Business leaders’ need to compete with other companies in the global marketplace is leading many organizations to look for IT nearshoring solutions. Many companies are now working with a third-party outsourcing provider to bring their IT operations closer to home. With the rise of globalization, many companies are now looking for more flexibility and control over their security measures. The result? Nearshoring IT operations can provide you with greater control over your company’s security and ultimately lower operational costs than offshoring would allow.
Let’s take a look at what nearshoring can bring to the table for France.
State of the IT market in France
The state of the IT market in France is changing, especially in major cities. This is primarily due to the shift away from hardware towards services and new technologies that help achieve cost reductions.
One way that wholesalers are achieving this shift is by providing added value products and IT services. However, there are many difficulties with this change which make it challenging for many wholesalers to make the shift successfully.
For example, it is difficult to make this shift because there is a lack of skilled management and staff members who are well-versed in these new technologies. It can also take longer than expected before successful changes are made to this model which adds to the difficulty.
Furthermore, many organisations experience difficulty in competition with other companies now because they are moving their operations closer to home. The rise of globalisation and the need for more control over their security is leading many organisations to find nearshoring solutions.
The IT, Software and Services sales in France reached €56.3 billion in 2018. Despite a more pessimistic economic climate in France this year, the market is anticipated to grow by about 4% in 2019. The IT software segment remains the growth driver of the industry with SMACS increasing 15.4%.
The French hardware market has been rough in 2018. Gartner has reported that the market decreased by 11.8%, whereas private household-related IT hardware sales have reportedly decreased by 13%. This might be linked to the country’s financial instability, which caused purchasers to put off buying renewals.
Tablet and PC sales are being stifled by competition from smartphones, high equipment costs, and price pressure. IT hardware demand is also affected by cloud computing, digitisation, and virtualisation among businesses.
Current outsourcing situation in France
In France, outsourcing is getting more and more popular as time goes by. Businesses have gotten comfortable with the idea of letting a subcontractor complete a project to save time, resources, and money.
In 2019, the yearly contract value in France has grown by 15% year on year. While outsourcing has been on a steady upswing for a couple of years, it’s switching up both locally and internationally. Managed services, despite their recent expansion, are facing a negative trend in favour of a-a-S (as-a-Service) activities, which is foreseen to be exacerbated due to the pandemic.
In addition, the advent of new technology, particularly Cloud servers, has resulted in a sea change for outsourcing. On top of selecting a provider to run managed services of IT infrastructure, there is now the option of utilizing a service provider that remotely manages those systems and hands them to customers using an Internet connection.
As stated by Whitelane’s 2020 outsourcing research for France, 64% of respondents who participated in the survey noted that they plan to outsource at the same rate or more.
Still, even with almost two-thirds of the business owners embracing outsourcing, plans to insource projects have also become more popular, as proven by the 3 percentage point increase in positive responses – from 14% to 17%.
The former suggests that companies are combatting talent shortages, whereas the latter indicates a willingness to dish out projects quicker.
The top motivator for outsourcing is cost reduction. 66% of respondents cited it as the most important driver for them while 50% mentioned focus on core business and 47% mentioned an improvement in service quality.
Providers are even keener on saving money than clients are. 92% of them stated that it’s the most important factor.
According to Infologo, by 2020, more than 67% of firms will have outsourced their network and IT management to simplify their operations.
Why nearshoring can be the solution for France
With new policies providing support for start-ups and financial incentives for companies investing the majority in research and development, it seems France is now more welcoming to the idea of nearshoring.
France, which is one of the most technologically advanced countries in the world, is facing an IT talent crisis. There are many reasons for this crisis – high unemployment, a high cost of living, and the difficulty to find skilled professionals.
New technology has resulted in a reduction of hardware sales in France because firms are taking a turn from manufacturing to R&D. Nearshore IT services can help France solve its innovation problem by providing technology that helps the country stay ahead in the IT industry.
Hiring dedicated teams with skills to build custom software, all with the added benefits of cultural affinity, getting to know developers from other locations, and a huge talent pool is what nearshoring is all about.
Poland has a long history of being a leader in the IT industry. The area of IT continues to grow and evolve rapidly with new opportunities, challenges, and trends every day. Nearshoring to Poland is an attractive option for companies looking to outsource their innovation initiatives as it offers solutions to be able to compete with other international companies.
Resources:
https://www.businesscoot.com/en/study/the-it-outsourcing-market-france