Home / Companies / Capgemini says it plans to do more R&D work out of India

Mumbai: Capgemini Group, a French information technology services firm with half of its global workforce in India, is planning to make the country its “backbone" by doing more research and development (R&D) work out of India.

Capgemini acquired Bengaluru-based IT services firm iGate Corp. in July for around $4 billion ( 26,500 crore) in cash, creating an entity with a combined revenue of $14 billion.

“Following the iGate integration, we wondered how we can put India at the heart of the group. The question is: is it the heart, the brain or backbone? For me, it is the backbone of the group because it (India) holds the group together," Capgemini’s chairman and chief executive Paul Hermelin said at a media roundtable on Tuesday.

In India to inaugurate a 50-acre campus in Mumbai, Hermelin said the company will set up a new innovation centre within the campus with focus on more R&D work.

Called The Applied Innovation Exchange (AIE), the centre is expected to focus on enhancing Capgemini’s service offerings, including digital and infrastructure services, which would be delivered to global customers based in the US and Europe.

Capgemini, which has eight such centres across the world, plans to accommodate most of its Mumbai-based workforce in the new campus that has a capacity of around 30,000 seats. Besides, it plans to hire 25,000 to 30,000 employees in India over the next one year.

Post iGate’s acquisition, the headcount of the group in India increased to around 90,000 people, making the country its largest offshore centre. The company currently has an employee strength of nearly 190,000 across the globe.

Hermelin said the group is in the process of integration with iGate and expects to complete it by the end of this year.

“What they (iGate) want to see is protection of their client base. So far it is 100%. They (also) want to see...retention of the key people," Hermelin said. The acquisition of iGate has brought in 277 additional clients.

Digital is another important focus for Capgemini.

Hermelin said the company plans to enhance its digital business, which currently accounts for 22% of its total revenue, to 30-35% organically in the next 2-3 years. “Our digital business is growing at 23% (annually) and growing rapidly. Our next investment will be more digital and innovation now. In terms of volume, we have what we need in terms of people and key clients. We will now look for innovation," he said.

Hermelin said that the company will focus on three initiatives to enhance its digital business. “One is big data and analytics and the second point is targeting new digital customers. Today, the two main clients (for digital) are consumer goods and retail, and financial services. Lastly, the emerging vertical is digital manufacturing (comprising concepts) such as the Internet of Things (IoT)," he added.

According to Sanchit Vir Gogia, chief analyst and chief executive officer at Greyhound Research, an independent IT & telecom research and advisory firm, the acquisition of iGate will push Capgemini’s overall growth as it complements the existing business of the group apart from helping create new opportunities.

“After the iGate acquisition, what (Capgemini) they do realize is that the overlaps (in terms of their clients and businesses) are very little. They are very complementary companies, and it allows them to do a lot of cross-selling. So, when you do a lot of cross-selling and collaboration between a lot of accounts, it creates a new set of opportunities," Gogia said.

“Investing in India would help in improving margins and deal a lot more with the digital opportunities, specially around big data and analytics, as well as expand on the back of its iGate acquisitions," he added.

Going forward, Capgemini plans to “look for acquisitions" that will increase the company’s presence in “North America or other territories", according to Hermelin. He also acknowledged Capgemini is “not at all present in healthcare in the US, which is like a hole in the racquet".

According to Hermelin, Capgemini’s “organic" contribution from digital space will increase to 30-35% in the next 2-3 years but “to take it to around 40%, we may have to look for acquisitions".

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