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Capgemini Looks for New Logo Growth in North America, Now its Largest Market

In Capgemini’s recent North America analyst conference, the company provided a compelling description of how its approach in North America has developed recently, together with examples of how this has succeeded, and shared its vision and a roadmap for the next few years. Confidence about prospects for 2015 is high.

Capgemini’s 2014 revenues in North America were €2,230m, a growth of 8.5% at constant currency and perimeter. The year ended strongly, with 10.5% CC/CP growth in Q4. North America is now its largest single market by revenue, overtaking France in Q3: of Capgemini’s major markets, North America has delivered the strongest organic growth in each of the last four years, and it is also Capgemini’s most profitable region.

While contract wins in North America in 2014 were all re-competes, the contract extension in every case expanded the services in scope, and almost a third of the wins were for its “strategic global offers”.

Capgemini is now increasing its focus on new logo pursuits, some of which have the potential to be large engagements. A key feature in many opportunities is digital transformation, though client requirements for aggressive cost take-out, often in multiple geographies (Capgemini works primarily with global enterprises in North America), continues to be a common feature.

Capgemini is able to offer aggressive cost take out because it:

  • Has extensive offshore delivery capabilities in India and expanding nearshore capabilities in Latin America, notably in Brazil (see here) and Guatemala), though its rural shore capabilities in the U.S. are nascent
  • Has been industrializing its delivery processes, an ongoing development
  • Is keen to commit contractually to delivery of cost savings

Capgemini is now looking to further enhance its ability in North America to:

  • Provide clients with a digital roadmap by:
    • Creating specific strategic offers (34% of 2014 sales, which are built on as-a-service "stacks" (infrastructure, applications and BPO) for a particular domain
    • Partnering with a wide range of emerging technology vendors to access current technology and provide clients with advice on suitability of vendor’s products for a digital engagement
  • Create more offering “stacks” with integrated SLAs and KPIs across the various elements of the stack (whether delivered by Capgemini alone or by multiple vendors)
  • Offer multi-shore delivery: this implies expanding its onshore delivery capability
  • Position on innovation, led by Capgemini Consulting, to help clients drive topline growth. Recent activity has been primarily around digital customer experience. Capgemini highlights its sector domain capabilities, enabling it to provide advice to clients on modernizing their businesses. 

Capgemini is working on a number of initiatives to develop further offering “stacks”. Two examples are:

First Data partnership: First Data Corp. (FDC) software processes the payment transactions for ~830m card accounts. The partnership, apparently proposed by a joint client, a global financial institution, will focus on developing solutions and stack offerings in three areas:

  • Prepaid offerings for governments: primarily government benefits payments
  • Analytics: primarily for loyalty programs
  • Mobile: including speed to deployment for consumer engagement initiatives

FDC and Capgemini have a high degree of client overlap in North America, so the intent of the partnership is to drive new offerings to existing clients. They have a much lower geographic overlap in international markets, where the intent is to support new market expansion: they have identified twelve markets to focus on initially. A typical model for new market expansion is through a global client, who has internal payments operations in its home market, but looking to FDC/ Capgemini to provide local payments operations for a market where it has subscale operations.

Innovation Centers: Capgemini is making a major commitment to restructure and build out its innovation center capabilities to convert its SMAC capabilities into offerings and client engagements. Currently Capgemini has 40 innovation centers globally, with three types of center:

  • Level 1: 90% of existing facilities; demonstration capabilities for new technologies
  • Level 2: ~10% of facilities; primarily located in India, have the ability to create new prototypes
  • Level 3: 1 facility to date (Lisle, France, retail sector focus); ability to do client work at industrial scale.

Capgemini intends to add two new Level 3 centers, to be able to build, in concert with clients, full production-scale operations and platforms, in:

  • Mumbai: primarily a project management capability
  • Silicon Valley (San Francisco): primarily a project sponsor destination for LOB input to projects

All the centers will be networked to other centers and house products and tools of technology partner, also those of some tech start-ups.

In terms of governance, the centers will operate from a common set of processes, project requirements, and branding to facilitate alliance partners contributing to the output and clients expectations being met by the work product


To date all of Capgemini’s 2015 pursuits have been self-generated (i.e., not brought to Capgemini by advisors). Capgemini is aggressive about creating its pipeline, both from its own consulting projects and from alliances with incumbent product vendors, generating opportunities to provide a roadmap to implement a “stack”.

As we noted here, while it is enjoying double digit growth in North America, Capgemini is not a tier 1 vendor (by size) in the U.S., and it is actively looking at inorganic growth in the country, where the commercial sector is a very attractive market, in terms of size, growth, and appetite for innovation. The transaction could be a client operation which brings in an onshore presence, a specialist capability in a target sector and a long-term outsource, or another vendor that can bring in scale and, ideally, IP. There has been, for example, speculation about CSC’s commercial sector business: while the U.S. business would attractive to Capgemini, it is less likely to be interested in the EMEA business.

Capgemini is one of two European majors currently focusing on expansion in the U.S. With the acquisition of Xerox IT services business, Atos’ revenues in the U.S. will nearly triple, to ~€1.7bn, and North America overall will move from 7% to 17% of its global revenue (still short of Capgemini’s 21%). Atos is more interested in IT infrastructure services, whereas Capgemini’s interest is likely to be more on domain focused stack offerings to target sectors, typically underpinned by consumer focused technologies.

As Capgemini aggressively builds out its alliance ecosystem – and perhaps acquires - it will accelerate new logo acquisition in North America. 2014 was an excellent year for Capgemini North America, built on contract extension - 2015 could well be a breakout year for it in the U.S.  

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