Margin protection priorities
Capgemini’s chief claims his company is resilient and well positioned to be able to handle the current economic turbulence because it is has “truly become a massive player in offshoring”.
Announcing the group’s latest financials today, CEO Paul Hermelin said, “For the customer that wants to protect their IT investment, but save on costs, this is the ultimate solution.”
Cap has offshore staff concentrated mostly in India, but also has operating outposts in Poland, China, Morocco and South America.
In all, around 28% of its headcount of more than 90,00 are in these regions and company executives in India are today quoted as saying they aim to double staff in that country to 40,000 by 2010.
For Hermelin, resilience and predictability of performance were the key takeaways from the group’s performance in 2008.
“In spite of all the economic turbulences of the second half mainly, we delivered exactly our early 2008 guidance. So we delivered 5% growth, a solid 1.1% improvement of operating margin just slightly higher than the 2007 net income, and cash collection was good.”
The business managed to grow revenues by 5% in 2008 but its numbers were practically the same as for last year, due to the strong appreciation of the Euro against the US dollar and the pound sterling.
Outside of the effects of the renegotiation of certain major contracts, total bookings reached €9,259 million in 2008, which is a rise of 4% on the comparable number for 2007. Operating margin comes out at €744 million, which is 8.5% of 2008 consolidated revenues, against 7.4% for last year.
Hermelin noted that while company finances were strong, with €775 million of positive net cash reserves, margin protection and not growth or acquisition was the top priority.
“We have a very strong balance sheet, a positive net cash situation, so we are ready for acquisitions” he said, but added that it was not something that would be rushed.
“We will only do that at the end of the recession, so it’s far too early today when nobody knows how long it will last. We shall prioritise acquisitions that are pretty focused, so that the integration is local and will not create a distraction at group level.
Hermelin emphasised that margin protection was an “absolute priority” in a deteriorating economic climate.