Morningstar | Capgemini Is a France-Based Global IT Service Provider With Particularly Strong Roots in Europe
Capgemini is a France-based global IT service provider with particularly strong roots in Europe. Although the company has a durable competitive position in Europe, the market is somewhat mature, and Capgemini is seeking higher-growth opportunities abroad. Additionally, management has made concerted efforts to improve the firm's business mix and cost structure given significant competition and macroeconomic headwinds. The firm’s acquisition of IGATE has helped improve its global delivery network and exposes the company to more innovation and relatively higher-growth business segments. Meanwhile, the company's shift to a global delivery model (also known as Rightshore) has improved adjusted operating margins. As a result, we think Capgemini is suitably adjusting its services portfolio and remains a top-tier global IT services provider.Capgemini's entrenched position in Europe and its renown for comprehensive innovative services have positioned the company's core business well. In fact, partners such as SAP, Oracle, Microsoft, and IBM see Capgemini as a key asset in entering the European market. We think the company's established brand, ingrained solutions, and broad industry expertise reinforce repeat business and protect the company from competitive disruption.Capgemini will increasingly use offshore leverage in order to reduce cost pressures and maintain price competitiveness. For example, since fiscal 2011, Capgemini's onshore head count has remained relatively flat, while offshore head count has grown over 100% to about 116,000, or roughly 58% of the total workforce from 37% in fiscal 2011. This shift has led to a decrease in average group remuneration costs. Also, offshore service industrialization and method standardization have led to improved productivity and cost reduction. Looking forward, trends in mobile, social, cloud, and analytics offer Capgemini the opportunity to provide higher-value services. New innovative services such as Capgemini’s Digital Experience give us confidence that it can remain a top-tier provider of IT services over the long term.Capgemini is a consulting and IT services provider. Co. works closely with technology partners at the cutting edge of innovation in major trends such as: Cloud, Big Data and mobility. Co. offers its clients skills in a variety of fields, such as digital transformation and digital customer experience, Cloud, Big Data, mobility, testing, cyber security, application management. In addition, Co. helps its clients enhance their performance and sharpen their competitive edge by offering them a range of skills grouped around four major businesses: Consulting Services through Capgemini Consulting, Technology Services (TS), Local Professional Services through Sogeti, and X Outsourcing Services (OS).
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