health crisis on this market is undeniable: faced with the need to telecommute, companies around the world have had to modernize their IT assets and information systems. In Europe, growth has been slower, but still impressive: the market has grown by almost **% in just two years.

1.3 A French market in line with global growth

The outsourcing market is in very good health. All software management, cloud, digital consulting engineering and digital services industries will see their sales grow in ****. The market is estimated to have reached record sales of **.* million euros in ****. The sector enjoyedgrowth of *.*% in ****, which should continue in **** with an estimated growth rate for the coming year of *.*%.

Annual value of outsourcing contracts (***) France, ****-****, in millions of euros ISG This staggering growth is due to a number of factors: The explosion in telecommuting The advent of cloud computing and AI The shortage of skilled labor in companies requiring these services The"all-inclusive" offerings of industry giants

While the market is growing steadily, it is also changing. In fact, the French outsourcing market is following a global trend characterized by the decline of corporate IT services in favor of services-as-a-service, due to the development of cloud computing and artificial intelligence.

Many outsourcing sectors are experiencing growth:

Growth in the various outsourcing sectors France, **** Source: ****

All these IT industry sectors are set to grow rapidly over the coming years. Companies using outsourcing services are particularly keen on IT security, cloud computing and artificial intelligence services.

2.1 Demand trends and drivers

The primary factor driving demand for outsourcing is digitalization and digital transformation. IBM shows the effects of digital transformation according to IT decision-makers from a panel of *** companies. Digital transformation is leading to a growing need for high-performance IT systems, modernization of existing systems and enhanced security, and is stimulating the outsourcing market as the preferred means of accessing these improvements.

What impact will digital transformation have on your company's IT over the next ** months? France, ****, in IDC France

Companies find many interests in outsourcing their IT management; performance, modernization and security of their IT network seem to be the reasons that most drive companies to outsource their IT systems.

IT outsourcing strategy in the coming year World, ****, in Source: ****

Globally, in ****, a significant majority (***) envisage a reduction in the level of outsourcing.

Over the next two years, what strategy do you plan to adopt with regard to outsourcing your information systems? France, ****, in Whitelane Research

In ****, Whitelane Research analyzes more than *** outsourcings carried out by over *** of the world's largest IT spenders. The conclusions of this study confirm the stability of interest in outsourcing. In fact, **% of companies surveyed plan to change nothing or outsource more.

Reasons why companies outsource, ...

2.2 Customer profile

For a long time, the clientele of outsourcing providers consisted mainly of large companies. Today, however, the benefits of outsourcing are considered to apply to small and medium-sized businesses, and even to very small enterprises. Indeed, outsourcing is well suited to smaller companies, as technological advances now make it possible to improve their information systems at lower cost.

Today, SMEs are particularly interested in outsourcing. Indeed, SMEs' low incomes prevent them from setting up dedicated IT services, so their investment in outsourcing is growing. In ****, SMEs were the target of **% of ransomware attacks, which steal company information and demand a ransom to return it to the company. SMEs therefore need to be concerned about the security of their information. As they are not always able to internalize this security, outsourcing companies are becoming a necessity for these customers.

The graph below shows trends in the sectors that make most use of outsourcing. The healthcare and pharmaceuticals sector leads the way, with annual growth of **%, while the energy, telecoms and media sectors appear to have strong growth potential. The financial sector, on the other hand, is on the decline, following strong growth (***) in the previous year.

Trends in outsourcing sectors Global, ****, in Source: ...

2.3 The effect of the Covid-19 crisis

The coronavirus epidemic has accelerated an already existing trend, namely the development of the service-as-a-service model to the detriment of managed services. The restrictive measures and confinement in France have in fact reinforced the decline of managed services in favor of service-as-a-service, whose growth has particularly accelerated.

The epidemic has slowed growth in the sector, particularly in managed services

The ISG index for the second half of the year showed that the combined market (***) in the EMEA region fell by *%, to *.* billion euros.

In France, managed services were down **% on the previous quarter, reaching ***.* million euros at the end of the quarter. In addition, they accounted for *** million euros over the half-year as a whole, down **.*% on ****. [***]

A blessing in disguise for the as-a-service model

Spend-as-a-service increased by **% in the second quarter of ****, i.e. during the epidemic-related containment. [***]

Lyonel Roüast, ISG President for EMEA, explains, "All organizations are now investing in public clouds. COVID-** has pushed organizations and individuals to completely restructure the way they work, leading to an increase in cloud contracts."

