Capgemini Puts a Few Elephants to Rest

During Capgemini’s recent analyst event we learned how it has increased its focus on driving Client Intimacy in relation to its three other strategic priorities of Globalization, Innovation, and Industrialization. We also gained insight into the strategy underneath Cap’s pursuit of IGATE. As we highlighted in this HfS Soundbite, that deal is tactically about building out North America and a few key clients but Capgemini is going in with eyes wide open. As the largest employer in India among the Global SIs, Cap’s management feels it can handle the task while readily admitting it has a few things to learn. Which brings us to the strategic part.

As it looks to complete its largest acquisition since the Ernst and Young deal, Capgemini is embracing a few hard lessons learned. First, do not let the deal disrupt organic revenue growth. Second, do not be naïve and expect that an acquisition of this size will not result in operational change. Third, seize it as a catalyst to drive structural change.

Why Does This Matter?

HfS believes Capgemini’s renewed emphasis on Client Intimacy coupled with its pending acquisition of IGATE presents a great opportunity for it to put a few legacy operating models (or elephants) to rest.

With this year’s analyst event held against a backdrop of Parisians protesting Uber, there was an undercurrent of the challenges we all face in moving from legacy to digital business models. Yet unlike the reaction of French taxi drivers, the leadership of Capgemini appears well aware of the inevitably of change. It understands its current operating model built largely around country-level go to market strategies can, at times, hinder their ability to increase Client Intimacy. It is committed to driving the necessary reforms at a pace that will not be disruptive to the firm.

We see Capgemini succeeding in this effort for two primary reasons. First, the goal is clearly well articulated and understood across the leadership team. While there might be a few questions as to the timing and extent of every change, we did not engage with a single executive who was not clear as to the significance and the underlying rationale. Second, the acquisition of IGATE will provide the external catalyst and air cover to get this done.

This is not to imply the plans are not ambitious nor without significant risk. But we saw Capgemini for the first time openly acknowledge the challenge of country-level focus and the difficulty it has had in leveraging its Application Services business to grow consulting. The moves it is taking in this regard bode much better for the service provider than the actions of the taxi drivers who were more and more coming to resemble elephants in their own right.