Capgemini sounds more like a consulting firm – we think other service providers will follow

At its Analyst Event in October 2022, Capgemini spoke a different language from most service providers, sounding more like a Big 4 or management consultant firm than a pure integration and transaction facilitator. Even though Capgemini claims its strategy and transformation business increased 30% in the last year, we want to know if it can move beyond the aspiration of wanting to be a strategic partner for CXOs and functional leaders of global companies to consistently delivering differentiated and value-enhancing advisory and operations solutions.

In HFS Research, enterprises consistently voice a requirement to focus on working with one or two service providers that can provide end-to-end advisory and delivery services. The Big 4 are rapidly adding managed services delivery, and IT and business process service providers are adding consulting strategy and advisory capabilities with a greater focus on industry-specific projects.

Three key capabilities could drive a new dynamic between Capgemini and its enterprise clients. While these are not necessarily unique to Capgemini, they represent a welcome departure from most discussions between service providers and their clients, all of which focus on cost reduction and the old chestnut of service delivery transformation.

Enable cloud deployment services to drive value through data across the enterprise

Capgemini pointed out that all services need to be managed through digital platforms, and there are no such thing as out-of-the-box cloud solutions. When it comes to managed services, in particular, our recent survey on managed services revealed that eighty-six percent (86%) of enterprise clients agree or strongly agree that platform-led managed services are the most effective where domain expertise is combined with technical capabilities (see Exhibit 1). Eighty-two percent (82%) of respondents stated that managed services are converging with consulting services as organizations continuously need support to re-think how they operate to successfully operate and innovate. Cloud deployment, especially in a multi-environment setting, is constrained because each deployment must be designed from scratch. Design and architectural experience and platform interconnection capability are requisites.

Exhibit 1: Most enterprise clients are asking for platform-led services coupled with consulting-led end-to-end capabilities

Sample: 800 executives from Global 2000
Source: HFS Research Managed Services study 2022

Focus on industry-specific applications when working with hyperscalers

The much-needed move from providing horizontal transaction services to vertical-specific services requires hiring significant incremental professionals from industry settings. Capgemini appears committed to doing this, knowing that demand for this kind of talent will outstrip supply for the next decade and that it is time to get ahead of the curve. Capgemini talked about how it is supporting one of the world’s largest restaurant brands to revamp its online ordering and data capture systems. While this is standard fare for many IT services providers, the data feedback loop has enabled the company to improve and diversify its food offerings – engineering for sandwiches. Capgemini assumed a consulting and integration role for this – customer-focused outcomes in the food services industry.

Build a culture of continuous innovation and integration with the broader ecosystem

There is a premium on innovation access, especially concerning domain expertise, technology, data architecture, and deployment. A core concept at Capgemini is that it builds projects along the continuum of ideate, design, digitize, build, operate, and optimize. This has been a consistent theme for the last two years, but actual evidence of it has been scarce. We think this is changing with examples that translate, for example, data and analytics advisory to customer targeting and increasing sales.

A telling example is a case study with a global leading company in the beverage, retail and logistics & distribution industries. Through innovative data and analytics services, Capgemini helped the company increase its beverage sales by 22 million cases. Stacked one on top of the other, they would reach 3,000 miles high.

Linking engineering understanding to strategy is one of the building blocks to facilitating this continuum. Capgemini introduced the “ecosystems” concept as another building block for innovation. Capgemini includes more than a conglomeration of tech partners, which usually is the case for most providers; Capgemini’s ecosystem spans verticals it wishes to emphasize and consists of a mix of technology companies and industry leaders: Schneider, Dassault, Microsoft Azure, Bosch, AWS, and Siemens.

As part of the innovation discussion, Capgemini highlighted sustainability services and data as its core components. Capgemini has 14 ESG initiatives (environmental, social, and governance) offerings. The interesting point is that sustainable solutions can often mean lower costs through less material and labor, as Capgemini emphasized as an essential value proposition for its offering in this area. This was highlighted in discussion with its client Lynk & Co, a next-generation car manufacturer with a unique car-sharing business model.

The Bottom Line: Traditional service providers, including Capgemini, are repositioning themselves as advisory and consulting partners giving enterprise leaders more choices and flexibility in service provider sourcing decisions.

Capgemini is recalibrating its go-to-market messaging and services delivery model. It provided a few examples of how it is taking new approaches to help its clients by adding more consulting capabilities and pushing its services and value propositions upstream to enable end-to-end capabilities better. Capgemini may need to deploy hundreds of projects to change its positioning and delivery structure over the next three years to be a preeminent strategy partner with differentiated technology deployment. HFS sees enterprises increasingly favoring partnering with services providers that can take this consulting-led end-to-end approach, whether they start from a strategy perspective and capability or conversely with an operations and delivery mindset.