How Capgemini improved profitability via automation

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Deleon Narcisse, research analyst at TBR, said Capgemini has improved profitability 150 basis points in H1 2016 through automation

Capgemini’s ongoing investments around automated services delivery, along with its increased utilization of offshore resources, positively impact profitability, evidenced by the company posting a 150 basis point improvement in operating margin, at 10.2 percent, in H1 2016. During the period, the company also focused on bolstering its digital footprint globally, expanding the scale of its Applied Innovation Exchange network through new centers established across North America, Europe and APAC.

Alongside the buildup of a new cloud delivery center in Brazil, such expansionary measures enable Capgemini to accelerate the delivery of innovative offerings to enterprises globally. With Capgemini experiencing digital and cloud revenue growth of 32 percent, the company is demonstrating successful execution of its transformational services delivery model, which we attribute as a key driver for Capgemini’s organic revenue growth of 3.3 percent in H1 2016.

Capgemini combines its services and tools with partner solutions to drive automation across clients’ business processes and infrastructures

Over the past year, while Capgemini continues to hire people, the company has been accelerating automation at the operations layer across service areas, such as Application Services, Testing, Infrastructure Services and Business Services.

In July Capgemini combined its automation capabilities by launching Automation Drive, a suite that includes automation services, tools, digital transformation experts and four Centers of Excellence that work as automation hubs.

The formulation of the Capgemini Automation Drive streamlines the company’s automation capabilities, makes them more visible for clients and indicates it can attract clients at different stages and maturity of their automation journeys. Capgemini is moving in line with the majority of its IT services peers, balancing R&D and partner-developed solutions in automation with investments in resources to assist in delivering offerings.

By ramping up capabilities around blockchain, Capgemini is fortifying its position in the financial services sector

Blockchain’s emergence as an innovative supply-chain platform in the financial services industry is prompting Capgemini to establish and scale its blockchain capabilities to address clients’ data management, security and infrastructure challenges. In April Capgemini expanded its blockchain practice in its financial services business unit by establishing a core team of blockchain technology specialists to provide C&SI services and plans to increase the team to over 100 professionals by the end of 2016.

Financial services is Capgemini’s largest single vertical at 24 percent of revenue in 2015, and the company works with several major banking institutions, regulators and insurers on consulting and implementing blockchain solutions. Also in April Capgemini partnered with ascribe GbmH to develop a blockchain database solution for rewards and loyalty systems for consumer banking.

Capgemini’s competitors are also investing blockchain capabilities, which can challenge the company’s expansion in the segment. In 1Q16 Accenture established a practice responsible for the development of blockchain IP, Infosys opened an R&D center for blockchain technology in Ireland and Deloitte unveiled its blockchain software platform, Rubix.

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