| (Steria is one of Europe's largest IT service providers | | | | being there, compared with our position in Asia. |
| and, since its 2007 acquisition of British firm Xansa, an | | | | Q: Where are you winning the bulk of your business in |
| increasingly prominent regional player in the BPO | | | | terms of industry sector, function et cetera, and how |
| sector. We spoke with Steria's Group Chairman and | | | | has that changed - if at all - in the last couple of |
| CEO, Francois Enaud, about his take on the current | | | | years? |
| state of outsourcing, his ambitions for Steria over the | | | | A: It's no accident that we've shaped the profile of |
| next few years, and how he plans to steer his | | | | Steria to be on what we consider to be the right |
| company through the current financial turmoil.) | | | | market. We've been selective in our market to focus |
| Q: What have been the biggest changes you've seen | | | | on the service industry. We've developed a strong |
| during your time in the outsourcing sector? | | | | portfolio of products adapted for markets like public |
| A: For me it's very clear that outsourcing has gone | | | | services, utilities, financial services; and I consider that |
| from a global approach to a more selective one. | | | | it's a good focus because these sectors are the most |
| Previously clients were looking for a global outsourcing | | | | IT-intensive and spending on IT is higher than in other |
| partner, now they definitely consider that it's not the | | | | sectors and the balance between public and private is |
| right model because it's more risky and less flexible. | | | | a good one. We'll go on with the same focus because |
| They proceed now with a selective model which | | | | it's an advantage to be acknowledged, to have critical |
| means that for each aspect of IT or each different | | | | mass on the market; one of the keys with this sector |
| outsourcable domain of process, they select the right | | | | is to be visible, to stand out from the competition with |
| partner for that piece. This isn't universal and is | | | | specific offerings and references. That's why I prefer |
| adapted to each client, but it's much smarter | | | | to stay focused - even if we extend the geographies. |
| outsourcing. | | | | Q: What is your view of the great growth in the Indian |
| Q: Have you noticed a shift in the balance of power | | | | service provision sector? And do you expect a similar |
| between buyer and provider in recent times - and if so | | | | impact from the ongoing development of the Chinese |
| what form has this shift taken? | | | | services export industry? |
| A: I would say yes, definitely; but at the end of the day | | | | A: China and India are totally different countries. |
| it's still a good balance, of course! However, the | | | | Regarding IT, we cannot compare them equally for |
| balance is not based on the same things any more. | | | | two reasons. Firstly, India is for the time being much |
| There has definitely been a shift, and in a sense clients | | | | more an offshore market than a domestic market, |
| now are - particularly with regards to the selective | | | | even if as I said before I think this will change. China is |
| model - much more demanding regarding engagement | | | | first of all a market in itself, and very late regarding |
| and the SLAs, particularly demanding on flexibility and | | | | offshore work - even if in some cases labor costs are |
| agility. In fact, they no longer consider outsourcing as an | | | | lower in parts of China than in India. In fact if you take |
| obstacle to the evolution of their IT. That's why, in the | | | | the overall cost - the overall picture - China is far less |
| contract and the way they manage a provider, they | | | | competitive an offshore destination than India, and it will |
| are very strict and demanding on this kind of | | | | take time for China to fill that gap. |
| relationship. Very precisely, the way they contract and | | | | Regarding China as a market: I consider this a huge |
| the way they formalise their engagement with their | | | | market. That's why we have decided to get into the |
| provider, is really based on service level agreements, | | | | region of Hong Kong and not to go too widely into |
| demanding quality from a technical point of view, and | | | | China, because it's what I would call oversized for |
| quality from an end-user point of view. | | | | Steria. To have a chance of success we need to be |
| Q: What do you see as being the biggest challenges | | | | very pragmatic. To get back to India: India is the most |
| to the sector's growth today and how are you | | | | powerful offshore location in the world and has a huge |
| positioning Steria to overcome these challenges? | | | | advantage; even if you can find cheaper labor |
| A: For me the biggest challenge is being able to | | | | elsewhere, it doesn't mean that these other places will |
| provide more and more customized services. It's not | | | | be competitive. |
| just IT any more, it's providing for the worldwide | | | | Q: More personally, what are your ambitions for Steria |
| business needs of our clients, and consequently we | | | | over the next few years? |
| have to provide very highly customized services. At | | | | A: My ambition is linked to what I said a moment ago; I |
