| | By Mick James
One of the most
difficult tasks in
consultancy is to stop a
lean period becoming an
irreversible cycle of
decay. Declining
revenues, share
performance, margins and
staff losses can all
feed off each other to
put a firm into a
tailspin from which it’s
hard to pull out.
That’s why it’s so
refreshing to see the
renewed energy and sense
of purpose at Capgemini.
In the consulting
industry’s recent lean
period, Capgemini
possibly had the hardest
time of all - finding
itself doubly exposed
after the acquisition of
Ernst & Young’s
consultancy business.
“We went though a
really tough time from
2000-2004,” says Ian
Jordan, Capgemini’s head
of Consulting Services.
“Just at the time of
acquiring Ernst & Young
for £2.5bn our market
dropped by 20 per cent.”
However, he
maintains, “it was
absolutely the right
thing to do at the
time.”
It was widely thought
that Capgemini might
simply cut its losses
and retreat from the
North American market,
but Jordan — who spent
seven years in the US
building up the
consulting business —
says that was never on
the agenda.
“Why would you | |
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| | helped to clarify our
portfolio,” says Jordan.
“There are clearly some
challenges in the US
market about
restructuring and
redesigning various
businesses. Pierre Danon
is working with the
North American executive
team, but this isn’t a
retrenchment even though
the economy is quite
challenging. We’re
moving back into
profitability and
growth, and we will
continue to develop and
grow in the North
American market.”
Jordan points out
that after difficult
times Capgemini is now
growing and profitable
in all markets outside
the US.
“The most important
thing was that we
maintained positive
relationships with our
customers and a strong
reputation around our
delivery and our
capability,” he says.
“We’ve got really good
people in our business
because we’ve always
kept the bar high. The
reason we’re entering a
new era is because we
have great people who’ve
sustained our business
through the tough
times.”
Jordan believes that
how you manage a
consultancy during a
downturn is critical to
how that business will
perform when the economy
recovers.
“If you go into cost
cutting mode you start
to become extremely | |
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| | bureaucratic, so that
no-one can spend more
that $10 without chief
executive approval,” he
says. “We wanted to
drive empowerment to the
real leadership of the
business. If you control
your costs and manage
effectively you can make
the margins.”
“Centralising may be
a simple way to control
costs, but it affects
your ability to change
and innovate which in
turn hurts your ability
to grow.”
Capgemini’s strategy
since 2003 has been to
focus on strong markets
like the UK and go for
“keel deals” which would
inject stability into
the business, says
Jordan. For example, he
says, the firm chose to
remove itself from the
NHS National Programme
bids, because it felt
the contracts were too
loaded with risk for the
contractors (a judgment
that seems to have been
borne out).
Jordan believes that
these decisions have put
Capgemini in a strong
position and isn’t too
concerned about the
post-election cloud of
gloom that has settled
over the UK.
“My personal view is
that I don’t think we’ll
see sustained growth
until the autumn,” he
says. “Until then
there’ll be ups and
downs, with different
companies reporting
different results—a
pattern of mixed
showers, if you like.”
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Meanwhile the
consultancy business is
embarking on a
pan-European recruitment
drive. Jordan is at
pains to stress that
within Capgemini,
consultancy is very much
a business in its own
right:
“Other firms use
consultancy as a means
to an end, not an end in
itself,” he says. “When
we bring together a
consulting business, a
technology business and
an outsourcing business,
it’s important to be
very good at each of
these for their own
sake. If you don’t
strive continually to
drive the consultancy
business to be more of a
consultancy business,
you end up
homogenizing.”
Homogenization has,
of course, often been
the least of Capgemini’s
worries, given the sale
and number of
acquisitions and mergers
that it has digested to
reach its current shape.
However Jordan believes
that the organization
benefits from the
multiple strands of
corporate DNA that run
through it.
“The whole thing
about Capgemini was
always its diversity,
those are the values
that we live,” he says.
“That’s what makes us
different from an
Accenture or an IBM.”
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