French IT Firms Report 17 Percent Growth

PARIS (04/06/2000) - The 1999 financial report by Syntec Informatique, the French association of IT service and system integration companies, is rather flattering for French IT service firms.

"Would you be able to find other economic sectors that show double-digit growth?," said Francois Dufaux, president of Syntec, during a recent presentation on the performance of the French IT service firms. The organization called 1999 "a good year" that followed an already "exceptional" performance in 1998.

Syntec members' earnings reached 17 billion euros (US$16.38 billion), with revenue growth of 17 percent from the year earlier.

Almost all types of services maintained consistent growth rates last year.

Consulting displayed the best growth rate and accounts for approximately 6.5 percent of total IT service and systems integration earnings. Consulting alone had a 25 percent growth on its own.

Other services, however, were doing just as well. Implementation and technical assistance grew 18 percent, engineering and integration rose 20 percent. These two services alone generated 46 percent of the total revenue.

"We estimate that services tied to the 'new economy,' namely e-commerce and the Internet, accounted for 13 percent of IT firms' global revenue," Dufaux said.

There was one problem area, integration of shrink-wrapped applications, where growth fell to 13 percent last year from the 18 percent reported in 1998.

IT service firms have every reason to be happy, though. Sectors of the economy that during the last few years have not contributed much to the coffers of the IT service firms, such as government administration and defense, are now beginning to once again to use the firms' services. In those sectors, the 1997 decline (-4 percent) gave way last year to a 14 percent rebound after starting to get back off the ground in 1998 (+8.5 percent).

This year promises to be just as encouraging, even if the growth rate predicted by Syntec will only reach 14.5 percent, far from the 19.5 percent reached in 1998, an exceptional year.

"The economic cycles have stabilized," Dufaux said.

Still, IT firms have to tackle to delicates topics. For example, recent legislation limiting the work week to 35 hours is a "really disturbing phenomenon," according to Jean Mounet, vice president of Syntec. Recruiting difficulties also pose a problem.

"To maintain our revenue, we will not hesitate to go find talent outside of France," Dufaux said.

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