| the same time we have to provide a very high level of | | | | want to make Steria a point of reference for selected |
| industrialisation of the delivery. The biggest challenge | | | | topics in selected markets, versus any possible |
| we've faced is ensuring the capability to provide these | | | | ambition to make Steria a global generalist. My ambition |
| two different dimensions together. That's a great | | | | is to go further with selectivity and to make Steria |
| challenge. | | | | famous for some topics; to make Steria a multi-leading |
| Q: What do you think will be the impact of the current | | | | player on various selected areas. This is combined |
| financial crisis on the outsourcing industry? | | | | with something which is absolutely key to our strategy: |
| A: Personally I consider - as we have already | | | | to keep our unique corporate governance, whereby |
| experienced in the last crisis - that there will be more | | | | our employees have a say in our strategy. This |
| opportunities than threats, in the sense that outsourcing | | | | specific governance is, I would say, the foundation of |
| is a very easy opportunity for clients to reduce their | | | | our historical values: Steria has a human touch and I |
| cap-ex, and a very good way to reduce their recurring | | | | would like to maintain this. My ambition is to ensure |
| spending. It's a double gain. The only problem for | | | | Steria continues to be a very attractive company from |
| outsourcing is the transition from one point to another: | | | | an employee point of view. |
| how to move from a situation to the next one | | | | Q: What is the best professional advice you've ever |
| represents a risk, and when you're in a crisis clients are | | | | been given - and did you take it? |
| much more risk-averse. But if you present a transition | | | | A: The best advice: don't run after volume. When |
| process which looks less risky for the client, the final | | | | you're considering company growth, pay more |
| destination is so attractive in terms of cap-ex reduction | | | | attention to how you increase your "muscles" rather |
| and operating-cost reduction that clients can be | | | | than how you can be bigger. Because the major risk in |
| convinced. | | | | any growth strategy - and particularly when managing |
| Q: The great majority of Steria's revenues come from | | | | external growth through acquisition - is to be excited |
| within Europe; are you looking to develop a more global | | | | by the volume and forgetting how you can swell your |
| revenue stream to go along with your increasingly | | | | profile and get more "muscles" through expansion and |
| global delivery footprint? | | | | acquisition. I took this advice and have been very |
| A: Obviously we have now reached significant visibility | | | | selective in our acquisitions. Because in our market, |
| and market-share in Europe, in Europe's largest | | | | ,size is not enough. It's probably the same in any |
| markets like France, Germany and the UK. It's time for | | | | industry, but it's particularly true in ours. |
| us to consider further geographic expansion to sustain | | | | Q: What are the most important professional lessons |
| our growth ambition.. But we don't intend to become | | | | you've learned during your career? |
| global. What we will continue to do is be very selective | | | | A: The most important lesson I've learnt is that people |
| in our expansion. Currently we are considering two | | | | are more important than anything else. You can have |
| potential expansions from a geographical point of view. | | | | the best tools, the best processes, the best |
| First is part of Asia, around the south-east around | | | | infrastructure; if your people are not aligned you will |
| Singapore, Hong Kong, a region of Asia which is very | | | | never deliver what you want. For me that's the biggest |
| innovative and fast-growing and investing a lot in IT; | | | | lesson, and I believe that's where Steria has a great |
| and because we've had a presence there for ten | | | | advantage. |
| years, we have now a good network of partners and | | | | Q: Finally, what advice would you give to a company |
| a good portfolio of clients, so we have a solid basis on | | | | just beginning an outsourcing journey? |
| which to consider an expansion of what we do there. | | | | A: Don't underestimate the investment in the |
| The second area of expansion would be, quite soon, | | | | transformation. Don't underestimate the necessity to |
| the Indian domestic market - which is not usually | | | | prepare the transformation very properly. If you don't |
| considered as a market, rather an offshore destination, | | | | invest enough in the transformation internally, first - and |
| but I can't imagine India with such a large, fast-growing | | | | ask your partner to help with that; if you outsource an |
| economy not investing massively in ICT to modernize | | | | existing situation, if you outsource a mess you will have |
| its infrastructure. We're not looking at anywhere else | | | | a mess on the other side - and it will be even more |
| at the moment - certainly not the USA, North America | | | | complex to manage. |
| or Latin: for Steria there's no specific advantage to | | | | |