Capgemini (CAPP.PA, Buy) : Goldman Sachs:: Second Annual IT Services Trip

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Capgemini (CAPP.PA, Buy, covered by SK Prasad Borra)
1) India as an end market – India is one of the focus growth markets along with Brazil
and China but is still a small geography in terms of direct end market revenue
contribution. SAP implementation is a big growth area for Capgemini especially in the
verticals of Energy, Tax and Defense. Success in India is dependent on getting the right
talent and the right cost structure.

2) Importance of India operations in the global scene – India is a part of almost every
single deal the company bids globally. Growth, margin and efficiencies by getting the
pyramid structure right are the key performance indicators for the management team
in India.
3) Offshoring to grow – Company mandate is to grow headcount aggressively in India
with a goal to achieve about half of the global headcount in India in the next three
years. Pricing is not a big advantage because of parent’s margin structure as they don't
package a 100% offshore deal.
4) Pyramid in India is not similar as yet – Capgemini still hires only 30% freshers in
India as compared to about 60% of other Indian vendors. Hence, there is a lot of
headroom to benefit from the pyramid structure. Fresher salaries are inline with the
Indian peers but get advantage of an MNC brand. Bench strength is close to 20% vs.
30% for Indian peers.
5) Recruitment patterns – Company gets day 1 or day 2 slots which are similar to
Accenture, in their view. Senior talent in not a problem currently as the market is flush
with that in India.

for details of remaining company see link

Goldman Sachs:: Second Annual IT Services Trip: LT drivers exist, 2012 outlook hazy