• United States
Peter Sayer
Senior Editor

French see offshoring as remote threat to business

Jan 25, 20063 mins
Enterprise Applications

French businesses are offshoring more of their IT functions, but this is not a threat to French systems integrators, and the number of IT workers in France will continue to grow, according to the French association of the software and computing services companies, Syntec Informatique.

“In the French market, we’re at a turning point between a few more-or-less successful experiments and a ripening of offshoring, which is becoming more widely applicable,” says Jean Mounet, the association’s president.

Offshoring, or the outsourcing of IT services to a supplier in another country, is a $12 billion a year industry worldwide, according to Marc Laporte, general manager of market researcher IDC France. However, it still only represents 2.8% of the world IT services market, he said. “The proportion of industrial goods that are exported is much higher.”

In France, offshoring makes up between 2% and 2.5% of revenue in the IT services industry, according to Jean-François Rambicur, president of Syntec Informatique’s economy and markets committee.

“Clearly, the amount of noise it contributes is much greater,” he says.

French IT workers need not fear for their jobs, he says, because demand for IT services is growing faster than offshoring, so even as some jobs are moved abroad, still more are created at home.

Offshoring’s share of the French IT services market is growing, and could reach 5% by 2009, but will probably never account for more than about 15% of the market, according to Rambicur. This is because many functions must remain close to the customer, he says, perhaps because customers need a quick answer to questions, or a response in their own language, or someone to turn up on site.

Language is a key factor in outsourcing decisions, according to Jacques-Benoît Le Bris, director of e-business at Rhodia SA, a specialty chemicals company with headquarters in France that has operations worldwide.

“The issue of language is huge,” he says. “You don’t have confidence in someone when you call the help desk and they speak to you in English.”

The division in offshoring is not between skilled and unskilled work, but between work that can be done remotely, and work that must be done locally, according to Rambicur. IT companies in France, and other European countries, need to train and retain employees with a full range of skills, from highly educated engineers down to less-qualified technicians. Europe’s IT industry needs to take a close look at its training and recruitment plans for the years ahead, he warns.