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IT Outsourcing Survey Reveals Strong Trend for Communications Infrastructure Outsourcing; IDC Research Shows Multinationals Prefer Selective Approach to IT Outsourcing

Posted on: Wednesday, 24 November 2004, 15:00 CST

Equant (NYSE: ENT) (Euronext Paris: EQU), revealed key findings of IDC research on IT outsourcing trends during its "Strategic Sourcing for Communications" event, held today in Geneva and attended by senior executives from top multinational companies.

Commissioned by Equant, the research was conducted during Q3 2004 in Europe, North America and the Far East among CIOs and CFOs from more than 300 of the world's largest multinational corporations.

The IDC research reveals that 64 percent of CIOs and 77 percent of CFOs are positive about selective IT outsourcing, but over three-quarters of board-level IT and finance directors would not want to outsource their IT in its entirety. Managing risk is the key concern. The most popular part of an IT function to outsource is the network/communications infrastructure (50%), followed by security services (32%) and server management (32%).

When selecting an outsourcing provider for the network/communications infrastructure CIOs rate telecommunications specialists highest (54%), followed by generalist IT companies (32%) and then local outsourcing providers (14%). They typically entrust their communications infrastructure to a specialist in order to drive down costs and focus on core business functions.

"Our IT sourcing strategy has been consolidated around one main IT provider and Equant as communications provider," said Michael Paravicini, chief technology officer at Zurich Financial Services. "We believe this is an effective compromise between risk management and the critical size of every individual project. The initial scope of our telecoms and network suppliers was highly fragmented," continued Michael Paravicini. "With one main communications provider today, we have saved considerable time and money."

Of the organizations polled in the research, 72 percent had already outsourced certain elements of their IT. The most common benefit, cited by a quarter of the CIOs interviewed was the ability to focus more on core business functions.

"When it comes to IT infrastructure and services, this research indicates that most multinationals are less enthusiastic about IT outsourcing mega contracts," said Duncan Brown, Consulting Director at IDC. "Most CIOs demonstrated a very pragmatic attitude to the outsourcing of certain elements of the IT infrastructure. In particular, most respondents were very open to outsourcing the management of the communications infrastructure to a specialist in order to help them focus more on core business functions."

"We see an increasing enthusiasm for communications infrastructure outsourcing as part of this selective IT sourcing approach," said Michel Picaud, senior vice president, Equant Solutions and Services. "This trend is reflected by a surge in demand for Equant's outsourcing services from multinational customers. Our outsourcing business revenues have more than doubled in the first half of 2004, and this year we have signed new contracts directly and through France Telecom. Our customers, such as JTI and Zurich Financial Services, are satisfied and we are progressively increasing the scope of our business relations."

Note to editors:

A complete summary of the research is available by contacting Equant. In addition to the findings outlined in this release, the full report compares and contrasts the perspectives of the CIO and CFO to IT outsourcing.

About Equant

Equant (NYSE: ENT) (Euronext Paris: EQU) is a recognized industry leader in global communications services for multinational businesses. Equant combines its network expertise - including unmatched seamless network reach in 220 countries and territories and local support in approximately 165 countries - with its expanded services capabilities to provide global, integrated and customized communication services to enable its customers key business processes. Equant serves thousands of the world's top companies, with the industry's most extensive portfolio of communications services and network solutions, including the market-leading IP VPN used by nearly 1,300 global businesses. Equant, a subsidiary of France Telecom, consistently leads industry surveys in corporate user satisfaction.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com

This release may contain projections or other forward-looking statements related to Equant that involve risks and uncertainties. Readers are cautioned that these statements are only predictions and may differ materially from actual future results or events. Readers are referred to the documents filed by Equant with the SEC, specifically the most recent filing on SEC Form 20-F, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including, among other things, risks relating to Equant's history of operating losses, the unpredictability of growth in Equant's markets, changing technology, uncertain and changing regulatory restrictions, Equant's international operations, dependence on suppliers, network security issues, competition, and volatility of Equant's stock price and risks relating to the combination with Global One. All forward-looking statements are based on information available to Equant on the date hereof, and Equant assumes no obligation to update such statements.

Source: Business Wire

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