With this in mind, fDi convened a roundtable of key decision makers and investment advisers to discuss where France stands as a destination in the highly competitive outsourcing market.
Participants included Arindom Basu, head of consulting services at Infosys; Nauman K Dar, CEO of Habib Allied International Bank; Antoine de Navacelle, an independent consultant and former Citigroup banker; Andreas Dressler, director of KPMG’s Global Location & Expansion Services; Hugh Elrington and Marc Reboux, both directors at real estate services company CB Richard Ellis; Rémi Girardot, CEO of Invest in France Agency; Barry D Glazer, a partner at business law firm Dorsey & Whitney; Martin Partridge, managing director of Brownell Ltd; Beatrice Ramelle-Rigollet, a business processing outsourcing research analyst at NelsonHall; and Vivek Sood, head of outsourcing at Deutsche Bank London.
BG: I remember when I first moved to France 20 years ago, someone told me that in France everything is difficult but nothing is impossible. After a few years, I began to see the wisdom of that remark. But I would say that in recent years things have become less difficult and certainly nothing is impossible.
ND: The perception of France has always been as a difficult place to work and a difficult place to manage the workforce. When I hear “outsourcing”, I think of places where labour is cheap and flexible. To me, France does not seem to fit that model. The other thing that comes to mind is the language. It is not very easy to communicate in France if you do not speak French.
RG: We are fully aware of that. That is why yesterday we started a campaign in the Financial Times to try to correct this misperception, and President Jacques Chirac has come to London this week to speak about France. We are trying to improve the perception. But often perception is one thing; the experience is another.
AN: It is true that historically France has had difficulty with learning foreign languages. But the younger generation tends to speak English.
Antoine de Navacelle: power shift
MP: We are a small company looking to set up a joint venture in France and we are considering a few questions with regards to labour laws. For example, once we have employed a person in France, can we get rid of them? Or should we just retain them as UK employees?
The labour laws still seem to be quite different in France, despite the fact that some changes have occurred.
BG: I think that most people are aware of the existence of protective legislation to protect the employees from unfair dismissal. In general, you cannot terminate employees without real and serious cause, but that does not mean that you cannot terminate for economic, financial or structural reasons. And it is not unreasonably expensive if you follow the required procedures.
VS: France has arguably the best education system in Europe. The grande école system creates an elite set of engineers, etc, that is way ahead of the rest of Europe.
Second, if you look at France’s exports – from agricultural produce at the bottom end and aerospace and technology at the very top end – the country has a critical mass of people who understand technology, infomatics and engineering. That has not been exploited, in my opinion, to the fullest.
France has to focus on its core strengths. If it tries to compete with China and India at the bottom end, there is no chance. But at the top end, there are some huge opportunities for France.
AB: In the outsourcing value curve there are some pockets where France can stand out. The point about French engineers is true: the quality of technology architects, and R&D and chemical engineers is extremely high.
AD: People often talk about outsourcing from the perspective of very labour-intensive, non-core, low-cost activities but there also high-level, complex, specialised activities, such as contract research, contract clinical trials, research and development, and product development. These are niches in which France has advantages.
AB: What surprises me is that if you look at the statistics of outsourcing in Europe, France tends to be among the laggards – even with in-country outsourcing. According to recent reports from Forrester and Gartner, France is in the bottom 3% for domestic IT and business process outsourcing. I think that it is not so much to do with the economic reasons, such as wages, but rather issues such as regulations on the transfer of employees and the management mindset about running ‘best of breed’ businesses.
BG: The issue of transfer of employees derives from the European Acquired Rights Directive, which is mandatory law in all EU countries. While there are different interpretations of the directive from country to country, it is the same issue and, ultimately, the European courts decide how the directive should be interpreted.
In terms of labour costs, France places a higher percentage of social charges on wages than, for example, the UK. But you have to look behind those figures. The average employee and employer is getting quite a lot for those social charges. The social security system is very broad in its scope, very generous in benefits and alleviates the need for employers to incur the ever-increasing costs of private insurance.
MR: Regarding the opportunities to set up a business or back-up operations in France, one of the advantages is that, although it is centrally located in Europe, there is plenty of land available. Land is cheap compared with more saturated countries, particularly in the regions. Paris is cheaper than London for office rates, but the gap between French regional cities and UK regional cities is huge.
Marc Reboux: better quality offices
HE: France has probably one of the lowest rent rates among the main European economies.
MR: Also, 20 years ago, in Paris and other cities much of the existing office stock was ageing and of poor quality. They were residential buildings from the 19th century, which had been converted into offices but were not really adapted to modern technologies. This has changed dramatically: old buildings have been refurbished and now offer the amenities and specifications of brand new buildings like those in London or New York.
HE: Part of the reason behind that is a change in French business culture and a move away from cellular office space – which has previously been the French style – to open plan offices, which is much more Anglo-Saxon.
AN: As far as the political and government environment is concerned, the government is moving away slightly from putting its hands in everything. It is giving more and more power to businesses. There is a change in the mindset.
If you add together the opening up of the business culture with the infrastructure, communication, speed, efficiency and productivity, then you have an environment in which your staff are probably going to be happy working.