Interesting story last week that two of France’s IT service providers have come together in a “friendly” merger that will cut costs and probably more importantly make them more attractive to potential customers and get them on more multi-sourced IT lists.
The merger will create a group with €3.1bn sales, 35,000 staff and customers in 24 countries. It is also expected to cut operational costs by €62m a year.
According to the people in the industry that I have spoken to this is a reflection of the multi-sourced outsourcing environments at big companies today. As a consequence suppliers are trying to make sure that they are on “the list” of suppliers that businesses use.
Today businesses are increasingly drawing up lists of suppliers they will buy from and are splitting up the services they buy between different suppliers. Suppliers have to be on these lists to stand a chance.
When I ask about certain suppliers I often get the response from experts saying they are on the list or not as the case may be.
Steria is the better known brand in the UK, with sales worth over €700m, compared with Sopra’s €80m UK sales. The coming together of Steria and Sopra will put the companies on more lists and enable them to offer more services to the lists.
Outsourcing advisor Jean Louis Bravard said businesses and their third party advisors compile lists of suppliers that they will consider for projects. “With Steria and Sopra combined they will get to the €3bn revenue mark which will put them on more lists.”
And that list is becoming attractive. In Europe and particularly the UK IT outsourcing is steaming ahead it seems.
The latest figures from ISG reveal that in the UK there were 59 contracts signed in the first quarter of 2014, worth €1bn. This represented a 66% increase in value compared to the same period a year ago and the highest number of contracts in a single quarter for three years.
So what do you need to get on “that list?”