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European IT & Technology Conference
Paris, 16 March 2006
Hubert GiraudBusiness Process Outsourcing CEO
1
In 2005, Capgemini got back into the race1. Capgemini won market share
Q1 + 20.3%Q2 + 22.1%Q3 + 9.8%Q4 + 9.6%FY + 15.0%
Organic growth
2005/2004
3. Capgemini returned to profit
2. Capgemini has significantly improved operating performance
-4420
62
163
H1 2004 H2 2004 H1 2005 H2 2005
-1.5%
-600
-500
-400
-300
-200
-100
0
100
200
300
Operating margin
2004 2005
-534
+141
-24
+225
Net Income +675 ME
Operating margin+3,6 pt
4. Capgemini achieved its major goals
1 Consolidate Project & Consulting European recovery
2 Accelerate the North American turnaround
3 Drive sustainable, profitable growth in outsourcing
4 Change gears in RightshoreTM
+0.6%+1.8%
+4.7%
2
In 2005, Capgemini won market share
RightshoreTM
US presenceAlliances
“From consulting to outsourcing & Business Process Outsourcing”
Transformation capabilityFront-office
Collaborative Business Experience“decentralization and entrepreneurship”
Due to our unique position… ...These clients trusted us in 2005
Le chiffre d’affaire du groupe progresse de +15%Toutes nos activités sont en croissance
Versus European competitors
Versus global Tech competitors
Versus Indian Pure Play competitors
Versus other leadersIn the sector
Group revenues are up +15%All our businesses are growing
3
In 2005, Capgemini returned to profit
Project & Consulting Europe
TOTAL US
Incl. Consulting & Technology services US
Outsourcing
Operating Margin
European P&C levels of profitability are in line with our peersNorth America profitable in H2 2005 Outsourcing on a strong improvement trend, accelerated by MAP
Group Operating margin
Net Income (M€)
3.4% (e)
- 8.0%-11.9% (e)
- 2.0%
8.7%2.8%
- 0.8%1.5%
2004
6.3%- 6.6%-8.2%- 1.2%
H1 2005 H2 2005
- 0.4% 1.8% 4.7%
-534 +58 +83
+141
4
In 2005, Capgemini achieved its major goals
1 Consolidate Project & Consulting European recovery
These businesses have begun a new expansion cycleA few lead indicators point the way forward
Top performers (Divisional Margin)
(%)
123456789
Sd&MSogeti NetherlandsTME C4France CSPortugal Sogeti SwedenFrance TS WestSogeti BeluxNetherlands CS/TS
18.417.014.512.111.611.411.010.910.9
Best operational swings
-10
-5
0
5
10
15FR CS+TS NL CS+TS UK CS+TS Norway Finland Denmark Italy Spain
2004 Divisional margin
+7,2 +4,6 +5,5 +8 +10,1 +4,7+3,7 +4,7
2005 Division margin
5
In 2005, Capgemini achieved its major goals
2 Accelerate US turnaround
Turnaround plan has delivered above forecastTurnaround will be confirmed during H1 2006
Sales Performance
P&C bookings H2 2005 : + 5% vs. H2 2004+ 3% vs. H1 2005
P&C bookings Q4 2005 : + 10% vs. Q4 2004
Return to profitUS Operating margin : + 2.8% en H2 2005 vs. - 8% in 2004TS & CS Operating margin close to breakeven
Lower Attrition
Headcount : 3,200 in Dec. 05 vs. 2,900 in July 05Stabilize onshore headcountDouble offshore headcountStabilize attrition rate at around 25%
Operating Efficiency
Pipeline P&C > $ 1BnOverruns : - 50% vs. 2004
2% of revenues in Q4 2005
6
In 2005, Capgemini achieved its major goals
3 Drive sustainable, profitable growth in outsourcing
Over 15% of outsourcing work mobilizes skills from CS and TS businessesMAP launched to accelerate outsourcing profitability
Mega Deals
HMRC
Business Process Outsourcing / Application Mgt / Infrastructure Mgt
significant additional work2 millions (+40%) online assessment as of 31/01/06
TXU
Schneider
18 months ahead of schedule1,400 Rightshore seatsMeasured client satisfaction (99%)
BPO breakthrough in Finance & Administration
Rebalanced portfolio (19 new deals between € 10-50M)
Growth of AM vs. IM
Strong commercial drive :
GM : € 498M
Metropolitan Police : € 503M
Swansea : € 91 M
Zurich : € 41 M
Successful transition (31countries)Global Core System production delayed by 6 months / one year
7
M€FY 2004IFRS restated
H1 2005 H2 2005 FY 2005FY 2005
vsFY 2004
Operating Revenue 6 235 3 472 3 482 6 954-6 729
2253.2%
175-186214-38
-35141904
61,036
+11.5%*Operating expenses -6 259 -3 410 -3 319Operating Margin -24 62 163(% Op. Revenue) -0.4% 1.8% 4.7% +3.6 ptOther operating Income 6 143 32Other operating expense -263 -82 -104Operating income -281 123 91Financial Interest Income & Expenses, net
-27 -9 -29
Income tax expense -226 -56 21Profit/(Loss) for the period -534 58 83Net cash and cash equivalents 285 498 904 +618Number of employees (end of period) 59,324 59,190 61,036
(*)+15% organic
Strong growth & margin improvement
8
In 2005, Capgemini set out its future1. Launch of the MAP initiative 2. Doubled ‘RightshoreTM’ Capability
4. Capgemini has adapted to new demand in the market3. Capgemini recruited and
invested in training
2005
Div
isio
n M
argi
n
2%
8%
Jan 2005 Feb 2006
Indi
an h
eadc
