For the 180 members of computer systems engineering industry association Syntec Informatique, 1995 was a year of contrasts, said Eric Hayat, president, at the organization’s annual presentation of the industry’s performance. We had very promising growth in the first half, so we forecast 5.8% to 6% for the year. But we were a bit disappointed with the 4.6% (to approximately $13,200m) at the end of the year. As every one was, we were affected by the strikes and the resultant downturn in the economy, he said. As in the last couple of years, the industry’s international business was more dynamic than its domestic activity, with the former up 5.2% to some $17m. Little wonder, considering that France trails its neighbors in total average annual industry growth rates. Paris-based market research firm Pierre Audoin Conseil SA says France’s total market growth in 1995 hit 5.9%, compared with 8.6% in Scandinavia (excluding Sweden), 10% in Germany and 12.5% in the UK. Francois Dufaux, Syntec vice-president and executive from Sema Group, said France’s growth rate lower than its neighbors is due to slower economic growth, and a comparative reluctance to outsource and buy packaged software. Slower domestic growth in France must also be attributed to a lack of spending on information technology by France’s public sector. Syntec estimates that the public sector accounts for 48% of its members’ total revenue and in 1995, systems revenues in that sector were virtually flat. Five years ago, systems engineering firms were sustained by public administration and the large public companies. Today, those organizations’ activity is growing at between 1% and 2% and, even if France Telecom remains a heavyweight, public administration is insignificant. The industry is now driven by competitive industries such as manufacturing/energy and retail commerce, said Jean-Claude Mailhan, vice-president at Cap Sesa Hoskyns SA. Syntec reported growth rates for those two sectors at 6% to 8% and 7% to 9%, respectively. So, he concluded, the computer service profession suffers not only from a slowing of the decision-making cycle, but from a lack of investment in the public sector. For industries buying computer services, the three main pillars of growth were systems integration and engineering (up 5% to 7%), software products (up 7% to 10%) and facilities management (up 13% to 15%). Mailhan said large packaged software from the likes of SAP AG, Baan Co NV and Oracle Corp is increasingly at the heart of information systems renovations, and despite continued reticence in France, facilities management is beginning to take hold. About 60% of Syntec’s members reported an improvement in their average after-tax margins in 1995, but at 2% to 2.5%, they are still inferior to neighboring countries, Hayat said. Approximately 15% of the companies report margins of plus or minus 1%. The industry created 12,000 jobs; after replacing 6,500 employees that left or retired, the net gain for France was 5,500. Over 50% of the total hires (7,000) were first jobs for college graduates. Today, one in four graduates begins their career at a software and systems engineering company, Hayat said. Growth prospects continue to be variable: They can change from one month to the next. We feel that the presidents of systems engineering companies are ready to hire, but they are restrained somewhat by their worry over how things will evolve. Dufaux believes France’s slower growth is encouraging, because this lag cannot last. Privatizations and deregulation should bring us to a rate of growth comparable to our neighbors.
