Capgemini - talking about the important things

(By Anthony Miller – Thursday 30th July 2009 8:00am). You want to know the real difference between Capgemini and Atos Origin? Top management talk about different things. Whereas Atos management show the pretty organisational charts and talk about strategic objectives, Cap talks about the things that really matter. I don’t just mean offshore – though that is absolutely top of their agenda. I mean things like the new propositions they are taking to market to play to the downturn. Offers like an integrated AD&M (application development and management) offering, sold onshore but, yes, delivered offshore. Plus big pushes on Business Intelligence, Testing (now nearly 6,000 FTEs) and ERP. Cap makes you believe that not only do they know what they need to do, they also know how they are going to do it.

That said, Capgemini made it – just – to its 1H09 guidance given back in February, with a “modest decline” (-2.2% organic) in group revenues and margins “which should remain above 6.5%” (actually 6.6% - phew, that was close). So, growth much in line with Atos yesterday (see UK star shines brightest at Atos), but that’s rather where the similarity ends. Despite Cap’s margin contraction (1H08: 7.6%) Cap outperformed Atos’ 4.6% margins. Indeed, Cap expects margins to expand in H2, guiding “around 7%” for the year.

But I must pick up on a comment that CEO Paul Hermelin just made on the concall. “A few years ago, Capgemini was 100% onshore. Now we are at 28% offshore. We are aiming for 40%. This is a 15 –year programme. It’s impossible to do this without restructuring. This is not just managing the pyramid (i.e. loading up with trainees) – we are transforming the company.” This is really what it is all about. The only thing I don’t agree with is that they are putting all the restructuring costs below the line as “although this is a long process – there will be only one of this type of transition.” That I might be so bold as to call long-sighted myopia!

Anyway, I will be talking to Capgemini CEO, Technology Services North West Europe, Christine Hodgson, shortly and will bring you a more detailed view on Cap’s UK business later.