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Industry Trends

Private Equity accelerates the transformation of the digital sector

4 min.

private equity

According to the latest Numeum study (Dec. 2021), the growth of the intellectual services market has reached results well beyond the initial estimates in 2021. These estimates have been revised upwards for 2022, with a figure of +7.1% growth. This rebound puts a new trend in the spotlight: the era of PE (Private Equity).
This new craze of investment funds is not without consequences on the digital transformation of Professional services. Jean-Philippe Couturier – CEO of Whoz – gives us a fascinating and exclusive interview, written by Roger Bui – Editor-in-Chief of iLogiciels & Services.

Digital sector: a must for private equity

In recent years, the digital transition has been gaining ground. And the pandemic has been a real gas pedal for the transformation of an entire industry, that of intellectual services.

Covid-19 has revealed a tendency for funds to outbid Professional services. We are not talking about investing in the digital sector, but rather about defining the best value that will enable a company to boost its development.

As we head into 2022, this movement is driving a shift in private equity’s position:

  • Move the lines by investing in IT
  • Contribute to the consolidation of a sector in full mutation.

We are also seeing this change in scale for ESNs and software publishers. The support of a PE fund allows them to considerably increase their value and growth, and to consolidate their expertise in their market.

Consequences of the background increase in the digital sector

Until a few years ago, private equity had little interest in the digital sector. Indeed, it is only recently that we are seeing more and more PE funds financing this sector. This has helped accelerate the digitalization and industrialization of Professional services.

Many Professional services have brought private equity funds into their capital, in return for which the companies are reviewing their processes and industrialization in order to optimize their margins.

In the world of intellectual services, competition is fierce, and the need to digitize quickly is a necessity. To remain competitive, the need to optimize margins through the “people supply-chain” is felt. This allows to accelerate contract signatures and production start-ups.

Companies that are still hesitating about the implementation of industrialization notice that they are lagging behind their competitors. Indeed, competitors are strongly accelerating their own approach and force them by default to take the step.

Impacts and challenges of Professional services acceleration

The need for transformation becomes crucial, strong competitiveness and PE funding make the sector even more competitive. The more the sector is financed, the more new competitors will appear, especially start-ups.

Therefore, the companies already present on the market must imperatively transform themselves.

This market is constantly growing and this is even more true for the engineering sector. In all sectors, there is a new competition, such as tourism, retail, etc… A competition that is financed and that will encourage industries to transform and will create a lot of business for Professional services.

In addition, there is a very high growth rate within Professional services.

The growth of Professional services is limited by two factors, the difficulty of recruiting and the need to use freelancers. Indeed, it is necessary to be hybrid, by calling upon internal as well as external staff. This allows them to respond faster to their clients’ needs. But this is not yet instilled in the culture of companies.

The support of a private equity fund brings benefits to Professional services. The contribution of external capital makes it possible to invest in recruitment, growth, innovation… and thus to develop more quickly, especially internationally. In the Digital Services Companies sector, the number of PE mandates is increasing, with 6 times more French top 40 Professional services under PE mandate in 10 years.

The importance of Whoz 

Whoz has doubled its business by 7 for the year 2021. Our core business is and has always been the “talent supply chain”. Our solution takes into account all the necessary data, such as availability, skills and needs. Then, we will match all these data. By using supply chain processes, we will optimize the staffing. As we are highly specialized in our field, we offer an innovative solution that is not just a resource planning solution. It is a vertical solution dedicated to Professional services Industry.