Paris, April 12, 2010 - Truffle Capital, the leading European private equity firm, has just published (in collaboration with analysts at CXP and with the support of the Syntec Informatique industry body) the 6th edition of the Truffle 100 France ranking of the country’s top software companies.
“2009 was a particularly difficult year. However, in the midst of this major crisis, the French software industry demonstrated that it was surprisingly resilient. Turnover grew slightly and the industry remained profitable while innovating, preparing for the future and continuing to invest heavily in R&D. The 100 software companies of the Truffle 100 announced the net creation of 500 skilled jobs”, commented Bernard-Louis Roques, Managing Partner for IT at Truffle Capital. “The software industry continues to innovate and is resolutely turned towards the future, creating new jobs in the midst of the crisis and investing more in R&D in 2009 than in 2008. Rather than giving way to short-termism, software companies are pragmatic optimists and 45% believe that they will do well as the economy recovers”, added Bernard-Louis Roques.
“This 6th edition shows again the great potential of the software industry and highlights its ability to adapt, innovate and create job. Although it is crossed by an unprecedented crisis, the sector remains dynamic both in terms of employment and volume of investment in R&D. This positive outlook should be supported by a solid industrial software strategy at European and national levels. In Europe, we have been thinking, especially with Spain, about the establishment of a strong strategy over the next 10 years. A Europeanized Small Business Act that would go beyond the French version proposed in February 2009 is also thought through”, commented Nathalie Kosciusko-Morizet, Minister of State to the Prime Minister, with responsibility for Forward Planning and Development of the Digital Economy.
According to Syntec Informatique, these R&D jobs confirm the research tax credit positive impact on employment within the software industry.
Industry turnover increased from €3.8 billion in 2008 to €4 billion in 2009, although profits fell from 7.6% to 4.3% of total turnover. The economic crisis hit large companies harder than it did SMEs, since only 60% of the top 50 companies maintained or grew their sales, versus 76% of the 50 smallest.
“Who will regret the year 2009? For many companies, the year 2009 will leave bitter memories, or else the announced annus horribilis, at least a nebulous and erratic period, with slow growth and downwards revised targets. For many players, this year has not been the easiest to negotiate. But we cannot complain: in this sullen context, our ecosystem and the one of the actors of the software world, displays a great resistance, proving that the software is well regarded for its value: as a competitive edge.Throughout the year, we have witnessed these new groundswell such as SaaS, Cloud, Open Source or Virtualization. All these concepts and technologies are changing radically and permanently, in “democratizing” the access to the packaged software functions for smaller companies, but also for all those who need to reduce management costs and for those who emphasize the rapid ROI and easily measurable projects“, said Laurent Calot, CEO of the CXP.
An innovative sector that creates jobs - 70% of the surveyed companies plan to increase their investments, versus 64% in 2008. In 2009, 750 million Euros have been spent in France for the R&D (700 million in 2008), reflecting the resumption of investment in this promising sector. Staff numbers in general and R&D staff numbers in particular continue to grow, rising from 51,198 in 2008 to 53,933 in 2009 and from 10,089 to 10,518, respectively. Despite the crisis, the number of researchers has remained broadly stable since 2006 and accounts for 20% of the total headcount. It is noteworthy that most software companies do not intend to relocate their R&D department to low-cost countries. Nevertheless, this proportion has decreased since 2008 and reflects the impact of the crisis: 63% of the companies said that they would not consider relocating their R&D, versus 68% in 2008 and 71% in 2007.
An uneven distribution - Despite strong sector dynamism and an increase in total turnover, there is a very uneven distribution in terms of sales figures. The leading company (Dassault Systèmes) accounts for 31% of total sales, with 23% for the 2nd to 5th - ranked companies, 20% for the 6th to 20th, 15% for the 21st to 50th and only 10% for the lower half of the Truffle 100.
Small companies - the industry drivers - A striking trend for 2009 was the strong growth by the last-ranked company in the 2010 Truffle 100 (Isilog), which posted sales of €5.2 million. Last year, the 100th - ranked firm had a turnover of €4.5 million and in 2007, the figure was €3.7 million. This 13.5% increase in turnover for the 100th - ranked company in the Truffle 100 France testifies to the sector’s dynamism and regeneration capacity. This trend is ever clearer for the 50th-placed software company: in 2008, Datafirst posted a turnover of €11.5 million; versus €13.2 million for Harvest in 2009. Small software companies are now considered to be the industry’s drivers. Although the multinationals are still present, they are still suffering as a result of the economic crisis and the SMEs have taken over the reins. The SMEs feels that they are rightly eligible for France’s research tax credit and may also benefit from the country’s National Bond Scheme. They offer the best returns on investment for public funding in terms of home-grown (and not offshore), skilled jobs and lasting contributions to future economic growth.
