Atos Is Starting to Regain Client Trust and Develop Commercial Opportunities That Will Generate Revenue in 2025

After years of instability and declining performance, Atos enters 2025 with new leadership, improved liquidity and early signs of commercial momentum, positioning the company for gradual recovery and long-term stabilization

Over the past several years, constant organizational changes have challenged Atos’ operations, weighed on the cost structure, and created uncertainty among clients, partners and employees around the company’s viability. Additionally, numerous changes made to its go-to-market approach and CEO team since 2019 — when Thierry Breton, Atos’ CEO for 11 years, left the company — have pressured Atos’ financial performance. On Feb. 1, Philippe Salle became Atos’ chairman and CEO. With a new CEO in place and a completed financial restructuring plan, Atos is working on gradually accelerating commercial activities and stabilizing its financial performance.

 

During 1Q25 Atos remained in an unfavorable position compared to its peers as the company’s revenue continued to decline year-to-year due to contract completions and terminations, lower business volume, and a reduction in scope of low-margin contracts. Revenue growth remained negative for the eighth consecutive quarter; however, Atos’ commercial activity began to improve with growth in order entry and an increase in the company’s book-to-bill ratio.

 

After completing its financial restructuring plan in December and limiting cash expenditures in 1Q25, Atos has strengthened its liquidity profile, which will allow for more investment flexibility and assist in stabilizing the company’s financial performance over the midterm. Although it will take time for new deals to convert into revenue, the positive trends in commercial activities indicate Atos is starting to regain clients’ confidence. TBR continues to expect 2025 will be a transformative year for Atos as the company solidifies client, partner and shareholder confidence; accelerates commercial activities; and rightsizes its cost structure to normalize profitability levels.

 

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Increased defense and infrastructure spending in the EU provides revenue expansion opportunities for Atos and its competitors

Recent legislative changes in the European Union (EU) emphasizing digital transformation, cybersecurity and technological sovereignty are influencing public sector IT spending trends, including increased defense and infrastructure spending. For example, the Artificial Intelligence Act from August 2024 introduced a risk-based regulatory framework for AI systems in the EU. According to the Act, public sector organizations that deploy AI must comply with strict requirements related to high-risk applications and AI systems, leading to higher spending in areas such as compliance, infrastructure modernization, AI-related training, and monitoring and incident reporting.

Atos is expanding activities with clients in the public sector utilizing its established expertise

The public sector is an established industry for Atos that accounts for more than 25% of the company’s total revenue annually, in TBR’s estimates, but over the past several quarters, Atos completed several contracts and saw a reduction in business volume in the vertical. These changes pressured the company’s revenue growth in the segment, notably in the U.K. & Ireland, which is a leading geography for Atos’ public sector activities, as well as in France and Germany. For example, in 2024, the Tech Foundations business line completed its business process outsourcing (BPO) contracts in the public sector in the U.K. & Ireland, which is part of Atos’ strategy to reduce underperforming activities in BPO. During the same period, Eviden’s Digital business line also completed contracts and experienced a decline in business volume in the public sector in the U.K. & Ireland and in Central Europe.

 

Atos will continue to reorganize its public sector business to improve performance while leaning on its established name to attract new clients. In March Atos won a five-year, £150 million (or $197 million) deal with U.K.’s Department for Environment, Food and Rural Affairs (DEFRA) to transform its service desk and provide end-user services for 34,000 employees. In April the Eviden business line won a €50 million ($57 million) deal with Serbia’s Office for IT and eGovernment to deploy a National AI Factory that consists of an AI Center of Excellence (CoE) and an AI-dedicated supercomputing platform. Atos will utilize its expertise in digital workplace services along with capabilities in AI, machine learning, analytics and automation.

 

Also in March, Eviden won a deal with Tisséo, the public transport authority of Toulouse, France. In January Atos extended its deal with the U.K. state-owned National Savings and Investments (NS&I) bank to provide core banking, payment, reporting and B2B services through March 2028.

Capgemini draws on client proximity, delivery resources and partner ecosystem to build momentum in public sector

Although Atos has an opportunity to expand activities with public sector clients, especially in its core geography of Europe, the company’s competitors are also actively pursuing opportunities in the sector. Capgemini has well-developed public sector capabilities and continues to gain momentum in the industry, notably in Europe, utilizing its established brand, client proximity, combination of onshore and nearshore service delivery resources, and collaboration with the partner ecosystem.

 

Capgemini is working with more than 15 ministries of defense across the EU and greater Europe as well as international agencies and strengthening relationships with more than 20 defense manufacturing providers. The company is also combining capabilities around digital engineering, data and AI, cybersecurity, and digital transformation to enable activities in areas such as military transformation, supplier network improvement, production management delivery and quality standards assurance and working with defense organizations around integrating workforce management and data and AI technologies. At 15.2% of revenue in 2024, the public sector represented Capgemini’s third-largest revenue-generating industry, following manufacturing at 26.7% of revenue and financial services at 21.3% of revenue.

Accenture’s Health & Public Service industry group remained the fastest-growing sector for the 10th consecutive quarter

In April 2024 Accenture acquired Intellera Consulting in Italy, adding 1,400 employees to Accenture’s regional operations to support public administration and healthcare sector clients. In January 2024 Accenture acquired 6point6 in the U.K., which will support Accenture’s efforts to rotate U.K.-based skills in areas such as cloud, data and cybersecurity and create a conduit for new revenue opportunities with clients in the public and healthcare sectors seeking to modernize IT infrastructure.

 

TBR expects Accenture’s investments across Europe within the last 18 to 24 months, such as in the U.K. (for health and capital projects) and Italy (public services and capital projects), will help the company’s Health & Public Service industry group fuel steady growth. Further, investments in Industry X capabilities, as well as sovereign cloud offerings with partners like Amazon Web Services (AWS) and Google Cloud, will also bolster Accenture’s regional opportunities as EU countries look to increase spending on defense and infrastructure.

Measures taken by DOGE will challenge vendors’ performance in the U.S. federal sector

While IT services providers are seeing growth opportunities in the public sector in Europe, they are preparing for potential disruptions in public sector revenue performance in North America, specifically in the U.S. federal sector due to Department of Government Efficiency (DOGE) initiatives. Measures taken by DOGE have put federal contractors, including Accenture and IBM Consulting, on edge, given the companies’ extensive work supporting federal agencies. The initial DOGE push has primarily targeted consulting projects.

 

We estimate that Accenture’s overall business consulting revenue trends at about 14% of total revenues, which means that $750 million to $1 billion of Accenture Federal Services’ annual revenue is at risk of disruption. We believe Accenture’s holistic portfolio and long-term relationships with many government agencies could help the company maintain its incumbent position.

 

TBR expects IBM Consulting’s 2025 revenue in the U.S. federal sector, which accounts for less than 10% of the business’s revenue, or approximately $2 billion in annual revenue, to be negatively affected by DOGE initiatives, as IBM stated during its earnings call that two contracts were negatively impacted in 1Q25. With federal systems integrator competitors facing similar challenges, we expect some of them to try to contest awards IT services providers had previously won and overtake their position through more flexible pricing options or packaged service offerings. For example, Booz Allen Hamilton and Leidos have filed a protest with the Department of Energy to review a $3.5 billion contract for IT support that Accenture won in January 2025.

 

TBR’s DOGE Federal IT Impact Series includes analysis of Accenture Federal Services, General Dynamics Technologies, CACI, IBM, CGI, Leidos, ICF International, Maximus, Booz Allen Hamilton and SAIC. Click here to download a preview of our federal IT research and receive upcoming series blogs in your inbox as soon as they’ve been published.