Capgemini benefits from rising demand for cloud and digital transformation

Written by David Adams

Capgemini has announced reasonably healthy full-year results for 2017, as the company continues to benefit from demand for cloud services and digital transformation. Digital and cloud revenues at the French IT services firm grew 24 per cent year on year (as measured at constant exchange rates) to reach almost €5 billion. Overall revenue grew by four per cent to €12.8 billion, with net profit up 11 per cent to €820 million. The one region where revenues fell was in the UK and Ireland.

Chairman and chief executive Paul Hermelin suggested that digital transformation has supplanted offshoring as the most important driver for growth in the IT services market. The company is seeing the greatest demand for digital and cloud services from companies in retail, financial services, consumer markets and manufacturing.

Capgemini reported revenue growth in every region except in the UK and Ireland, where revenues fell by 9.6 per cent, a fall blamed by the company on an anticipated decline in public sector revenues. No prizes for guessing which other unique factor affecting those markets is also being blamed in part by some analysts for this anomaly. The region that saw the biggest growth was North America, where revenues rose by 12.3 per cent.

The fastest growing part of the company by service was consulting, up by 14 per cent, but this accounts for only five per cent of overall revenue. Application services, which accounts for about 62 per cent of revenue, grew by 6.6 per cent globally. Technology and engineering (15 per cent of revenue) grew by 4.7 per cent. Other managed services contracted by 6.4 per cent, but the business process outsourcing and platforms services within this part of the company remained “generally stable”, according to Capgemini.

Hermelin said: “Our excellent performance in 2017 reflects our ability to create value for our customers and capture – in particular – the demand fuelled by their digital transformation agendas, while pursuing our profitable growth journey.” The company says it expects to see revenue increases of between six and seven per cent in 2018.