Review of 2020 and outlook for 2021: Impacted in 2020, the digital sector should see strong growth in 2021

A sector that has proved resilient in the face of crisis

While the digital sector recorded a -4.6% drop in sales between 2019 and 2020, the situation varied from one business to another: software publishers and cloud platforms fared better, growing by +0.3% vs. 2019, while ESNs (digital services companies) posted a -4.2% drop in sales. Technology consulting activities were particularly hard hit, with a -12.3% decline, due in particular to their exposure to the aerospace and automotive sectors hard hit by the Covid-19 crisis.

While 20% of companies in the sector have not used any form of aid to cope with the crisis, the remainder have made use of one or more social and financial measures. For example: 35% used aid to recruit work-study students, 31% a state-guaranteed loan, 29% partial activity and 18% aid to recruit young graduates. The use of partial activity remained fairly limited, with 6 out of 10 companies resorting to it for less than 10% of their employees. Moreover, 75% of suppliers using partial unemployment are doing so in regions still exposed to the crisis.

Despite the crisis, a total of 4,600 salaried jobs were created in 2020, marking the 11th consecutive year of job growth in the digital sector. While Auvergne Rhône Alpes was the most prolific region with +1,174 new jobs, three regions saw the number of salaried jobs fall: Occitanie (-427), Provence-Alpes-Côte d’Azur (-102) and Normandie (-12).

2021: a major upturn in France’s digital sector

With the first half of the year already encouraging, the French digital sector should see a dynamic recovery in 2021, with growth estimated at 4.8%, representing almost 54.9 billion euros.

The return to growth is due in particular to IT spending, which is set to grow significantly, with 54% of CIOs (Chief Information Officers) declaring that their IT budgets will increase in 2021.

However, this rebound remains conditional on customers’ economic situation: migration to the cloud, as well as improving data usage, are the IT priorities for 54% of digital business customers, who have already launched or will launch projects along these lines in 2021.

On the employment front, 95% of new hires have already been relaunched. Recruitment of young graduates (+29%) and work-study students (+27%) has also risen sharply, illustrating the attractiveness of the sector.

Of the 60% of companies currently deploying a new corporate policy on working methods, 60% are doing so, for example, to improve their attractiveness in terms of recruitment, and 43% to improve the flexibility of skills management on projects.

5 key growth drivers to continue boosting France’s digital sector

While the French digital sector was the most affected in Western Europe between 2019 and 2020 (-4.8% versus -2.4% on average for the region), according to forecasts to date, it should see strong growth between 2020 and 2021, putting it ahead of Italy (+4%), on a par with the UK (+4.8%), and just behind Germany (+6.3%), Spain (+5.3%) and the Netherlands (+5.2%).

5 main growth drivers seem to stand out:

• Digital transformation(+10.8% growth expected in 2021): such as customer experience, digitization of processes, dematerialization…
• Cloud C&SI- Consulting and systems integration (+28.1% growth expected in 2021): verticalized clouds, globalized collaboration, widespread use of containers, modernization and transformation of apps/infra…
• Big Data(+23.4% growth expected in 2021): the collection and use of data to develop new business models and services…
• IoT (+21.6% growth expected in 2021): the development of new solutions with 5G and edge computing…
• Security(+9.2% growth expected in 2021): with increased investment and outsourcing to counter the upsurge in risks, attacks…

Focus on ESN: cloud, cybersecurity and CSR, the priority levers for recovery

74% of Digital Services Companies are already reporting growth for the first half of 2021. Although sales are expected to fall by -4.2% in 2020, the sector will return to growth as early as 2021, with +2.6% growth forecast. Transformation to the cloud, cybersecurity and CSR are the three main levers that are helping to maintain business at the start of this year.

Focus on software publishers and cloud platforms: growth driven by SaaS

With 8.3% growth forecast for 2021, the software and cloud platforms sector is strongly driven by the SaaS model (hosting and updating of operating software on remote servers). In fact, SaaS accounted for 46% of new projects over the last three months. The 3 priority levers identified to maintain business in 2021 are: opening up to new customers, developing business with existing customers, and R&D with the development of new offers and functionalities.

By the first half of 2021, 57% of publishers and platforms were already growing.

Focus on Technology Consulting: a growing customer need

Growth in the Technology Consulting sector is set to resume in 2021, with expected growth of 5.1%, a clear contrast to the -12.3% decline in 2020. 65% of technology consulting companies were already growing in the first half of 2021. Big data, cybersecurity, augmented/virtual reality and artificial intelligence are the most promising topics for customers.