‘Flat is the new good’ - Capgemini on India

(By Anthony Miller – Friday 28th May 2009 7:30 am. Another excellent day at the Capgemini analyst conference. Cap is one of the very few players that mixes industry analysts and equity analysts at the one event to everyone’s mutual benefit. Others please note.

One of the many interesting sessions covered Cap’s involvement at Ontario-based utility, Hydro One, which is in the throes of rolling out 1.3m ‘smart’ digital electricity meters across the province. This is part of a grand plan to eventually convert its supply network to become a ‘Smart Grid’, though they were quick to point out that you do not need smart meters to create a smart grid – or vice versa. This is what I rather suspected was the reality, somewhat contra to the justification put forward in proposals currently before our own government for a similar programme, though an order of magnitude (and some) larger (see Smart Meter madness (Part 3)). I will return to this subject again.

But my attention was particularly grabbed by a statement from Cap’s Asia/Pacific CEO, Salil Parekh, whose domain includes their near-21,000 India-based employees. Astutely assessing the mood of his ‘pure-play’ competitors with the phrase ‘flat is the new good’, Parekh said he has observed even major players cutting prices by as much as 20% to try to drive business. I’ll go into more detail about Cap’s offshore/nearshore strategy in OffshoreViews as I think they, almost alone among the Europe-based SIs, really seem to have ’got it’.

And I must admit I hadn’t appreciated before that Cap has over 6,000 FTEs dedicated to Managed Testing Services, almost half of these in its Sogeti ‘body shop’ division. I would have thought it might make more sense to have them all together in a single service line though CEO Paul Hermelin did tell me they were looking at how to get better leverage from what is a really sizeable operation.

Anyway, caps off to Cap, so to speak, for covering a lot of useful ground in such a short conference. I will be meeting senior management over the next few weeks to get a closer view on Cap’s UK operations.