Capgemini looking for more buys

Close on the heels of its takeover of Kanbay, Paris-based IT major Capgemini is scouting for three more acquisitions amounting to over $1 billion (around Rs 4,300 crore). It is looking at the business process outsourcing (BPO), product engineering and local consulting space.

Salil Parekh, executive chairman, India Capgemini, is hoping they would acquire a BPO this year itself so as to scale up faster. The acquisitions will be valued similarly to the Kanbay acquisition at around $1.25 billion, according to Parekh. The company wants to increase the number of its employees from the current 14,000 to 40,000 by the end of 2010. It will be hiring almost 2,000 students from campuses this year. "For the entire last year, we hired about 500 but this year we will increase the numbers," said Parekh. For FY2007-08, Capgemini will hire close to 10,000 people of which 80 per cent will be through lateral hiring.

To compete with the likes of Accenture, Infosys and TCS in attracting talent, Capgemini is planning to work on a brand recall strategy. The India-focused advertising campaigns to begin by July-August, 2007 will highlight the quality of projects it is currently working on, its people focus and corporate social responsibility. Almost 30-35 per cent of the company's global advertisement budgets have been allocated to India.

But the top-most priority for Parekh is employee retention. "I am quite happy to say that the attrition rate for the last two months has dropped from 20-22 per cent to 13 per cent." To retain and train its talent, the company has plans to start a university in Hyderabad on the lines of its Paris university, Les Fontaines, and to provide residential accommodation for 1000 students/employees. It has bought 15 acres of land in Hyderabad. "We are in the process of finalising the curriculum and will start some courses by this July-August and the centre will be ready by August next year," added Parekh.

In spite of its late entry, the company is intent on going beyond shoring up its off shore capability to being a significant player on the domestic scene. "The consulting company that we plan to acquire will specifically look at Indian customers," adds Parekh.

Most of the company's global consulting work is handled out of its North American offices. The India centre, with 15 members, serves only 12 clients. Parekh wants to increase the number of consultants in India to 200 in a year's time. "Consulting is a strong business for us. As much as 15 per cent of revenues come from this segment and we have enough expertise to cater to Indian companies," said Parekh.

The people culture is another important consideration. "We want the entrepreneurial mindset of people to be encouraged," said Parekh.

The Kanbay acquisition was an instance of this, he said adding, "it was completely handled by the Indian team. Rather it was reported to the global heads by the India team."

India is clearly becoming the focus of Capgemini's operations, comprising almost 20 per cent of the company's current workforce. By the end of 2007, it will touch 40 per cent. The company's global management meets have been held in Mumbai for the last two years. This year, for the first time, the global board meeting will also be held here.