India will continue to have bulk of our headcount: Salil Parekh

Q&A with CEO of UK, North America & Asia-Pacific, Capgemini

The recent full year and fourth quarter results from Paris-headquartered Capgemini brought some more cheer for the Indian IT services industry. The company that has 70% of its revenue from Europe, saw the region grow after a few quarter of disappointment. Salik Parekh, chief executive of Capgemini's UK, North America and Asia application services unit said that year 2014 will be better than 2013. In an interview with Shivani Shinde Nadhe, he talks about three-year roadmap to see 50% of its employee base in India, improving global scenario and newly formed digital transformation unit. Edited excerpts…

Do you think 2014 will be a better year?

We have had a good year in 2013. We are European based firms, with 70% of our revenues from Continental Europe. Among our European competitors and the difficult environment in this region, I think we have the most positive results. Our view is that 2014 will be along the same lines and more or less on fourth quarter performance, which was a strong quarter for us.

We have large presence in US (20% of revenue; grew 7.9% y-o-y) and it is showing improvement. Latin America is doing well and so is Asia Pacific. The whole talk that Euro will collapse is not there anymore, so things should look stable to growth. In terms of verticals, we see good growth in BFS, grew 12.7%. Other sectors are also doing well, especially telecom.

Nasscom has indicated 13-15% growth rate for the Indian IT services. How do you see your India unit performing?
Nasscom’s 13-15% represents the Indian business. We suspect the growth will be strong or go beyond that. Our growth numbers in India have been in the top quartile of the industry growth. Best proxy is the headcount indication. We have a three year plan wherein 50% of our resources will be in India. At present our headcount in India is 47,000. Our India centres have also started supporting our European business. Outside of UK it is still 30-35%.

We do have presence in Philippines and Poland. Total employee base in offshore centres is around 55,000-60,000. We have a lot of work in Poland as it supports multi-language capability. India will continue to have bulk of our headcount.

The company recently announced the formation of Digital Customer Experience unit. What was the reason for the formation of this unit?
Today companies are going online in a way that needs a new thinking. We have to help them go online. We have a business approach called digital transformation, a technology model—under which we have developed a platform that integrates 20 different tools from different vendors into our architecture. We also bring business suits from other vendors. For this we have four centres of excellence for customers, one each in London, India, West Coast and France.

(Post results, Group CEO and chairman Paul Hermelin said: “We can raise (slightly) our gross margins by innovation. Digital customer experience is main innovation of the year. It’s mainly visible in retail and consumer groups but also in sectors like BFS.”)

With the markets reviving, do you see any significant shift?
Shift is more on innovation. Companies are looking at what are their growth drivers and how are they going to address it. Today, competition can come from players like Google and Amazon. For instance, Google has more consumer connect than say an insurance player.

One of the biggest shift has been in big data and analytics. People are trying to do predictive models. Western markets are going for such innovation in a big way. You go to any bank in the US, it looks much more like a Starbucks coffee shop. Innovation is followed by security. This is another big play that needs to be addressed.

Capgemini a few months back tied up with Amazon cloud services. Comment.
We use Amazon’s cloud infrastructure to provide our clients hosted solutions in the US markets. If we don’t change our models and evolve then we will get stuck. If people do not adapt fast we see 4-5 companies heading for failure. Our partnership with Amazon is for specific industry verticals. In the last 12 months I have spent in west coast as all that innovation is being driven from there. Elastic Analytics is an enterprise-ready, integrated solution that includes the infrastructure, management, security, support, and maintenance to run analytics solutions on a cloud environment.

Since Capgemini has been looking at expanding out of Europe, how do you see the visa regulations in the US impacting your expansion plans?
The Indian players have a real mess in front of them. The visa issue is a de-stabilizing event. For us we have a large local team. We do have genuine offshore model as well. It is not a business model for us. We have had local team. In US we are around 4,000 people. We have considerable presence in terms of BPO, infrastructure services offering and applications business unit.

The US government has been looking at several ratio and good news is that we are at the lower threshold in all the scenario.