Thursday, 12 February 2009

Capgemini sees offshore ‘core’ to strategy

(By Anthony Miller). It was virtually Capgemini CEO, Paul Hamelin’s opening statement in the company’s FY08 results concall this morning, and it was a theme echoed throughout the presentation. Capgemini now has over 20,000 employees in India (+21% yoy), the lion’s share of its 25K-ish offshore headcount. Highest offshore growth (+37%) was in Poland, where Capgemini now has over 3,000 staff. Indeed, over 40% of its 22,500 new hires last year were offshore, helping to bring group average remuneration costs down 4.5% (currency adjusted). This was in spite of 9% (local currency) offshore salary increases and 4% onshore. Outside of Consulting and the Sogeti bodyshop operation, 36% of Capgemini’s effort was delivered offshore; this should rise to over 40% this year. Offshore mix reached nearly 80% in Financial Services (thanks to Indian SI, Kanbay, acquired in 2005) but even in Southern Europe, Cap’s SI business reached 10% offshore content. By the way, group margins grew 110 bps to 8.5%. Get it? Got it! Good!!

Now, onto the UK. FY08 revenues (including Ireland) were just under flat in constant currency (ccy) terms, at €1.92bn. However, surprisingly, revenues grew 1% yoy ccy in Q4, though were 2% down compared to Q3. Revenues from the all-important Aspire contract fell 8% last year though are expected to be broadly flat this year. UK margins rose from 6.8% to 7.8%, ahead of France (7.3%) and North America (5.8%) but way behind Benelux (14.2%) and Germany/Central Europe (14.0%), which have a higher proportion of bodyshopping.

There’s lots more to go through and I may well update this later.

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