Capgemini names Salil Parekh deputy CEO
Parekh will focus on the business growth strategy and operating dynamics, along with current responsibilities
Mumbai: Salil Parekh, who heads the Application Services One and Sogeti units of Europe’s largest information technology (IT) services firm, the Capgemini Group, has now become a deputy chief executive officer.
“The leadership team structure at Capgemini group continues to be the same but Parekh’s title is new. The change was formalised late February,” said a company spokesperson, adding that Parekh now shares this position with Patrick Nicolet and Olivier Sevillia. All three are part of the Capgemini Group management board.
Capgemini’s Application Services One unit covers Asia-Pacific, North America, the UK, and financial services sector while Sogeti is its wholly-owned arm that specializes in local professional services. Both these units account for nearly 50% of Capgemini’s total revenue.
Confirming the change in designation in an interview on 23 March, Parekh pointed out that the Application Services One and Sogeti units cumulatively account for around €5 billion of Capgemini Group’s total turnover. The group reported €10.57 billion revenue for the year ended 31 December.“The portfolio that I have, has seen a good level of growth and profitability. Our US business grew over 15% in the second half of last year. Our UK business saw very strong growth in the private sector—over 20% in 2014. Our Asia-Pacific business, too, saw over 12% growth. Hence, we can compete with both consulting firms and offshore-based ones. It’s in these areas that Paul (Paul Hermelin is the group chairman and CEO) has asked me to help him,” said Parekh.
As deputy CEO, Parekh said that along with his current responsibilities, he will sharpen his focus on “the business’s growth strategy and their operating dynamics”.
“We have developed two new dimensions of the push. One is we are looking at big changes in innovation and differentiation like analytics, social, security and mobility. That comes with the digital transformation work you see with us, especially in consulting. Second is competitiveness—build a large offshore capability and bring in more productivity and automation”.
India is very central to Capgemini’s “competitiveness strategy”, according to Parekh.
Over 47% of Capgemini group’s worldwide delivery is done from offshore centres. Of this, India accounts for a little over 70% of that total offshoring. Moreover, Capgemini Group is the only European firm to employ more than 50,000 people in India, making the country its largest offshoring centre.
The target is to have 70,000 employees by 2016-end.
Capgemini’s dependence on India for manpower is higher when compared with its two main multinational rivals. Accenture Plc has about 60,000 employees in the country, or about a fifth of its global workforce, while International Business Machines Corp. employs about a quarter of its 4,34,000 employees in India.
To support its India headcount expansion, Capgemini opened a new facility in Bengaluru in January with a capacity of 5,000 seats. The new centre will provide application development and maintenance, business process outsourcing (BPO), consulting and infrastructure services to global clients based in the US as well as clients from Europe and APAC, including India.
“As clients in Europe become more open to outsourcing, Capgemini increases the volumes of work delivered from India, creating a need for resource expansion in the region,” said Elitsa Bakalova, an analyst with Technology Business Research Inc (TBR), in a 19 February note.
Last year, Capgemini grew by close to 20% in India, according to Parekh. Software lobby body Nasscom has forecast Indian information technology (IT) services providers to grow 12-14% in financial year 2015-16.
Parekh said that Capgemini’s social, mobility, analytics and cloud (SMAC) solutions are growing at 25%, and accounted for 14% of the group’s global revenue in 2014.
It was 11% in 2013. The group also has a broader segment called ‘Strategic Offers’ that accounts for 34% of the revenue—part of which is SMAC and includes work like smart energy in the utilities sector, and a “demand-driven supply chain” as a retail solution.
Moreover, “a large part of our work is consulting”, said Parekh. “Even in our core work that includes apps development, maintenance, managed services and BPO. Even in ADM (application development and maintenace) for companies like us will be about 45% but a lot of SMAC is apps development,” he added.
TBR analyst Bakalova expects Capgemini to continue “to grow revenue and expand profitability to achieve its financial goals for next year... with innovation at the forefront in 2015”.
Capgemini’s late expansion in cybersecurity, according to the note, places the company behind key competitors, but the company’s ability to provide consulting-led solutions to support clients’ digital transformation coupled with platform-based solutions and industrialized service delivery will help Capgemini generate higher-margin opportunities, according to Bakalova.
Sanchit Gogia, founder and CEO of Greyhound Knowledge Group, expects Parekh’s appointment as deputy CEO to help Capgemini’s growth given Parekh’s “long-standing expertise in this arena”.
“Salil earlier proved his worth in the North America, the UK and APAC markets and his latest role will offer him a bigger playing canvas. Capgemini has been investing in India for the last few years—both as a delivery centre and as a market—as it looks to compete on a more even playing field with Indian IT providers. It took a little time in adopting India as its global hub for offshoring but is now going full throttle,” said Gogia.
However, Gogia added that with Capgemini betting big on digital services, “Salil will have to work towards ensuring that these services contribute increasingly to the company’s overall revenue”.
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