Indeed, the cloud is characterized by three advantages for organizations: resilience and stability in an uncertain context, adaptability to cope with variations in demand, and prudence ...

3.1 Market organization

The definition of outsourcing has evolved in step with innovation and the emergence of new technologies. Indeed, multiple concepts have emerged, and the vocabulary has become increasingly complex. However, it is possible to identify two forms of outsourcing. Managed services, as the outsourcing of information services management, can be broken down into two categories: managed services and the service-as-a-service model. Whether managed services or services-as-a-service, outsourcing can be global or partial.

3.2 ESN, the giants of the sector

The traditional ESN model

ESNs (***),are the main players in the outsourcing market, and generally offer IT services that go beyond outsourcing alone.

In ****, ESNs in France reported sales growth of *.*%, compared with ****. The year **** also saw *% growth compared to ****, so the sector seems to be enjoying solid growth since the COVID-** crisis.

The main NSEs in the sector are shown in the graph below. Capgemini dominates the digital services sector with sales of €*.* billion in ****, well ahead of SCC France (***). However, the outsourcing market is not highly concentrated, and comprises numerous players of varying sizes.

NSE ranking by sales revenue France, ****, in millions of euros Source: ****

Alongside these giants, a large number of SMEs and VSEs are developing, and now account for the vast majority of NSEs. By ****, there will be over ***,*** ESNs in France. [***]

The uberization of ESNs

In addition, new players are emerging on the outsourcing and digital services market in general, notably Innovative Digital Services Companies (***).

ESNIs offer the services of independent IT consultants. Their profiles can be consulted online free of charge by interested companies. [***] Halfway between a collaborative platform and an ESN, Le Hibou is one such example.

3.3 The rise of the service model

ESNs are particularly likely to offer an "As a service" model. The "As a service" model offers services in return for subscriptions, rather than buying the product directly. The advantages for the customer are numerous: constant product performance, the possibility of unsubscribing at any time... For the company, this system offers financial stability and enables constant improvement of services without having to produce new products to market.

The as-a-service model refers to the monetization model that corresponds to the architectural model of cloud computing. It's a model generally based on paid subscription or pay-per-use billing that provides access to resources.

Cloud computing is the on-demand delivery of computing power, database storage, applications and other computing resources via an Internet-based cloud services platform. The dominant model in cloud computing is pay-as-you-go, on a sliding scale.

Today, the as-a-service model is the main growth driver in the IT service management outsourcing market. It can be broken down into several cloud service models, the main ones being as follows. [***]

IaaS (***): Provides users with infrastructure and computing resources to develop their information systems. PaaS (***): Provides users with a cloud environment to develop and manage applications. SaaS (***).

Other models are developing, such as DaaS (***), but are ...

3.4 Generative AI, an opportunity

The graph below highlights the still limited adoption of generative AI in France in ****. Indeed, a significant majority have not yet implemented anything concerning generative AI, while only **% of respondents have already integrated or plan to integrate this technology into their offerings or solutions. This figure shows that, although generative AI is attracting growing interest, it remains in the experimental or planning phase for many companies, leaving considerable scope for future adoption.

Are you using generative AI for your offerings / solutions (***) France, ****, in Source: ****

The graph below shows the general perceptions of the arrival of generative AI in business and internal processes, according to a survey conducted by Numeum in ****. A majority of respondents see generative AI as an opportunity for improvement, while **% see it as an opportunity to carry out projects for their customers. On the other hand, **% see it as a threat to certain professions. A smaller proportion believe that the impact of generative AI will be negligible.

What is your general perception of the arrival of generative AI for your business / your internal processes? France, ****, in Source: ****

The graph below shows the areas of application of generative AI in digital companies. Software development leads the way, with **% of ...

4.1 Types of outsourcing services

Global outsourcing

Global outsourcing involves outsourcing management of the entire information system.

Partial outsourcing

Partial outsourcing involves outsourcing the management of part of the information system. There are several categories of partial outsourcing.

