Two years ago, Capgemini generated about $30 million in its Government Solutions practice. By year's end, the practice will be tallying about $135 million in revenue, a 450 percent increase in just two years. In two more years—by the end of 2012—Capgemini's Government Solutions practice will account for about $250 million in revenue.
Why the sudden surge? Capgemini has always had a lot of success serving this market in Europe. In fact, Her Majesty's Revenue and Customs, the U.K.'s equivalent of the IRS, is the firm's single biggest client where it manages the entire IT environment, generating $1 billion a year. Leadership decided the time was right to turn the firm's attention to the biggest market in the world—the $150 billion federal, state and local markets in the U.S.
Leading the charge is the newly appointed CEO of Capgemini Government Solutions, Joe Moye. Previously, Moye served as Capgemini's head of the public sector leadership team, but the new title further cements the firm's dedication to the market, according to Lanny Cohen, CEO, Capgemini U.S.
"We felt it was the right time for us to build out a new capability and a real increased-presence to grow both our federal and the state and local practices here in the U.S.," Moye says. "I don't think there's another firm in the marketplace with our story—a $13 billion, 92,000-person firm with global success in public sector. We're using that to our advantage."
The firm essentially had to build its state and local initiatives from the ground up and has already had some significant success right out of the blocks. Capgemini won a major contract with the sate of Nevada to run its unemployment insurance. It also partnered with Oracle for its enterprise tax management solution. "For us, it was the perfect time to get into tax revenue and unemployment insurance," Moye says. "These areas are littered with old legacy systems. There's an awareness of how limited the technology is in that space."
Moye says Capgemini has ongoing bids out right now in Florida, Michigan and Oklahoma. It's also made headway in key geographies, such as Massachusetts, Pennsylvania, New York, California and Texas. "We've probably already exceeded my expectations. We really didn't enter state and local until about 12 moths ago," Moye says.
State and local will account for about $50 million of the $135 million this year. It accounted for $0 in 2009. Federally, Capgemini already had a foothold and Moye says the plan is to grow significantly there, as well. About $150 million of the projected $250 million by 2012 will be in the federal space. And the firm is also looking to make an acquisition on the federal side sometime before the end of the year.
In that space, Homeland Security is the firm's biggest client from a revenue perspective, but Moye says the firm is also focused on the Department of Defense, specifically the Army where it was recently awarded an $88 million contract to drive its convergence strategy around its SAP and ERP environment. It's doing the same type of work—a $100 million engagement—with the U.S. Department of Agriculture. The IRS is also a potential target, Moye says.
"The federal market is still being underserved by the larger companies," Moye says. "To be frank, some of these smaller engagements are not the type of contracts bigger firms want to go after. We're a fresh voice in this market with a tremendous track record of delivery success. That's afforded us the opportunity to get engaged a lot earlier than you'd expect."
—Joseph Kornik
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