Capgemini America Rekindles the Affections of its Wayward Parent

CM: Paul Hermelin (Capgemini CEO) recently convened a meeting of the firm's global leadership in Montreal. What was this about? Parekh: In the past, Capgemini has held these meetings every three to five years, with the rationale being to reset the strategic direction. Paul's feeling — and it's one that was really shared by all of us on the executive team — is that it's time to reset the direction. So what Paul did was to close the door on what is generally viewed as a black period and position the business for the next five years. The next five-year horizon is about innovating for our clients and innovating how we serve our clients. It's about the intimacy with which we interact with our clients, and it's about the industrialization of how we deliver our services globally. So what Paul was really doing was preparing us for this journey. CM: Where should we expect to see the North American business grow over the next three to five years? Parekh: We now have what we call seven growth platforms, and these include such areas as digital media, life sciences, and insurance claims processing. We have some unique insights inside these areas, and my sense is that they can drive our growth by 10-plus percent, maybe even 20-plus percent. When you look at our recent sales activity, it is coming from this level of focus on these platforms.
CM: Capgemini reported last July that North American sales had grown by 3.9 percent, compared to the same quarter a year earlier. Meanwhile, Capgemini reported North America's consulting and technology services businesses grew by double digits over the same period. Can you be more specific in terms of the consulting business? And will we see the consulting business grow as a percentage of the pie? Parekh: We have three different businesses (outsourcing, technology services, consulting) and therefore there are three different sets of dynamics. … In North America, outsourcing is currently larger then it needs to be in terms of the percentage of the pie. While outsourcing will still enjoy some growth in terms of absolute dollars, consulting will clearly grow in terms of the percentage of the pie. There will also be growth in the technology services piece, but overall not as much as we expect to see in consulting. The growth in consulting will be much larger in percentage terms. Especially if we execute around innovation and these growth platforms. CM: One area of growth many consulting firms are focused on is healthcare. Today, many of your rivals point to Capgemini's decision to sell off its healthcare unit to Accenture and shake their heads. Are there any regrets here? Parekh: We always thought and we knew healthcare was an asset we could find value for. It was a difficult decision. However, it gave us the ability to fix the rest of the business. Taken in the context of what it did for Capgemini it was a huge success. If you think of where the business was at the time (of the sale) to where we are today, this was a dramatic move, which in the overall scheme of things was the right move for our shareholders and for Capgemini's people. CM: Are you prohibited for a period of time from pursuing healthcare opportunities in the U.S.? Parekh: There are some restrictions in the manner in which we do it, but not withstanding that, we see enough opportunity in the seven growth areas I have mentioned. CM: How does Capgemini distinguish itself in the market today from other, perhaps, larger firms? Parekh: Our clients say they like us because we tend to solve problems with them, and do not attempt to impose solutions on them. More and more clients are starting to see us as innovators in the spaces with our growth platforms. CM: You helped open Capgemini's office and operations in India, has your intimate knowledge of the Indian market helped underscore Cap's offshore capabilities to North American clients? Parekh: This experience has certainly helped me to further leverage our (offshore capabilities) within the North American market. And it has, perhaps, given more credibility to our teams here in North America to make the connections easier. CM: Is Cap's offshoring capability now a "door opener" with clients? Parekh: It's not a door opener. Where the offshore capability has helped us is that it enables us to play a larger role in transformational deals. Innovation is really the door opener.