No doubt the turnaround Salil Parekh, executive chairman, Capgemini India, engineered in his previous position as CEO of Capgemini North America was impressive. With Parekh at the helm, the operation went from a $100 million loss in 2004 to a break-even business in 2005, and recorded a $100 million profit in 2006. "We had the benefit of an improving economy," he notes, but cost-cutting and the refocusing of the operation's efforts were what made it possible. To sharpen the focus, Parekh reduced the 35 business areas to seven growth areas, such as retail back office, insurance claims processing and digital media. It also concentrated on SAP. "We became well known in these few areas," he explains. To cut costs, Parekh reduced 32 Capgemini offices in North America to 12, axed 80 vice presidents and reduced administrative support by 20 percent. The operation went from a negative 18 percent margin to a plus 8 percent margin by the second half of 2006.
"The hardest part was having to keep saying 'no' to new ideas. I had to tell people with valid ideas that we can't move ahead. We can only focus on a few things," Parekh says.
With the North American operation back on track, Parekh was rewarded with the firm's India operation in March. "India is very different. The business is expanding here. The focus in India is how to manage our growth. We had eighty percent growth in headcount last year. We'll have more headcount growth in 2007," he says. Not surprisingly, India is Capgemini's largest operation. "CEOs want to do things the most efficient way; this is the era of services," he says. Capgemini also is setting up operations in Poland and China.
Before North America, Parekh had been based in the UK. The globetrotting takes a toll on his personal and family life. "I have a wife and three young boys, ages 9, 7 and 2," he says. The family has settled in Mumbai. "My wife doesn't want to move again, but the boys think of themselves as global citizens. They know baseball and cricket, football and soccer," he says.
At this point, the North American turnaround represents the high point of Parekh's business achievements. There is no dramatic turnaround to duplicate in India. Instead, he faces different challenges. "We need to figure out how to construct a global business model yet keep the essence of what we do. How do we meet new demands without losing who we are?" Parekh wonders. Odds are, he'll find a way to figure it out.
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