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Capgemini: People come to India for its talent, not to cut costs: Capgemini global CEO Aiman Ezzat


India is a fast-growing market for French IT services major Capgemini and a solid base for it to service clients globally, Capgemini global CEO Aiman Ezzat told ET. The company has more than half of its 360,000 employee base in India. In an interview with Romita Majumdar, the chief of the $23-billion IT company, during his ongoing India visit, said that he is hopeful of the demand situation improving over the next two-to-four quarters but is waiting for an inflection point. Ezzat added that generative AI’s impact on productivity gains will be much higher than pricing gains in the long run. Edited excerpts:

How do you see technology spending in the current macroeconomic situation?

It is pretty mixed at present. There is softness in some places but not everything is doomed. The reality is that our pipelines are huge and that shows the appetite for technology and transformation.

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Europe has been more resilient. There is a bit more softness in the US. We have been preparing for this scenario since the end of last year and we anticipated the deceleration. The sectors facing the biggest rationalization are tech, telecom and financial services which are big for us in the US.

We can see plenty of positive signs but what I’m looking for is an inflection point because that will really be the real restoration (of demand).

Capgemini has gone slow on hiring over the past year. When will hiring be back on track for laterals as well as freshers?

In the last few years, we had to deal with high attrition and high growth. For that we had to buffer because if you end up having 30% attrition in a year you cannot replace people overnight. And India is one of the countries where we have the highest attrition and potentially the highest growth at the same time. Now, when things get optimised, you see less growth and attrition comes down, you don’t need to operate with these buffers (of people). So we are in the optimization phase. I’m not the only one, the whole industry is doing that. But it’s not a sign that the business is declining, it is just that we’re able to optimize right now. So of course, we’ll be onboarding less freshers, in the short term, but this can change in two or three quarters.

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India is a huge talent hub for Capgemini, but how is India as a market?

It is growing. We have a great team here, I love coming here. Of course, it’s still not at the same level of maturity, in some other countries like the US or Germany, etc. But as the maturity of the country from an economic perspective increases, they start to value more high end services.

We are seeing a trend of massive expansion of GCCs in India.

People are coming to India, not just for cost. It’s (for) access to talent. They realised that without having a base in India, they’re missing part of the talent pool. So I see this trend will continue and it’s just more the realisation that they need to have a footprint in India, because technology has become so important to them.

Capgemini has announced an acquisition in Japan recently and now another acquisition in the financial compliance space. Is this a good market for acquisition at lower valuations?

We look at a lot of companies and a few end up being interesting. We are still in acquisition mode. The reality of this market is that some people are ready to sell at a lower price while some want to wait for the market to become better before they sell. So there is a mix. We continue to (evaluate) deals that make sense for us at the right value to complement some of the capabilities that we have. So it’s more towards bolt-on types of acquisitions to complement capabilities and from a geography perspective, it will mainly be in Asia Pacific.

You have recently announced Euro 2 billion investments in artificial intelligence (AI). Where will it go?

A lot of the investments will go into building the talent, into training and reskilling. Some of it will go in development of some assets and of course setting up Centers of Excellence, etc.

There’s a lot of hype around generative AI. But is it driving returns?

It is going to be slow (revenue from Gen AI). When people started investing in scale projects from POCs of digital transformation projects in the early days, it was almost a leap of faith and the scaling could take up to three years. The good part with generative AI is that within 6-8 weeks we can see tangible results and clients are ready to scale up.

Now there is no Gen AI solution which will change the world on its own. It is about building a relationship with customers, becoming their partners and building a large number of POCs to offer business solutions across a range of issues.

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