Few markets are as stable as this one in regards to IT services in France. Since 2008, PAC rarely observed growth rates under 3% and this in a very mature IT market, highly impacted by any economic interference. Even this year, when all other verticals are on the decline, the utilities sector shows a positive growth of over 1%. In the first place, this does not seem like enormous growth, but it is indeed, taking into account the pitiful condition of the French Economy.
This said, every provider dreams of having contracts with utilities clients. Most of the contracts, especially those for outsourcing services, are long-term contracts with length above French average (3 to 5 years), and often with an automatic renewal built in. So how does a provider get there? Well, it is a long way to go.
A couple of providers are already very well positioned: Atos, Orange Business Services and Capgemini are excelling in the exercise of locking up the market. Together with Logica and HP they make up for almost 40% of it. And in addition to providing quality services, they stand out in the exercise of building up and maintaining client intimacy – because this is what it is all about! The market is a highly strategic one with complex company and regulatory concerns (e.g.: servers must be located in France). Once potential providers have completed the task of showing that they perfectly manage all the business constraints, and even demonstrate the added value of their services offering, the one thing that counts to the decision markers is trust. And trust goes to those who are the closest to the decision markers.
This means that local players are advantaged. New players in the French utilities market, especially the Indian competitors HCL, TCS and Wipro, are struggling to gain market share. They will have to be patient, gaining confidence slowly but surely, by organizing workshops and client meetings. Closed by incumbent and local relationships, the market will open because of cost saving measures among utilities caused by declining energy demand, especially from manufacturing. And so new players with offshoring capabilities will have a new market entry point.
Post by Katharina Dalka