The reconversion of ETIs, a boost for the industrial rebound

Midsize companies often operate in industries that have been disrupted by automation and technology – manufacturing, mining, healthcare, to name a few. In France, according to I’INSEEgirls are 5,400, with more than three million employees. They account for 34% of exports and a turnover of 1,000 billion euros per year.

In the footnote Five years to advance the France of ETIs, Institut Montaigne and the Movement of Mid-Size Companies (METI), with the support of PwC France and Maghreb, are sending proposals to the candidates for the 2022 presidential election to advance medium-sized companies and accelerate France’s industrial rebound .

According to the technical association ATH, French ETIs have shown good resilience despite the health crisis. Undeterred by disruptions and slowdowns, the middle market remains tenacious and continues to see technology as its best path forward. But shifting to innovation requires a more specialized workforce, which costs money and takes time — two things midsize companies don’t have compared to larger companies. Given these constraints, reskilling and upskilling are essential for the recovery and expansion of this segment, which has been severely affected by the pandemic.

Analysis for self-improvement

Retraining in data science can provide the highest and fastest return on investment for midsize businesses. For one thing, online courses and training in this area are now readily available from third-party organizations. However, most ETIs cannot build a data science infrastructure around AI skills from scratch. The good thing is that the analysis tools themselves, which were once too expensive and complex, are now easily accessible.

Most suppliers offer training directly to customers, which can provide an additional level of retraining for employees. But while these connected business intelligence platforms have become easier to use, they are still sophisticated tools that require considerable know-how to operate properly to drive organizational growth. That’s why mid-size companies need to make real and serious investments in retraining or upskilling their employees to enable them to use these systems. Once this process is in place, data science offers the opportunity to create new revenue streams and improve operational efficiency.

The combination of the right tools with properly trained employees promotes business success. When people hear about retraining, they often imagine a classroom, with specific course and training days. This goes for formal training, but there are other ways to learn in the office, through informal and non-formal training. By recognizing the value of these three types of learning, midsize companies can create a sustainable workplace culture. Learning cultures foster the emergence of more productive and effective teams. But that doesn’t happen overnight. This change requires a philosophical adjustment on the part of business leaders, which is not always easy for private, family-owned and sometimes decades-old companies.

Cost of training versus cost of hiring

In investigation rconducted by Deloitte with 500 middle-market executives, 61% of respondents said they were retraining their staff, while 57% said they were redeveloping jobs to compensate for positions lost due to the automation and technology.

The pandemic has hit mid-cap companies hard. According to the ATH observatory in its study on the financial health of French ETIs, after a steady increase in their turnover of around 11% over 3 years, the latter fell in 2020, thus erasing this three-year growth. This situation has notably accelerated the need for new technologies and employees trained to use them.
In France, the cost of recruitment se is on average between 5,000 and 8,000 €, and, according to some estimates, external recruitment can cost an organization up to six times more than internal development. In a sluggish market, these economies of scale allow midsize companies to invest in innovation—tools like business intelligence platforms—that can boost revenue. Also, by saving the time and money needed to recruit externally, they can adapt more quickly and more effectively to disruptions affecting their sector.

Why does retraining work so well in the middle market?

ETIs face challenges that small and large companies do not know. On the one hand, they operate in complex global markets that require the use of powerful and scalable technological solutions, but they have no access to capital markets and obtain little external financing. In addition, mid-market operations always require skilled labor and competing with larger companies on pay can be difficult.

However, the ETI market is doing well, as it always has. Combined with their overall resilience to industry disruptions, these companies are uniquely positioned to tackle new areas of expertise such as data science, build training and learning cultures and, ultimately, retain and retrain their current employees to secure a brighter future for the middle market.

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The reconversion of ETIs, a boost for the industrial rebound


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