Atos needs to leverage its cybersecurity, computing, and digital assets to deliver on its new strategy

While Atos’s recently announced restructuring, which will see the company split into two, is much needed, the company would now benefit from better leveraging its cybersecurity portfolio, computing business, and the expertise it gained from the acquisition of Syntel, says GlobalData, a leading data and analytics company.

Rena Bhattacharyya, Technology Service Director at GlobalData, comments: “Over the past two years, Atos has been unable to turn around its performance, even with numerous acquisitions. The company’s organic revenue contracted in 2020 and 2021 (-3.0% and -4.3%, respectively), while many rivals enjoyed double-digit growth. Atos’s decision to separate out its higher-growth and higher-margin businesses from the underperforming divisions is a smart move, as the latter have been dragging the company’s overall financial performance down for several years.”

One of the new companies, SpinCo, will offer high-growth solutions supporting digital transformation, big data, and cybersecurity. GlobalData recognises cybersecurity as one of several key themes in which companies will be looking to invest. Indeed, the company’s recent report, ‘Cybersecurity – Thematic Research’, forecasts that the cybersecurity industry will grow from $125.5 billion in 2020 to $198 billion in 2025 at a compound annual growth rate (CAGR) of 9.5%.

Bhattacharyya continues: “Atos has considerable strengths, including its cybersecurity portfolio, computing business, and the digital expertise gained from its purchase of Syntel. It now needs to put in place a framework and strategy that better leverages them.”

Digital transformation is affecting enterprises, employees, and value chains the world over, with the COVID-19 pandemic and the war in Ukraine accelerating changes that were already under way.

Bhattacharyya adds: “Most of Atos’ rivals are looking to grow the portion of revenue they bring in from what they call ‘digital solutions’, which usually encompass a mix of cloud, automation, advanced analytics, augmented reality (AR) and virtual reality (VR), and cybersecurity capabilities. However, Atos has been the least successful in offsetting losses from its legacy businesses with gains in newer, ‘digital’ areas.”

Although Atos’ reorganization strategy appears to be set, there may be more changes to come. Rumors are flying of a potential acquisition by Thales, a French defense company.

Bhattacharyya comments: “Given Atos’s strong cybersecurity portfolio and relationship with the French government, acquisition suitors will most likely be French organizations.”