Last week, Capgemini unveiled Capgemini Consulting, a new strategic business unit and brand with more than 4,000 consultants in over 30 countries. In 2008, consulting services accounted for 8 percent—or about $1 billion—of the Capgemini Group's total revenue. However, three quarters of that revenue was in Europe, but the firm says it plans to significantly grow its North American operations. In fact, Michael Schulte, North America Leader for Capgemini Consulting, is predicting double-digit growth for the North American market this year. Consulting's One on One caught up with Schulte to discuss the new brand and how it will help the firm better serve its clients.
Consulting: What was behind the decision to transition to a new consulting specific brand?
Schulte: The decision to globalize Capgemini consulting was made two or three years ago. We decided to do that because the market is a global one and clients expect a consulting services partner to have the capability to manage accounts globally and deliver on a global scale, as well as leverage and mobilize their talent independent of where it exists. Now we have a global strategic business unit and a new identity called Capgemini Consulting.
Consulting: How, if at all, does the new brand change the way you do business?
Schulte: The group overall needs a strong consulting services arm to differentiate what we're doing as a market. So, the consulting services arm we now have will help differentiate the Capgemini offering in general. Of course, there has to be a benefit to clients or else we wouldn't be doing it. I think clients will find it much easier to differentiate the Capgemini Consulting capability and to understand better the value that we bring to the table. That's objective No. 1. Objective No. 2 is to have a specific brand and identity for our consulting services so we can grow the business.
Consulting: How do you plan to grow the business?
Schulte: Of course, we want to be the market leader in Europe, and right now the European market represents about 75 percent of our total revenue. We need to have a more balanced portfolio of geographies and the real growth areas for us are outside Europe. Therefore, our growth in North America and Asia needs to be significantly higher than our growth in Europe. Eventually, we'd like our revenue to be 50 percent in Europe and 50 percent outside Europe.
Consulting: Let's stick with North America. Where do you see the opportunities for growth?
Schulte: By industry, life sciences is one area of growth for us in North America. The economy will have an impact on Life Sciences, but we think that impact will be relatively low compared with other industries. As far as the type of business we're doing, we see growth opportunities in the areas of complexity reduction and cost management. We also see a significant increase in the amount of clients who understand the power of IT innovation and its ability to transform business. Let's leave financial services out of the equation for the moment and our projected growth figure for 2009 is double digits for North America. That's about where we were other years, so we're not seeing a dramatic drop off in other areas because of the economy. Short term, at least, our pipeline is very strong.
Consulting: What about a longer-term view for the North American market?
Schulte: Our objective is to gain North American market share—in both a good market and a bad market. The plan is to grow our business organically. But it's a well-known secret that if the group would be able to identify the right target for an acquisition, I think our investors would be well prepared to do that.
Consulting: What are the long-term forecasts for consulting within the Capgemini Group?
Schulte: The top-down view is that Capgemini Consulting should represent about 10 percent of the total revenue of Capgemini globally. Today, we have about 8 percent, so that means we need to pick up 2 percentage points in internal market share. We also have to make sure that our growth is at least in line with the growth of Capgemini overall. Right now, we represent $1 billion the group's $13 billion globally, but it's only a matter of time before we need to have a top-line of about $1.5 billion.
Consulting: I know any change can be difficult. How is this move being viewed internally?
Schulte: The consultants are excited about it. The consultants like to have the opportunity to be engaged in global activity. And that's not only true of the consultants we have today, but we think this move will help us recruit and acquire additional talent. And our colleagues from technology services and outsourcing services see the value in this, as well. Here's a key point: By globalizing Capgemini Consulting, it gives us all more autonomy and integrity. Capgemini Consulting is an integrated part of Capgemini; we are by no means independent, and we don't want to be, but we are proud to be part of the Capgemini Group. Autonomy means that consulting now has its own management structure and P&L. Integrity means that we'll always do what's in the best interest of our clients, even if it means the downstream revenue for the overall group is not as attractive. So, ultimately, it's clients who will see the biggest advantages of this move.
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