France: Implications of the French Presidential election for NASSCOM and its members

 Background – the contenders

On Sunday 6th May, French citizens voted for their next President. The contest between centre-right incumbent President Nicolas Sarkozy and the Socialist challenger François Hollande was won by Hollande. In terms of character, Mr. Hollande is seen as a methodical consensus-builder, in stark contradiction to Mr. Sarkozy’s “hyperactive” style. In spite of real reforms achieved at breakneck speed, Mr. Sarkozy’s policies were perceived by the French population as unconvincing, particularly because his personal behaviour was in sharp contrast with the image the French people have of the presidency and his style of government was sometimes deemed too direct and disorganised. Less than 6 months after his election, Mr. Sarkozy’s popularity rating had already collapsed and during the 5 years of his mandate it never rose above 40%. François Hollande, by contrast, appears as something of a new man on the French political scene; in spite of having led the Socialist Party (PS) for several years he has never held a ministerial post and embodies a drastic change from leaders of the left. He has also benefited from the unexpected fall of Dominique Strauss-Kahn, long seen as the Socialist favourite, and François Hollande now represents French style social democracy.

Impact of French policies on NASSCOM member companies

There are a number of policy issues being discussed that are relevant for NASSCOM members. While the issue of ICTs has not been explicitly raised, Mr. Hollande has stated that French unemployment levels are unacceptably high. Creating jobs and growth for French citizens young and old is essential for Mr. Hollande and he has made a manifesto promise to create 150,000 new jobs in the public and private sectors. Mr. Hollande is also promoting tax cuts for those who employ older and younger workers. Furthermore, Mr. Hollande has highlighted that a debate should be held annually in the French Parliament as to how many workers should be let into France. There is therefore a risk that the debate around legal immigration, low-skilled workers and ICTs will get mixed up and that the number of ICTs allowed into France may be capped, and at a low-level. It will be important for NASSCOM and its member companies to reach out to key potential coalition partners such as the French employers’ federation (MEDEF) and important French companies who use ICTs to highlight the need for bringing ICTs into France. It should also be noted that Mr. Hollande is very close to the French trade unions, who are keen to protect French jobs and are very sensitive on the ICTs issue. Engagement and education will therefore be important routes for NASSCOM to pursue with the new administration. On the other hand, while this appears to be a campaign of “French jobs for French workers”, there is an opportunity to demonstrate how bringing in highly-skilled professionals from non-EU countries can boost the economy and fill positions that would remain vacant due to a lack of skills locally. There is also the opportunity to communicate the efficiency gains that can be made through strategic outsourcing.

European context

Political developments in France are threatening the European Union’s Stability Pact once again. With Mr. Hollande at the helm, the Franco-German alliance at the heart of the EU – and the European Stability Pact and its commitment to austerity – are going to come under increased pressure. The German requirement for public spending cuts – stating that this is necessary to restore confidence in Euro-zone public finances – will be threatened since he sees this approach as too strict in light of a looming recession and growing unemployment. Nonetheless, a June summit is likely to be called which will focus on growth while shunning looser fiscal policies.

Once again, the broader European malaise around the economy, jobs and growth actually offers NASSCOM’s members an opportunity to win business. With public sector companies being squeezed to make efficiency gains, there is a perfect opportunity for the Indian IT-BPO sector to step in and assist them in meeting the requirements of “doing more with less”.