CRN Interview: Atos North America CEO On U.S. Expansion, M&A Strategy And Why Labor Arbitrage Is Dying

Atos U.S. CEO On The Record

France-based Atos is a $15 billion IT services firm, solution provider and manufacturer that is looking to become more visible in North American, already owning tight technology and channel relationships with the likes of Dell Technologies and Cisco.

"We have just opened a new office in Dallas – a brand new [U.S.] headquarters," said Patrick Adiba, senior executive vice president and CEO of North America Operations, in an interview with CRN at Atos' Global Analyst Conference in Boston. "Beyond that, we're investing a lot more in people, in training. … We have a plan of re-skilling about 25,000 people per year."

Atos has a global workforce of 100,000 and has made several aggressive moves over the past few years to diversify, such as the purchase of Xerox's IT outsourcing business for $1.05 billion in 2014, tripling the size of Atos' operations in the U.S. at the time. The company also acquired unified communications vendor Unify in 2016, which now boasts more than 2,000 channel partners. Atos also builds its own hardware including its Bullion line of high-performance servers. Adiba spoke to CRN about Atos' merger and acquisition plans, investments in North America and how the company turned away from labor arbitrage.

You've made a variety of acquisitions over the past few years. Can we expect M&A activity in North America this year?

One very important thing to know is we have no debt, which means that we can continue to contribute to the consolidation of the industry should the right opportunity happen. This business is moving a lot. There's a lot of opportunities and we want to be able to seize them whenever they happen. … So the biggest investment we're going to do in North America is first investing – and we did it in the past already – acquiring companies, acquiring expertise like scientists and so on.

Are you looking to buy channel partners?

The fact of having no debt is a strategy. We want to be debt free to be able to be agile, but not just for acquisitions, also for investing with customers. Some of those require joint investments and we can do that. It's more complicated when you have debt. We saw that it was better to be debt free to be more agile to make any kind of move that will require capital investments.

Think about the customer. Most of the customers -- retail, manufacturing, life sciences -- they're going through transformation. [Customers] not only want to do things faster and cheaper, they want to go to the cloud, do digital workplace one day, but they also want to make sure they get a partner who is willing to put their skin in the game.

What investments are you making in North America to drive more visibility and market traction for Atos?

We have just opened a new office in Dallas – a brand new [U.S.] headquarters. Beyond that, we're investing a lot more in people, in training. One of the things that comes with digital transformation is that your people must be re-skilled because the job is going to change. What we want is to give priority to keep our workforce and have them be able to do different jobs. So investing at [the regional] level, we have a plan of re-skilling about 25,000 people per year. It's a big part of our investment. It's probably one of the most important ones for us because keeping our talents, being able to develop them, adapt them to the new world is absolutely fundamental. And it's changing fast.

What's Atos strategy around labor arbitrage?

We made the deliberate choice a long time ago that we were going to invest in automation versus labor arbitrage because we thought the [labor arbitrage] model has an end. You send out to a cheaper country, then a cheaper country, then where? So this is going to stop because in [this world] you need people close to the customers. The world of offshoring everything to India or the Philippines is gone because customers want people next to them. You need the experts and the data scientists next to you. You don't want them 10,000 miles away. We invested a lot in automation and try to automatize any task that could possibly be automated from software development to even call centers, so we can free some labor and free some cost for innovation. That was the philosophy of the company for the last eight to nine years for our own needs. That's why we are a different company compared to any of the IT players.

Where are most of your employees centered?

All over the world. Our low-cost geography coverage is probably in the range of 20 percent-ish. Even when you have conversations with clients or others, two or three years ago [lack of labor arbitrage] was perceived as a big weakness because people didn't see the benefit of automation. When you look at it now, it's a good thing, because you're less dependent on labor arbitrage, on political changes, on economical changes, etcetera. It was difficult, because for many years we were going against the trend.

Do you want to be a technology company or a services company?

It's a blend. The future is a blend. … We are a use-case company. We find a use case, and if that use case is strong, we just wholeheartedly go into it. Our Bullion [servers] is an example. Hitachi, [Dell] EMC, they sell our brand, Bullion, they white-label us and sell it for high-performance computing because they have to compete against HPE. Another example is what we're developing in the workplace of the future, where we believe that computing of tomorrow will be ubiquitous and boundless.

You're not too well-known in the U.S. What is your message?

The United States now needs players like us. We're a trusted digital partner. For every mature market, Amazon for example: why does Amazon make acquisitions? Why do they not build everything from scratch? Look at how they acquired Wholefoods, so why did they not build everything from scratch? In a mature market, the only way to grow is to acquire capability, acquire customers, go through some consolidation and prepare yourself for the next chapter. That is where the industry is heading.