Similarities, Differences Mark French Outsourcing Market

Opinion: Outsourcing as we know it in the United States and the United Kingdom doesn't exist in France.

To most Americans, the French outsourcing market is an unknown world. But if you work for a company with global operations, chances are some of those operations are in France, and you therefore are likely to need, at some point, an outsourcing provider in France—vous voilà!

While in France on vacation recently, I learned as much about the market as one can in a day, taking time out from time off to attend a seminar put on by the French magazine for CIOs, called 01 DSI. (CIO is expressed as DSI in French.) The event was sponsored by the French outsourcing and systems integration company Unilog and was followed by lunch with Aydin Azernour, a general director of the company.

Unilog, with about 600 million euros ($840 million) in annual sales and some 8,000 employees, focuses on work in France, the United Kingdom and Germany.

In the United States, Unilog works with Keane as a partner. Its specialties are SAP consulting, training, application development and IT infrastructure outsourcing.

In general, French companies and their CIOs face the same array of challenges as their U.S. counterparts, with a few significant exceptions. For example, the issue of outsourcing relationship management, or gouvernance, was top of mind. Unilog officials recommend starting slowly with a pilot project and then building on that experience. It was interesting to note that two methodologies for good IT governance, ITIL (IT Infrastructure Library) and the Capability Maturity model developed at Carnegie Mellon University, are both strongly advocated by Unilog.

Vincent Destombes, who is in charge of IS at the Societe CFM, a major French gas pipeline company, offered two words of wisdom in drawing up contracts: "Clarifier! Preciser!" You get the idea: The need for drawing up an unambiguous outsourcing contract is common worldwide.

Citing one CIOs experience, Unilog executive committee member Jean-Pierre Parra asserted that people tend to outsource what they dont know very well. However, Parra continued, it makes more sense to outsource what you do know well—that way, you can manage the relationship better. Parra also cautioned against seeking instant payback. "Its a myth that its possible to cut costs immediately," he said. "It takes several years to realize real economies [my translation]."

As in the United States, offshoring is a topic of intense interest. But in France, the discussion is not dominated by India. Instead, theres considerable interest in sending work to former French colonies such as Lebanon and Morocco, two countries in which Unilog has operations. Eastern Europe, however, was nowhere near as attractive to French companies as I thought it might be. Unilog officials said theyre deterred by the threat of "mafia" extortion.

Perhaps the biggest difference between there and here is a French law known as 122-12, which forbids layoffs in the case of outsourcing deals. If you think they cant be serious, they are. Just ask Alcatel, which signed a deal a few years ago and laid off hundreds of workers, only to be forced by a French labor court to take a large number of them back.

If you believe strongly that workers need to be protected against the ravages of outsourcing, a good place to begin is to study the effects of this law on the labor force and economy of France.

As a result of this law, Unilogs Azernour told me that outsourcing as we know it in the United States and the United Kingdom does not exist in France. Faced with entrenched IT labor, management makes concessions to maintain la paix sociale (social peace), which is very important in France, said Azernour.

Out and about

Meanwhile, paris-based capgemini reported a strong first quarter, with 1.71 billion euros ($2.19 billion), up from 1.48 billion euros ($1.9 billion) in the same quarter a year ago. However, the outsourcer and systems integrator is seeking to return its troubled operations in North America to profitability with its so-called Booster Plan, which will cut office space by 45 percent and support and administrative costs by 30 percent.

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