France - Country Commercial Guide
Computer Services and Software (CSF, CSV)

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-03-04

Overview

 

2017

2018

2019

2020 (Estimated)

Total Market Size

79,856

86,892

85,938

89,376

Total Local Production

73,307

79,767

78,891

82,050

Total Exports

15,012

16,335

16,156

16,801

Total Imports

 

21,561

 

23,460

 

23,203

24,127

Imports from the US

11,658

12,686

12,546

13,051

Exchange Rate 1 Euro

USD 1.13

USD 1.18

USD 1.12

USD 1.12

(total market size = (total local production + imports) - exports)

(Figures in USD millions; * indicates unofficial estimates.

Year to year figures adjusted for varying exchange rate.)

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Valued at $86 billion in 2019, France’s market for computer software and services grew by 4.2% in 2019 and stands as the third largest in Europe after Germany and the U.K.  Despite challenges created by the COVID-19 crisis, the market is holding up well, especially because of a corresponding increase in demand for Internet/Cloud-based solutions, as well as for more robust cybersecurity.

IT Consulting and Services 

This market is estimated at $46 billion, and pre-COVID projections indicated a growth of 4% in 2020.  Two thousand firms in this sector produce 80% of revenue. There are currently 28,000 French firms employing 474,000 employees, all focused on software and services.  The market is divided among the three following activities: Consulting & Services (61%); Software publishing (21%); and Technology Consulting Services (17%).  Ten information technology service firms dominate the French market: Capgemini, ATOS, IBM, Sopra Steria, Orange, Accenture, CGI, Hewlett Packard, GFI and Econocom.

SMACS (Social, Mobility, Analytics, Cloud & Security):

SMACS is an ever-growing market that stands for 30 % of the software and services market, with an annual growth of + 15,7 %, or a total of $18.5 billion.

Software publishing:

The French market grew by 5.3% to reach $13 billion.  Top companies in the software publishing sector experienced increased diversification and decreasing revenues, down by 10% over the previous decade.  The trend of decreasing company weight in terms of total market revenue is obvious throughout the Software & Services market, which has become increasingly heterogeneous, especially with the entrance of newcomers from various sectors, such as telecommunications, temp agencies, computer hardware firms, defense firms, and network integrators.

Cloud Market:

The French market for cloud computing solutions and related services is estimated at $23 billion for 2020, or 19% of the overall IT software and services market in France. Even if its average annual growth is in slight contraction, it is anticipated to reach 20% per year until the end of 2021. This trend is caused by the arrival of new firms in Europe, along with the dramatic expansion of data centers. This market recently witnessed the entrance of companies such as Amazon, which recently brought its first local cloud infrastructure to France, and that of Orange, known as “Flexible Engine.” Demand for public cloud is expected to continue growing by the end of 2021, driven by large-scale markets in both private and public sectors. By the end of 2021, demand for consulting, managed and operated services will further enhance the implementation of cloud-related solutions, with increased needs in the areas of Compliance; Security and data protection reinforcing certification requirements (ISO 27018/27017, SecNumCloud, HDS, etc.); the implementation of ‘Software Defined’ and ‘Infrastructure as a Code’ (IaC) approaches to data management; Automation of public cloud replication and operation procedures; and Supervision, observability and predictability of consumption (FinOps, etc.).

SaaS (Software as a Service):

The implementation of software as a Service (SaaS) solution largely influenced market growth, which is expected to reach $3.4 billion in 2020.  The share of SaaS applications in the entire market is consolidating around 50%, with uses that now cover almost all market segments, including very specific business areas in functional processes, such as invoicing, order-to-cash, etc. The offer expands with solutions targeting more and more vertical markets (health, real estate, transport, tourism, etc.). The SaaS market is expected to continue growing around +17% per year between 2019 and 2021.

IaaS (Infrastructure as a Service): IaaS is growing at a rate close to that of SaaS, benefiting from the dynamics of digital transformation projects carried to the highest strategic level by companies, as well as from storage needs.

PaaS (Platform as a Service):  PaaS will likely be extremely dynamic, with an estimated annual average growth of +23% between 2019 and 2021.

GDPR (General Data Protection Regulation): As of May 25, 2018, GDPR, which regulates the protection of EU personal data, imposed specific obligations on processors, who may be held liable in the event of data breaches. This new regulation has been implemented throughout the EU and EEA region and applies to all European Union citizens, regardless of where the business is established. The GDPR has sweeping consequences for businesses, even in the areas of marketing, and especially customer engagement. Failure to comply with new regulations can result in fines of up to 4% of a company’s global revenues or $24,6 million, whichever option is greater. To ensure compliance to the GDRP, it is suggested that companies appoint a data protection officer (DPO) or data controller. Even smaller businesses or those not processing large volumes of personal data, should at least appoint a primary point of contact for the protection of this data, whether that individual is internal, or the role is outsourced.

Leading Sub-Sectors

  • Big Data
  • Cloud Computing (i.e. SaaS solutions)
  • Mobility
  • Cybersecurity Solutions
  • E-Commerce
  • Outsourcing / BPO
  • Social business
  • “Apps” software applications in smart phones
  • Facilities management and Third-Party Maintenance of Applications (TMA)
  • Facilities management of infrastructures
  • Externalized R&D
  • Integration of Information Processing Systems
  • Integration of smart phones and tablets into the existing IT infrastructure
  • Integration of social networks into the sales/marketing model
  • E-health/Tele-Health
  • Smart Grid/Smart Metering

Opportunities

In the market as a whole, researchers expect growth in the following areas: document and process digitization; digital user services; data management and processing; information system sharing, and especially cloud computing. Increasingly widespread and afforable high-speed Internet (5G) access and wireless connectability will maintain demand for systems integration, especially with regards to omnichannel commerce solutions and e-commerce in general, which benefits from its lower costs and increased mobile accessibility.  The coming to market of 5G will further boost the development of solutions in IoT and Artificial Intelligence.

While market growth of consumer software and services hovers around 4%, the cloud market keeps on expanding at a rate of 21%. The public cloud market, one of its fastest growing subsectors, grew by 49% over the same period. The cloud (and especially the public cloud) market is becoming an increasingly attractive commercial opportunity.  As a whole, high growth in the cloud market represents an opportunity for business’s investment, entry and expansion, especially in France’s current market climate.

In France, the growing need for data storage and security for personal data has been further spurred by recent cyber-security concerns and GDPR implementation. Spending, in order to conform to RGDP regulation, is estimated to average over $30 million per unit among France’s 40 largest corporations. With huge disparities across sectors. For banks and insurance companies, the bill could be over $100 million on average and $35 million for other consumer businesses. The suppliers of the organizations will be limited to $11 million. While these developments present an opportunity for cloud providers to provide solutions and respond to increased demand, it is also important to keep in mind that these changes will have a large impact on the approach of cloud providers and will necessitate an updated approach by those affected by new regulations.

Web Resources

International Data Corporation (IDC)

Pierre Audouin Consultants (PAC)

BIPE (provider of economic analyses and consulting services)

Syntec Numérique (French association)

Markess International Inc.

Médiamétrie

Journal du net

Le nouvel économiste

Truffle 100

CXP Group (European research and advisory)

Commission Nationale de l’Informatique et des Libertés (CNIL. Research firm)

 

Contact: U.S. Embassy France - U.S. Commercial Service Trade Specialist

Charles.Defranchi@trade.gov

Tel: +33 (0)1 43 12 71 63

trade.gov/France