Capgemini plans to invest Rs 4,000 crore in buying 10 small companies
, ET Bureau|
Updated: Mar 06, 2018, 08.13 AM IST
BENGALURU: Capgemini plans to spend €500 million (about Rs 4,000 crore) to buy 10 smaller firms to bolster capabilities in emerging areas such as digital and analytics and gain market share in a changing business environment. The Paris headquartered €12.8-billion professional services and business consulting company had last month acquired LiquidHub, a digital services firm with offshore capabilities in India, which it said would add value to its business with seasoned design thinkers, user-experience designers, digital architects and analytics specialists. It plans to keep LiquidHub at the centre stage of the acquisitions and realign its service offerings using expertise in complex technologies from the smaller firms.
“You should be careful where you put it, how you dock it. LiquidHub is the terminal and we can dock small helicopters (companies) and there will be around 10 comparatively smaller companies,” Capgemini chairman Paul Hermelin told ET in an interview. “We told the market that we will deliver more than €1billion of free cash flow. Out of that €500 million will be spent on acquisitions.” He cited an example of how a team of 75 employees at Fahrenheit 212, acquired in February 2016, was helping the large IT services firm boost its consulting business with consumercentric design. Capgemini, which took a €100-million hit on net profit in 2017 in part due to US tax reforms, reported an organic free cash flow of €1billion.
The company’s larger peer, Accenture, had earlier said that it would spend $1-1.5 billion on acquisitions to acquire digital skills faster. Among Indian competitors of Capgemini, Wipro has been aggressive in buying small to mid-sized firms to boost capabilities in areas such as cloud computing-based services and design thinking. Analysts said many such buyouts by IT services firms have been targeted at acquiring strengths and hitting the market faster with digital services. On the company’s biggest acquisitions in India, Hermelin said getting iGate on board has been equally important for the highly-skilled talent pool from the country and value addition through access to 277 fresh clients.
“You should be careful where you put it, how you dock it. LiquidHub is the terminal and we can dock small helicopters (companies) and there will be around 10 comparatively smaller companies,” Capgemini chairman Paul Hermelin told ET in an interview. “We told the market that we will deliver more than €1billion of free cash flow. Out of that €500 million will be spent on acquisitions.” He cited an example of how a team of 75 employees at Fahrenheit 212, acquired in February 2016, was helping the large IT services firm boost its consulting business with consumercentric design. Capgemini, which took a €100-million hit on net profit in 2017 in part due to US tax reforms, reported an organic free cash flow of €1billion.
The company’s larger peer, Accenture, had earlier said that it would spend $1-1.5 billion on acquisitions to acquire digital skills faster. Among Indian competitors of Capgemini, Wipro has been aggressive in buying small to mid-sized firms to boost capabilities in areas such as cloud computing-based services and design thinking. Analysts said many such buyouts by IT services firms have been targeted at acquiring strengths and hitting the market faster with digital services. On the company’s biggest acquisitions in India, Hermelin said getting iGate on board has been equally important for the highly-skilled talent pool from the country and value addition through access to 277 fresh clients.
