French IT services giant Capgemini’s move to buy out US rival IGATE for $4 billion will make North America its biggest market.

The deal will position it strongly in the US market. Pierre-Yves Cros, previously CEO of Capgemini Consulting, a member of the executive committee since 2003 and the head of strategy and M&A for the Capgemini group spoke to BusinessLine on various aspects of the deal. Excerpts:

Is this acquisition about getting clients in North America?

Yes, it is largely about that. It also shows our intent to grow aggressively in the US and a part of our target of getting 40 per cent of our revenues outside Europe.

IGATE perfectly fits our strategic ambition, giving us a new status in the American market, and taking further our industrialisation journey to offer more competitive services.

This will also give our Indian operations a new scale, allowing us to compete on par with the best US-based and Indian-based companies.

There are a lot of overlaps in terms of industry verticals. How will that play out?

We see strong synergies with IGATE and see it complementing our strengths. Also, their offerings such as IBAS can open up areas in insurance and healthcare for us. Similarly, store-in-a-box offering will help us build on our retail strengths.

How much did the European recession play in your decision?

While Europe is in a recession, it was not a big factor. We always believed that during tough times with a genuine value proposition around outsourcing, we can get more business.

The other important element (Indian employee base) is a throwback from the past. How do you assess that at a time when your peers are looking at smaller sized acquisitions?

We considered all this and that is when we decided to go ahead.

If you look at IGATE, it has a strong non-linear push which is evident in its numbers. Also, we have been building our expertise in areas such as SMAC which we have been working on for some time. This, coupled with IGATE’s experience in applications services, infrastructure services where they have 3,000 employees, BPO, with 3,500 employees and engineering services with around 3,500 employees, should give you an idea.

Your roots are European, you want to expand into the US, and have acquired a company with a large India presence. How will the integration will shape up?

We acquired Kanbay a few years back and by now it is common knowledge that European companies integrate better than others.

Building on both companies’ previous experience of integrating acquisitions and a strong cultural fit, the integration is expected to be smooth. We expect the new organisation to be in place in the next three months of closing the deal and after that the integration is expected to be completed early next year.

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