Application Management (***): Involves the development, maintenance, operation and upgradability of a company's software assets. It enables a company to entrust an external service provider with the management of its applications, including design, bug correction, updates and continuous improvement in line with new requirements. Operations outsourcing: This covers the hosting and operation of a company's systems and applications. This includes IT infrastructure in a data center, monitoring systems to ensure their availability, and maintaining mission-critical applications. Network operations: This covers the interconnections and applications linking the company's various sites. This includes supervision and maintenance of LANs, WANs, Internet connections and VPNs. Good network operation ensures smooth communications between different sites, and the security of data exchanges. System operation: This covers the management of computer fleet characteristics, server administration, storage capacities and backup management. It also includes the supervision of operating system updates and the resolution of technical incidents linked to these systems. Hardware outsourcing: This covers workstations, their licenses, financing and upgrades. It includes the purchase or rental of ...

4.2 Prices

Prices for outsourcing services can vary according to a number of criteria, the main ones being: the scope of intervention (***).

However, it is possible to give a rough idea of prices.

Outsourcing companies offer monthly, hourly or flat-rate prices. Monthly fees start at €** per workstation, and €** per server for simple maintenance. So, if a company entrusts the outsourcing of * workstations and one server, it will cost from €*** per month, excluding tax.

In addition, outsourcing providers often carry out a preliminary audit before taking on a computer park. This type of study costs from €***.

On-site interventions, such as data recovery, cost at least €** for an hour, and more than €*** if the specialists travel outside their home town. The daily rate is €*** excluding expenses, for example in the case of on-site preventive maintenance.

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4.3 Innovation: a major challenge for our offering

NSEs rely on innovation to enhance and differentiate their offering. There has been a significant increase in the use of innovation in the marketplace to enhance a company's value. As the NSE market is under construction, it is particularly conducive to innovation.

Young companies and start-ups in the NSE and outsourcing sectors with innovative technological projects are the first to benefit from the funds raised by the financial sector.

Fundraising trends for tech start-ups in France France, ****-****, €Bn Source: ****

ESNs provide their customers with their innovation capabilities and technological skills, particularly in artificial intelligence and the cloud, which remain the preferred areas of investment for players in the sector. In ****, companies raised **.** billion euros for innovative ESN projects, **% more than the previous year.

In ****, there will be spectacular growth in investment in this field, following the COVID-** crisis. It should be noted, however, that while **** was a record year, the figure conceals a number of nuances, as the majority of investments were made at the very beginning of the year, before the effects of the war in Ukraine were felt on the French economy.

The ESN and outsourcing market is mainly driven by investments in the development of innovative new ...

4.4 A trend from outsourcing to CSR

Like many other sectors, ESNs and outsourcing are faced with the issue of technology pollution. While the metaphor of the cloud is often used to refer to the fact that these technologies require no physical support for the user, in practice they do require physical support for the vendor, and greedy servers to make these services available.

Internet networks are not immaterial, and require a great deal of equipment to operate: it is estimated that the digital sector will account for *% to *% of greenhouse gas emissions worldwide by ****[***]

In response to these issues, outsourcing companies and, more generally, many ESNs are moving towards CSR policies.

In concrete terms, these new initiatives enable companies to reduce their IT and energy impact. Cloud Computing, for example, enables different machines to run on the same server, rather than on different servers, thus limiting the energy consumption of the whole system. Cloud Computing also makes it possible to optimize available computing power by sharing with many users a high-performance machine that will only be used a small part of the time by a single user. While the energy costs of communicating information are higher, the material costs of creating powerful computers are largely limited with ...

5.1 Regulations

The outsourcing contract The outsourcing contract is an SLA (***) between the outsourcer and the customer, defining the quality of service to be provided by the service provider. The contract includes both basic and specific clauses. The standard clauses include Identity of service provider and customer Conditions of duration, renewal and termination Insurance Terms of payment Liability clauses Confidentiality clauses (***) Mutual obligations The outsourcing contract may also include specific clauses, such as the scope of the outsourcer's intervention (***) the reversibility clause, which enables the customer to recover his data and the management of his IT assets the service provider's commitment to maintaining the information system in operational condition confidentiality [***] Data protection Coming into force on May **, ****, the General Data Protection Regulation (***), common to all European Union countries introduces certain rules concerning the use of personal computer data. The main constraints are as follows: Keep a register of data processing, with their level of sensitivity and hosting mode. Prevent and detect risks of leakage, theft or intrusion, notably through a monitoring system. Data must be protected as soon as it is collected, and by default. Have a restoration system in place in the event of data compromise. Respond to user requests for deletion, ...

6.1 Positioning the players

Source: ****

• Sopra Steria
• Orange Business Services
• XEFI
• DRI
• Atos Eviden
• Koesio Groupe
• Computerland (Resadia Groupe)
• Resadia Groupe