In the 2009 edition of the Truffle 100, 17 software companies have risen in the ranking relative to the previous year (27 in 2008), 9 held their position (7 in 2008) and 60 have lost at least one place (49 in 2008). Eight companies have slipped out of the ranking, due to inadequate turnover in their software business. The number of listed companies has continued to rise since 2004, with 33 this year (versus 30 in 2008). Dassault Systèmes and Sopra Group still occupy the first and second spots in the ranking, respectively, despite a drop in sales and staff numbers in 2009. CEGID, with a turnover of €226 million in 2009 and third in the 2008 ranking, slipped to 4th place in 2009. The new company Murex comes in at number 3, with a 2009 turnover of €265 million. The top 10 is generally the same as in 2008, with one exception: Berger-Levrault (currently 11th in the ranking, with a turnover of €85.7 million) was pushed out by Murex.
It is noteworthy that 6 companies left the ranking; in three cases, this was due to acquisition by other (many foreign) companies: Sysload Software (#95 in 2008) was acquired by the French company ORSYP (#15 in 2008, now #16), Vivéo (#13 in 2008) was taken over by the Swiss company Temenos and Etap-On-line (#71 in 2008) was acquired by the US company Concur. These acquisitions (half as many as in 2008) represent a software-related turnover of €55 million (versus €371 million in 2008). Despite this decrease, these acquisitions still show that French firms have trouble remaining independent and holding their rank within the sector.
The top two French regions in the Truffle 100 are still Paris Ile-de-France (with 79% of the total turnover, 82% of the total workforce and 78% of the R&D spend) and Rhone-Alpes (with 11% of the total turnover, 8% of the total workforce and 9% of the R&D spend)). These are the only two French clusters which can claim to have an impact on the European level. Government measures - Software publishers are massively in favour of a Small Business Act as a key measure for boosting their growth and job creation capacity. They also believe that they are natural recipients of France’s national funding schemes (such as the research tax credit and the National Bond Scheme) for guaranteeing good returns on investment for public money in terms of home-grown, qualified jobs and a lasting contribution to future economic growth. Methodology The Truffle 100 is based on a survey questionnaire through which the participating companies declare their compliance with the ranking criteria. The ranking is generated on the basis of the data submitted by each participating company and (in some cases) additional, externally sourced data. Certain confidential data are only processed in an aggregate manner. The Truffle 100 questionnaire is available on the web at http://www.truffle100.com/. Candidate companies can register at any time.
About Truffle Capital:
Founded in 2002 in Paris, Truffle Capital is a leading independent European private equity firm and number two in France dedicated to investing in and building technology leaders in the life sciences, IT and energy/sustainable development sectors. Truffle Capital notably finances spin-outs from multinational companies and technology research institutes. With close to €400 million in managed funds, Truffle Capital is led by a team of four partners with decades of successful investment and entrepreneurial experience in both Europe and North America. In 2007, Truffle Capital was rated as France’s second most dynamic venture capital fund (out of the 51 listed by Chausson Finance). For further information, please visit www.truffle.com.
About CXP:
The CXP (Centre d’Expertise des Progiciels, the Center for Software Package Evaluation) was incorporated in 1973 under the impetus of the French Ministry of Industry and multinational end-users: Air France, Anotec, BRED, BSN (now Danone), EDF, RATP, Société Générale, etc. At the time, the CXP’s key mission was to raise awareness of the “software package” concept within the computing industry and develop methods for choosing a software product. As the only organization of its kind in Europe, the CXP is dedicated to the expert analysis of software packages and their technological environments. About Syntec Informatique:
Syntec Informatique is the French national trade association for software vendors, IT services and R&D services companies. It represents more than 1,000 member groups and companies; i.e. more than 80% of industry sales and staff. Headed since June 2003 by Jean Mounet, Syntec Informatique contributes to the growth of information and Communication Technologies and their applications, promotes the whole industry, and protects collective professional interests.
Syntec Informatique monitors and analyses the software & services sector, keeps the entire ecosystem of ICT players informed of industry figures and trends, and represents the industry vis-à-vis other organizations and public authorities. For further information, please visit www.syntec-informatique.fr.
