I am continually wondering what the strategy of French IT companies could be. This morning, I was talking to the manager of the French subsidiary of a well-known group which employs 700 collaborators here. This likeable manager was a little surprised to notice that Pentalog already has almost 600 collaborators involved in large or very large projects, while they don’t have more than 20 collaborators offshore. This reminds me of the encounter I had a few months ago with one of the French giants of outsourced R&D… who piteously admitted to having a total of 200 offshore collaborators all in all, while boasting thousands of employees in the referencing files that they send to their clients’ purchase departments.
I am asking myself questions on their strategy when I compare the organic growth differential, while the sales force of this company is 20 times greater than that of Pentalog. Over the last 2 years, they have had an organic growth of only 100 collaborators, whereas we added 300. With three sales people against 50, the competition is not fair. In fact, the marginal profitability of this development is likely to be negative.
We had a small friendly argument defending our models: he objected by saying that they don’t know how to sell offshore services and I answered that I wasn’t talking about offshore, but about strategy, management and profitability. When marginal returns are decreasing, one must immediately question the business model. When development destroys value, it has to be stopped.
Many IT company managers have what, in my opinion, is a misconceived idea that their clients can’t stand to see them make money. I think that they couldn’t care less about that; what they want is to pay less for the same or better results. The reality of Pentalog’s organic development clearly sets clients’ expectations for high-quality nearshore services, based on a powerful industrialization that helps them make savings of 30-50%. As long as IT companies don’t make adjustments in terms of production, i.e. by equipping themselves with genuinely local management structures, as long as they don’t understand that PM must be based on the production site but also make regular travels, they won’t stop the growth of pure players like Pentalog. If they content themselves with outsourcing tests and bug corrections, project costs will only decrease by 10%, which is very far from the truly Design to Cost expectations of their clients.






















