iGate brought in an intensive client-centric approach: Lanny Cohen

In July 2015, the $13-billion French IT service provider Capgemini acquired iGate, a US-listed technology and services company with a large employee base in India, for $4.04 billion. It helped Capgemini add nearly 33,000 employees to its fold. iGate today contributes an incremental revenue of over $1.2 billion to Capgemini;.

Globally, Capgemini has nearly 1.80 lakh employees, over 50 per cent of whom arein India. Lanny S Cohen, Global Chief Technology Officer, Capgemini, says the iGate acquisition propelled North America to the largest geography for the group in terms of revenue, and increased the employee base in India substantially. Both are important to take on competitors, he told BusinessLine in an interview at the company’s Applied Innovation Exchange in San Francisco. Excerpts:

How did the iGate acquisition change Capgemini’s approach to being client-centric?

iGate brought in an intensive mindset around client centricity. They had an obsession with putting the client first. We are replicating it and trying to transform ourselves in that model. This does not mean Capgemini was not that way earlier. But iGate’s client centricity was quite powerful. We have embraced it and continue to emulate it more and more. They also had real gems and nuggets in their business.

For example?

One example is the strong focus on the product and engineering business, with around 3,500 engineers working on smart products and embedded software. A lot of things that are being done in the automotive industry today are being led by this part of iGate’s business. Other areas of specialisation include digital manufacturing, the Internet of Things and smart devices. We had pieces of that, but added 3,500 engineers on top of that. iGate was a big win for us.

How critical was the acquisition?

The acquisition propelled North America to the group’s largest geography in terms of revenue.

North America now represents 31 per cent of Capgemini’s revenue.

iGate added around 10 per cent in revenue for us from the region. Although we were a global IT services company, we had a reputation of being Europe-centred.

Now, with North America being the biggest revenue region, it makes a big difference: we are regarded by clients as a true global enterprise. Secondly, the ability to transform around the client-centric approach is a big cultural shift in our transformation as a business.

How about your Indian presence?

iGate’s employee headcount was much more India-based, which was a strong case to acquire the company. Our financial services practice was 20:80 between onshore and offshore; while the North America business pre-iGate was 65 per cent offshore, iGate had 85 per cent offshore. The acquisition reinforced our India capability, with over 100,000 employees working in India. In other words, over 50 per cent of the total employee base is in India.

How did the acquisition impact domain capability?

iGate strengthened our hands and power in the product and engineering domain. More importantly, the strengthening of the India delivery capability gave us more confidence and options while pitching for major deals.

Will Brexit and Donald Trump’s victory in the US Presidential elections affect your clients’ IT spending?

We don’t know where things will end up with issues like Brexit and the US elections. However, we need to look beyond that.

Historically, the IT spending of most of the major companies is 1.5-4 per cent of their revenue. Nearly 80 per cent of the companies are in this range. However, nearly 80 per cent of that spending is on IT maintenance, infrastructure and applications.

Companies have now realised that it is not a recipe for growth and that they need to focus on innovation to stay in the market.

One major trend is towards shifting some percentage of IT spending towards innovation. The second trend is that of Operations Technology, which is fuelling shop-floor and new customer experience with things like the Internet of Things. This is about six times the spend going on in IT. That’s a big number and that’s what iGate, through its product and engineering services, brought in. This is not the shifting 1.5-4 per cent IT spend, but additional spend.

How is your India story playing out?

India will continue to be the group’s growth strategy. With the acquisition of Kanbay (an IT services firm which was headquartered in the US but had its operation team based out of India) and iGate, we proved that.

It is not just about delivery out of India, but also more market leadership out of India.

We are looking at more mobility for our India colleagues who would like to be in leadership roles in other geographies. There are a lot of management and senior leadership positions assumed by our colleagues in India. Earlier, if we had a US business, out of 10 leadership positions, all 10 were staffed by colleagues here; but now 6-7 are from here and the rest in India. We are seeing more of this trend with a strong leadership focus in our colleagues in India.

How about start-ups in India?

We see India as a very important start-up hub. In our innovation strategy, India will be one of the top sourcing locations due to the strong start-up ecosystem. We are constantly looking for start-ups to work with.

Will you invest in start-ups?

We are resolute in our strategy that for now, we will not take any equity position in start-ups or set up venture funds.

How is the competition from Indian peers?

Accenture is a major competitor on a global basis. However, pure-play Indian service providers are always formidable. They are mobilising and acquiring companies in digital agencies, SMAC (Social, Mobile, Analytics and Cloud) and start-ups, setting up innovations centres, and moving upstream to higher-value services. We are responding well to the pressure from them.

(The writer was in San Francisco at the invitation of Capgemini.)

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