Alten puts IT services back at the core of its priorities

Alten, the largest ER&D services pure-player, recently held its first-ever advisor day on its IT services unit, IT Enterprise Services (IT.ES). While Alten is well-known for its ER&D capabilities, the company has also developed strategically in IT services. IT.ES now wants to accelerate its growth. It announced a significant transformation plan by adopting a modern organization and moving away from its historical regional agency structure. M&As are on the agenda, and IT.ES targets €2bn in revenues (from ~€1.3bn in 2024) and a double-digit operating margin by 2028.

Since Alten was founded in 1988, IT.ES has relied on an agency network structure. The structure promoted manager accountability at the local level, with agency heads in charge of both sales and recruitment. Under a new head, Yannick Tricaud, a former Atos VP for Southern Europe, Alten IT.ES reconsidered its organization based on the belief that its agency model needed to evolve to manage its service portfolio more systematically, introduce factory-based delivery, and expand its client base.

Focus on 16 key ‘Signature Offers’

Initially, IT.ES reviewed its capabilities to identify its service portfolio strengths and set up priorities. The company set up seven competency centers (CCs) based on this exercise. The CCs include five horizontal (i.e., PMO, Data & AI, Cloud & Security, Software Factories, and Smart Platforms) and two vertical ones (Financial Services and Telecom).

The CCs focus on 16 high-priority offerings (‘Signature Offers’), such as systems integration around Siemens AX4 and MDM around Tibco EBX in Smart Platforms. Another example is the Financial Services CC, which specializes in high-frequency trading.

AI has the highest priority of all offerings and lies across IT.ES and Alten’s ER&D business. The approach is as one would expect. It combines an internal initiative on support functions and two external ones with clients on project productivity (across development and testing) and marketing.

In project productivity, IT.ES has expanded its approach from bottom-up to top-down. The unit found that the bottom-up approach brings up to 4% productivity gains. IT.ES is now taking a systematic approach to automate all activities across the software development lifecycle (SDLC). It develops accelerators (e.g., libraries of standard prompts), drives usage (through conducting training and change management), and monitors LLM usage. The unit argues that such a systematic approach will help reach productivity gains of up to 25%.

Sales verticalization

Along with its portfolio focus, IT.ES is verticalizing its GTM, with its sales force aligned around five major sectors. IT.ES’ vertical presence is concentrated: telecom and financial services represent 2/3 of its revenues, with the remaining 1/3 spread over many sectors. Historically, IT.ES had focused on financial services and service industries to counterbalance the more manufacturing-heavy presence brought by the ER&D business.

One of IT.ES’ priorities is to expand its client base and cross-sell its IT service portfolio to the core client base of Alten’s ER&D arm. Sectors of priorities include, for instance, manufacturing & defense, and energy & utilities. The unit will focus on digital engineering: IT.ES’ specialized capabilities in data, AI, cloud, and security will help, for instance, in clinical trials or health data.

Expect M&As

To support the growth of IT.ES, Alten has somewhat amended its M&A strategy. Previously, the company favored international markets to reach critical scale in several countries, while only conducting tactical acquisitions in France.

Under its new structure, IT.ES will use M&As to complement its portfolio and presence. For instance, IT.ES wants to expand its presence in regions outside of Paris and also in nearshore/offshore countries. Strengthening its Signature Offers through acquisitions in security and consulting, for instance, is also a priority.

Transforming IT.ES with AI

The transformation is still very recent. IT.ES says the new approach is effective and that it is winning larger deals than in the past, despite the change disruption and the soft market. IT.ES targets organic growth of +3% in 2025, somewhat above market growth in Europe.

IT.ES’s ambitions do not stop with overperforming market growth. Yannick Tricaud believes that GenAI and Agentic AI will reshape the IT services industry and automate many IT service activities. IT.ES wants to accompany this secular shift and is investing in automation. The unit has a team of 300 experts building its IP to automate delivery.

The IT services industry has talked for a long time about non-linear growth, with a decoupling of revenue and workforce growth. IT.ES believes that GenAI will enable that decoupling. It expects significant productivity gains in the not-so-distant future and believes its mid-sized will help it navigate this industry transformation without major pains.