Capgemini puts its money where the growth is—APAC

As IT services firms grapple with lengthy sales cycles and stalled innovation initiatives with many clients, market participants search for growth wherever they can. To tap into the growing APAC opportunity, Capgemini recently acquired Tokyo-based BTC Corporation.

Investment in Asia Pacific (APAC) region businesses has become a strategy for many IT services firms as the region has grown despite economic uncertainties. IMF data shows that the APAC region, a mix of advanced and emerging market countries, has been relatively strong in real GDP (gross domestic product) growth compared to the rest of the world, with variability by country market. While this is expected to temper in the coming years, it yields favorable business conditions and interest in innovation. In acquiring BTC Corporation, Capgemini has added a Japanese cloud and digital services provider with a team of more than 500 employees.

Acquisition complements and extends digital transformation and cloud capabilities

BTC Corporation is headquartered in Tokyo, Japan, and has offices in Japan, Vietnam, and the US . The 20-year-old company focuses on diverse offerings, including technology, consulting, digital marketing, and staff services. Prominent client logos include the National Cancer Center; Okinawa Institute of Science and Technology Graduate University; Mitsui Fudosan Residential Co., Ltd.; MISUMI Group Inc.; and Riraku Co., Ltd.

Capgemini’s acquisition of BTC offers a triple win:

• For Capgemini: While Capgemini has a footprint in Japan, it will gain deeper access to the Japanese market. BTC corporation has a good track record for cloud and digital services in Japan. Through its Vietnam operation, it could also help Capgemini with enhanced nearshore and offshore capabilities.
• For BTC Corporation: BTC will gain access to Capgemini’s global network, helping it grow its business, reach new markets, and strengthen its position as an IT service provider in Japan and the broader APAC region.
• For clients: With broader expertise and offerings, clients of both firms will have access to enhanced service and innovation capabilities.

Capgemini is expanding its geographic footprint with acquisitions, added capabilities, and regional specializations across the Asia Pacific region

Capgemini has been acquiring APAC-based firms to capitalize on high-growth markets, generate new opportunities, and expand its global delivery centers to enhance client service capabilities. In 2022, its year-on-year growth in the region was 40%, led by acquisitions and growth in the manufacturing and financial services sectors. While Q1 2023 showed tepid results, the overall outlook is stable for the region.

Since 2020, Capgemini has acquired five companies in the APAC region, as shown in Exhibit 1. While these acquisitions have primarily supported the APAC market, the APAC region also offers offshore and nearshore delivery potential. As Capgemini CEO Aiman Ezzat mentioned in a NASSCOM Technology and Leadership Forum, India is the obvious example: More than 50% of Capgemini employees are based in India. As HFS has written, Vietnam is a rising star on the global services stage and is one of the emerging locations for talent and expertise that business leaders should not overlook. The BTC acquisition adds footprints in Vietnam and Japan.

Exhibit 1: Capgemini has been on an acquisition spree to strengthen its digital transformation capabilities across the APAC region

Source: HFS Research, 2023

The Bottom Line: Capgemini’s acquisitions will better serve its APAC clients—if it can integrate them as a true regional entity.

Capgemini is a French firm that derives most of its revenue from Europe, followed by North America. Since its mega-acquisition of Altran in 2019, Capgemini has made strategic tuck-in acquisitions to strengthen critical sectors like financial services and expand into key regions like APAC.

Capgemini has pockets of country depth and expertise. Success in the region will require strong integration of the APAC-related acquisitions to get them to work in sync as a true regional entity. Integrating these companies’ cultures, processes, and systems across Japan, Vietnam, Singapore, Australia, and New Zealand will be vital in delivering synergistic benefits to their regional customers.