There can be a rise in pricing by year end

Written by Rachana Khanzode | Updated: Aug 27 2010, 03:31am hrs
IT services & consulting firm Capgemini is witnessing a robust pipeline. However, whether this recovery is sustainable or not in the coming six months will largely depend on the global economic environment, Capgemini Indias executive chairman Salil Parekh said. During the first half of 2010, Capgemini Group reported net profit of 101 million euro, up 29% from the year-ago period. In an interaction with FEs Rachana Khanzode, Parekh said there could be a price improvement by the end of the year if the demand continues. Excerpts:

How sustainable is the recovery that you are witnessing at the moment

At Capgemini, we are witnessing a strong pipeline and we have seen growth in the last few quarters, fuelled by pent up demand. However, there is still a need for cost-cutting initiatives that will drive growth. Currently, the value of contracts is larger than the deal sizes in the recent past and this is giving us the confidence. But it is a difficult environment and assuming the economic climate changes as there are concerns about a possible double dip, we could see some impact. However, we are seeing growth across application development that contributes 30%, application maintenance contributes 40%, infrastructure management 10% and BPO around 10%.

So are you expecting any price improvements

Since the demand in the offshore business is strong, we are not witnessing any reduction in prices. But at the same time, there are no discussions around on the increase in pricing. If the demand continues at this pace, then there is a likely outcome that there could be an increase in pricing. This could happen around Q4 CY10 or Q1CY11.

Capemini had plans to increase its headcount in India to 40,000 by 2010. Are you expected to reach those levels

We currently have 26,000 people in India which is almost a third of our total employee base. We intend to hire 17,000 people this year at our offshoring locations, including India, China, Vietnam, Philippines and Poland. Headcount in India would be around 32,000. Over the next two to three months, we would add 3,000 people in India.

Are you witnessing any demand around cloud computing

At the moment, cloud computing is at a very nascent stage. However, we have no client who is not talking about it. We expect the cloud service to become a dominant part of our business in the next three to five years. Clients would want to use cloud for application development and at the same time replicate their existing applications like large ERP projects and move them on the cloud.