Paul Hermelin, chairman and CEO of French IT firm Capgemini, spoke with Sunny Sen on how important is India for the company, his growing love for social media and his friendly relationship with Infosys Chairman N.R. Narayana Murthy.
Q. How has Capgemini changed in the past three years?
A. Over the last two years you will see on the stock market, the perception has changed and we are no longer seen as a European player. We are seen as a global player, for several reasons. One is the strength of the Indian platform that has helped us groom ourselves in the US. We are now growing the Indian engine in Europe massively. We are [also] growing in Australia, thanks to India that has played a big role, and is very well accepted in the group. The second part, in terms of global a big change is when I decided to take a big position in Brazil in 2010. We are now No.3 or No.4 in Brazil. We are expanding in Colombia, Argentina [and] so Latin America is now also a part of the Capgemini world. So with Asia we were in Europe and the US. By adding Latin America, we are significantly [present] in Africa.
Q. Why did you need to increase the headcount so drastically in India?
A. Forty-four per cent people we bill are from offshore locations, which include Morocco, Poland, China, Argentina and Guatemala. India is 80 per cent of that 44 per cent and that percentage increases by [about] three per cent every year. Initially we thought it will stop at 50 per cent, but it has not. [This year] it will most probably be 47 per cent. Where we will stop probably is when we will go to 60 per cent offshore. For new production, the abundance of Indian educated people is unparalleled.
Q. What else are you doing out of India beyond research and development and offshoring?
A. It may not be glamorous, [but] we have a worldwide application testing centre and that's driven from India totally. It's not only cost of labour, but very advanced in fields like technology and metallurgy. We have a big centre for business intelligence and Big Data. We are in industry sectors like energy, insurance and retail. But, in case of technology, I see the heart of mobility is in the US. Today the heart of cloud [computing] is in the US, but the rest of it is more in India but I am saying that mobility and cloud-they will come to India. These are some new things coming to India. I am on Facebook. Look at me; grey-hair, old people are on Facebook, WhatsApp, Tumblr.
Q. Are you on Tumblr?
A. I am not on Tumblr but I am on WhatsApp, so I am trying to figure out the transition into being younger. Young people buy iPhones because they see their parents buying iPhones. The problem with Apple is that they are now a brand for old people, not for young people but back to digital marketing-we write lot of the codes on mobility in India, but new ideas emerge in the US.
Q. How big is India, and how fast is it growing?
A. We are doing pretty well. In the last year, we grew 35 per cent in India.
Q. What will Capgemini do if India ceases to exist tomorrow?
A. Let's imagine there is a big earthquake and India does not answer, no network… We will have to build some kind of [technology] platforms in other countries. I don't see where we could grow some of the platforms today. Probably looking towards the Philippines or Vietnam we could grow there, so we could replace India by 20,000 people in several locations. Remember I told you total offshore is 44 per cent; in that the US is 70 per cent and France is another 20 per cent. We will need to completely reinvent the US business.
Q. Do you remember when the first time you won a global account out of India?
A. General Motors in 2006 or 2005. We won the global deal.
Q. There have been talks in the past few months that Capgemini can be a good acquisition target for Indian companies to strengthen their European base.
A. If people want to acquire, there's a learning curve. The last acquisition by Tata [Consultancy Services] was of Alti in France. [It has] 900 people. You don't move from 900 to 30,000. It takes a learning curve. I do not see that India is ready to buy big volumes of people and managing social relationship everywhere. I don't see it. The only companies that have an archetype for acquisition, today, strangely enough, are Japanese firms.
Q. Mr. Narayana Murthy has a strange relationship with France, his first job was in France.
A. He worked for a company he acquired [later]. One day, I called up Narayana Murthy on the phone. Mr. Murthy said, 'yes, Mr. Hermelin', and now we know each other well. We didn't know each other then, and he said in French, 'Mr Hermelin, I will try to speak French, you also speak French.' I said that I had found his first project leader. I had found his first boss. So now we have a very friendly relationship. In the French-Indian Business Council, you find [Wipro's] Azim Premji and Narayana Murthy and both are quiet fond of wine.
Q. Two years from now where will India be?
A. End of 2015, early 2016, I think [India] would be above 70,000 [employees]. To the group, it will be 50 per cent.