France’s digital sector: steady growth over the past 15 years, now slowing down

Innovation, resilience and sustainable growth: the digital sector's watchwords for 2024

Following growth of +6.5% in 2023, the digital market should grow by +5% in 2024, confirming its role as a driving force in the French economy despite a slowdown in orders and a wait-and-see market environment.

All business lines will face a slowdown in sales growth:

• Estimated growth forCloudpublishersand platforms in2024: +9.6%.
• Estimated growth forDigital Services Companies(DSCs) in 2024: +2.1%.
• Estimated growth fortechnology consulting(ICT)in 2024:+3.4%.

In 2024, the size of the digital market is estimated at 70.4 billion euros: 38.7% of the market for software publishers and cloud platforms, with sales of 27.2 billion euros, 49.8% of the market for ESNs, with sales of 35 billion euros, and 11.5% for Technology Consulting, with sales of 8.1 billion euros.

The 5 main growth drivers to continue boosting France's digital sector

Beyond the cloud, which remains the most buoyant lever for the digital market in France, new markets are emerging, small in size but with very strong growth like responsible digital, and AI.

• Cloud(platforms and services): a market worth 39.4 billion euros, with +14.2% growth forecast for 2024
• Big Data: a market worth 5.4 billion euros, with +16.8% growth forecast for 2024. The collection and use of data are becoming essential to the evolution of business models, the development of new services and the optimization of operations.
• Security: a 7 billion euro market with +10.6% growth forecast for 2024. Increased investment and outsourcing are essential to counter rising risks, regulations and attacks.
• Artificial Intelligence: a market worth 2.8 billion euros, with +35.7% growth forecast for 2024. This is not a new subject, but new technologies are helping to democratize and accelerate it.
• Digital Responsibility: a market worth 1.3 billion euros, with +38% growth forecast for 2024. A lever that has become essential for the growth of companies and organizations in the sector.

Spearheading Véronique Torner’s mandate, responsible digital is no longer an option, but a necessity for companies and their customers. According to a survey conducted by PAC for Numeum, by 2024, 78% of digital companies plan to intensify their actions in the area of digital responsibility, focusing primarily on environmental aspects. On the other hand, Companies are increasingly being asked to demonstrate their corporate social responsibility (CSR) actions in calls for tender. This is because 80% of digital companies of all sizes respond to calls for tender that include CSR criteria. Nearly one in 2 digital companies (46%) win projects that include a CSR theme. .

Talent remains the key to competitiveness

Faced with a slowdown in the deployment of order books, digital companies have been more cautious about job creation in 2023. Indeed, 7,000 jobs were created last year, compared with 47,000 in 2022, which marked a record. However, it’s important to point out that jobs created in the digital sector are generally long-term: 90% are permanent and 80% are management positions.

Despite this slowdown, the digital sector remains under pressure, and skills requirements are still high. The skills most in demand include security, cloud and data for ESN and ICT companies, and R&D teams for software publishers. What’s more, confirmed and even senior profiles are the most sought-after by companies.

Staff turnover remains a key factor, due to a highly competitive market: 45% of employees who left their company in the first 6 months of this year went to work for customers, and 43% went to work for competitors.

Artificial intelligence: a new growth driver for businesses

At a time when the rise of generative AI is arousing great enthusiasm, the survey reveals a high level of enthusiasm among digital companies for this new era, which they see asa source of opportunities for improvement (70%) and business (50%). Only 9% of companies in the sector see it as a major threat to employment. At the same time,85% of digital companies have already integrated Generative AI into their internal processes by 2023, or will do so in 2024 and beyond.

The adoption of AI in digital companies varies by business and process. While some areas such as software development, marketing and software testing are more inclined to use AI, other functions such as HR, legal and finance are exploring its potential more moderately. Companies that can identify the relevant use cases for AI and integrate it effectively into their processes will be best placed to take advantage of this revolutionary technology.

Please note: the survey took place in April and May 2024 and the econometric market forecasts in May 2024. These analyses are therefore based on the economic context preceding the decision to dissolve the National Assembly. As a result, Numeum and PAC remain attentive to the context that may impact business activity and potentially public procurement. At its biannual conference in December, Numeum and PAC will review the year’s market situation and outlook.