‘We expect organic growth to be back by Q2 next year’3 min read . Updated: 05 Nov 2020, 10:42 PM IST
India is no longer just a delivery centre but a global business platform, because it is as much about delivery as it is about innovation
For Paris-based information technology (IT) services company Capgemini, India has emerged as a global business platform, supporting several critical functions. The India unit currently comprises nearly 50% of its total workforce of 264,600 employees and continues to grow. In an interview, Aiman Ezzat, chief executive officer, Capgemini Group, spoke about the outlook for the IT industry, the importance of India, and its deal pipeline. Edited excerpts:
What’s the outlook for the IT services sector, in terms of client spend?
Many companies have tightened their budget in terms of IT spend as they have been affected by covid-19. Some are more impacted than others depending on the sectors. If we go into the most cyclical part of the business, such as management consulting or engineering, they were more impacted. If we go to the other end, such as cloud infrastructure services, BPO (business process outsourcing) or even applications, there was less impact. So, the degree of impact depends on the sector and on the business. But overall, there has been a net decrease in spending. We have also seen good growth in cloud, cybersecurity, analytics and artificial intelligence (AI). On all the digital customer front-end part, there was some increase but it’s not as strong as it was last year. A lot of clients’ discretionary spending around upgrading certain applications have been cut. They are now focusing their investments more strategically.
What is the role of the India operations in Capgemini’s overall growth strategy?
Ten years ago, India was mainly a delivery centre. I don’t use that word anymore. I call India a global business platform because it is as much about delivery as it is about innovation. It is becoming a backbone of support to a lot of our accounts. It encompasses a wide array of capabilities spanning delivery to account management to R&D and engineering, as well as providing support to the creation of new product offerings and strong industry content. We launched a programme called ‘India 2020’ a couple of years ago around expanding and structuring the role of India in the group, in terms of what the country can bring. In India, we have two applied innovation exchanges, one each in Mumbai and Hyderabad, which serve as a framework for driving innovation.
How does the deal pipeline look, and what kind of deals are picking up?
The overall deal pipeline has recovered and we have plenty of small, mid-sized, and large deals. The overall pipeline has refilled in a harmonious way like we would expect it to be. We have seen an increase in some of the bigger deals related to vendor consolidation. We also see some large digital transformation type deals in the pipeline. So, the overall deal pipeline is good because it is up year-on-year. The bookings have been a good year to date and it is going to be strong in Q4 (October-December). We expect to be back with organic growth by Q2 next year.
Capgemini acquired many companies, including engineering consultancy Altran. What’s your strategy for acquisitions going forward?
There are two fundamental pillars that are transforming a lot of businesses today which I consider very important. One is cloud and the other is data. The way we look at our market and what we do with clients, can be seen in three parts. The traditional part is IT services, which I call enterprise management, where we have clients manage all their applications. That has been our main business for many years. Then you have two other parts. The part known as digital marketing includes all the digital channels and all the data in terms of working with the CMO (chief marketing office), segmenting clients, launching new offerings, and improving services. We have done this organically to a large extent with some acquisitions. On the other side of the enterprise, you have all the operations and all the new product development in areas of R&D, engineering, operations, and supply chain. The acquisition of Altran is for this part. This is where we have the convergence between IT and engineering to digitalize the operations and develop new intelligent products, be it electric cars, autonomous cars, or digital supply chain in retail.