Capgemini is going full tilt

Though the recovery from recession is proving to be a slow affair, the $12.8 billion European IT services and consulting giant Capgemini is going aggressive on expansion and business development, particularly in emerging markets such as India.

The company had a three-pronged strategy to counter the effects of the slowdown — increasing focus on the public sector, multi-year contracts and increased emphasis on offshoring.

Accordingly, the public sector accounts for 28% of its total business today, while long-term contracts contribute 38% of the sales compared with just 12-15% two years back. Likewise, 22% of the software services delivery is based on the offshoring model compared with almost nil 5-6 years back.

However, going ahead, the company will adopt an aggressive strategy across markets, particularly in emerging ones such as India, Salil Parekh, a member of Capgemini group executive committee in charge of financial services and CEO - Asia and India strategic business unit, said. 

 “People have been talking about a fast recovery but as I see it will be slow and stability will come about in 2010 followed by full recovery only in 2011,” the senior executive stressed adding Capgemini had changed its business mix to executing long term projects which account for 60% of its business now.

But Capgemini has set a busy agenda for organic and inorganic growth for itself. Close on the heels of its recent acquisition of Australian testing firm NU Solutions, Europe’s largest computer consultancy and IT services firm Capgemini Group is in line to carry out two to three more acquisitions over the next 12 months in Asia-Pacific, Parekh added.

 “We are in active discussions with target companies with a focus on growing fast in emerging regions in verticals like financial services, insurance, telecom and BPO, all areas where growth is robust and acquisitions could help us,” he said.

Though he did not rule out acquisitions in India, the senior executive said there was no active target in the country where the $11 billion IT services and consulting giant acquired two companies, Kanbay Solutions and Indigo, earlier.

With a total headcount of nearly 22,000 people last month India became the largest resource centre for Capgemini which employs upwards of 90,000 people across 30 countires.

The company is looking to more than double the headcount in India by 2010. It is slated to open a new 30 acre campus in Chennai next week with an initial capacity of 3000 seats which will be ramped up 15,000 at the centre subsequently, he added.

Last year Capgemini had set up an exclusive arm to tap the domestic market in India with a particular focus on government business. It has 23 clients currently with most of them involving high level consulting engagements ranging between 3-6 months, Parekh added.

More significantly, the company is also setting up centre of excellence across the country. It has already set up COEs for telecom, retail, insurance, SAP and testing practices and is looking to set up centres for lifesciences and government to tap opportunities in taxation activity soon, he added. 

“We are putting in huge investments in COEs and every quarter one or two such new centres will come up,” he said.

Given the current global scenario I see outsourcing from Europe increasing in the coming months and we are strongly placed to tap it, the senior executive said adding Europe’s largest computer consultancy is looking to boost Asia-Pacific’s contribution to revenue to 5 percent in three years, said Salil Parekh, global head of Capgemini’s financial services and CEO of Asia-Pacific business units.