Global Sourcing

Capgemini Year-End Results Show Encouraging Signs for BPO

By Dan Berthiaume
Despite a generally slow global market for BPO services, leading international BPO provider Capgemini has released its year-end 2012 results and they indicate some growth did occur in demand for BPO.

Capgemini reported 2012 revenues of about USD $13.1 billion, or a roughly 6% increase from 2011 revenues at current exchange rates. On a like-for-like basis (i.e. at constant Capgemini structure and exchange rates) revenues grew 1.2%. The difference between these two rates is primarily due to the appreciation of the US dollar and the UK pound against the euro and the integration of Prosodie, which Capgemini acquired in July 2011.

Bookings during the year totaled about $13 billion, at the same level as in 2011. The book-to-bill ratio is 1.07 for the year and 1.16 for the fourth quarter for technology services, local professional services (Sogeti) and consulting services together.

The operating margin is about $1 billion, or 7.7% of 2012 consolidated revenues, representing an increase of 0.3 points on 2011, in line with Capgemini objectives. Before amortization of intangible assets acquired through business combinations, the operating margin is 8% in 2012. In spite of a significant increase in restructuring costs ($220 million in 2012 compared with $106 million in 2011), operating profit is $788 million.

North America, UK Report Strong Revenue Growth
The North America region reported revenue growth of 16.4%. Organic growth of 7% was driven by technology services, Sogeti and consulting services. With an operating margin rate of 8.8%, North America remains, as in 2011, one of Capgemini’s most profitable regions;

The UK & Ireland region reported revenue growth of 8.1%. Like-for-like growth is limited at 0.9%, with growth in technology services more than offsetting the slowdown in outsourcing services due to the expected reduction in public sector expenditure. At 7.7%, the operating margin rate is up 0.6 points on 2011.

Benelux recorded an 11.7% decline in revenues in 2012 with a sequential stabilization in the fourth quarter. The operating margin rate is 7.2% (down slightly by 0.2 points on 2011). Measures taken in September have already enabled a return to an operating margin rate of 10% in the second half of 2012 (a level identical to the second half of 2009);
In the rest of the world, revenue increased 8.8% on average (+6.3% like-for-like), with the Nordic countries and the Asia-Pacific region reporting the strongest growth. The average operating margin of these regions is 9.3%, up 1.4 points on 2011.

Technology, Outsourcing Services Grow Revenues
Technology services – Capgemini’s leading business in terms of revenues (more than 40%) – reported growth of 3.5% (like-for-like), with a steady improvement in the resource utilization rate and a slight increase in prices enabling an increase in its operating margin rate of more than one point to 7.9%;

Outsourcing services – which contributes 40% of Capgemini revenues – reported revenue growth of 0.5% (like-for-like) and an operating margin rate of 7.6%, in line with 2011;

Sogeti (15% of Capgemini revenues) reported a 1.3% decline in revenues (like-for-like) and a slight fall in the operating margin rate (10.4% in 2012 compared with 10.9% in 2011);

Consulting services (5% of revenues) reported a 3.6% decline in revenues like-for-like. Despite a slight fall in the operating margin rate in 2012, Consulting services remains Capgemini’s most profitable business (11.2%).

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