ount
2000
4000
14,500 new hires
1.7 M training hours
2006
4%
Service Oriented ArchitectureRightshoreTM EuropeBPO Finance & Administration3rd Generation ERP…
9
In 2005, Capgemini launched the MAP initiative
Revenues
Production costs
Business Mix
Re-negotiation
Purchasing
Rightshore
Rationalization
General Expenses Support Function
TBD
0.5%
1 – 1.5%
1.5 – 2%
1 – 1.5%
1 – 1.5%
Impact on Op. MarginLevers
MAP in implementation phase since Dec. 2005Goal: divisional operating margin of 4% in 2006
Project : Governance structure in place Full time team of 14 people (OS+CS)
RationalizationNew organization in Service Line (Europe, US, BPO)Sale of hardware maintenance business France to Unisys
PurchasingGood start to the Cap 30 program
Rightshore : Growth led in 2006 by GM and Eli Lilly
Re-negotiation3 contracts currently under re-negotiation in Q1 2006
Support Functions:Closure of site in UK and NetherlandsBPO of F&A functions
10
In 2005 Capgemini increased “RightshoreTM” capability
Capgemini is the leading European company in offshoreTarget is to have 10,000 people in India by 2007
India
China
Poland
Spain
France
2,050
200
350
150
300
Headcount ‘04Country Headcount ‘05 Type
3,550
400
750
300
450
Offshore TS/OS/BPO
Offshore BPO
Nearshore BPO/OS
Nearshore OS
Local TS/OS
+80%
50% of offshore staff works for Europe
Outlook 2006Open Calcutta site (with BPO)Create a second site in Krakow (Poland) Oviedo gets stronger (Spain )Opening of Capgemini University in IndiaAccelerate on-campus recruitment at Indian universities
11
2006 Priorities
Focus on adding value to clients• Invest in innovation (SOA, 3rd generation ERP
Business Intelligence…) and competencies • Develop sector approach and improve portfolio
management• Grow RightshoreTM capability
Confirm North American turnaround
Implement MAP initiative• Develop BPO and Application Management• Target divisional margin of 4% in 2006
1
2
3
BPO Overview
13
BPO Global ServicesToronto, Dallas, Krakow, Mumbai, Guangzhou & Adelaide
Procure to PayStrategic Sourcing
eBusiness
Purchasing
Supplier Management
Catalogue Management
Master Data Management
Customs & Tariff
Vendor Performance Mngmnt
Global Capability• > 20 different Accounting Systems
• > 500,000 invoices per month
• > 25 languages
• > $250 million receivables/month
• > $7bn in procurement management
Accounting to ReportingGeneral Ledger
Accounts Payable
Accounts Receivable
Cash & Asset Management
Planning and Budgeting
Management Reporting
Financial Analysis
Tax Compliance
Additional CapabilitiesHR & Payroll
Time & Expense Management
Financial Services Knowledge Process Outsourcing
Technical PublicationTechnical Publication
14
Global BPO RightshoreTM Delivery Network
Guangzhou & Hong Kong
Krakow
China 2
Poland 2
3rd European transaction
centre
Asturias
AdelaideMumbai
Malmö
Lyon
Bangalore
Toronto
Dallas
South American
centre
X
XHubSatellitePlannedX
“BPOpenTM” backbone
“BPOpenTM” backbone
3500 Seats
Kalkotta
0
500
1000
1500
2000
2003 2004 2005 2006
Offshore F&A
15
Capgemini & Microsoft are collaborating to buildthe BPOpenTM Service Orientated Architecture
Globally Collaborative Workforce
Stan
dard
Bus
ines
s Pr
oces
ses
Business Process ManagementBusiness Process Management
Integration Backbone (Enterprise Service Bus)Integration Backbone (Enterprise Service Bus)
Common Processing Model(Standards based)
Common Processing Model(Standards based)
XML
XML
XML
XML
XML
XML
System ASystem A System BSystem B System nSystem n
Krakow Guangzhou South Africa India
Business Process ManagementBusiness Process Management
Integration Backbone (Enterprise Service Bus)Integration Backbone (Enterprise Service Bus)
Common Processing Model(Standards based)
Common Processing Model(Standards based)
XML
XML
XML
XML
XML
XML
System ASystem ASystem ASystem A System BSystem BSystem BSystem B System nSystem nSystem nSystem n
Krakow Guangzhou South Africa India
Lega
cy In
tegr
atio
n
Legacy WrappingClient System Integration
…
Inte
grat
ed S
ervi
ce P
latfo
rm
Globally Collaborative Workforce
Stan
dard
Bus
ines
s Pr
oces
ses
Business Process ManagementBusiness Process Management
Integration Backbone (Enterprise Service Bus)Integration Backbone (Enterprise Service Bus)
Common Processing Model(Standards based)
Common Processing Model(Standards based)
XML
XML
XML
XML
XML
XML
System ASystem A System BSystem B System nSystem n
Krakow Guangzhou South Africa India
Business Process ManagementBusiness Process Management
Integration Backbone (Enterprise Service Bus)Integration Backbone (Enterprise Service Bus)
Common Processing Model(Standards based)
Common Processing Model(Standards based)
XML
XML
XML
XML
XML
XML
System ASystem ASystem ASystem A System BSystem BSystem BSystem B System nSystem nSystem nSystem n
Krakow Guangzhou South Africa India
Lega
cy In
tegr
atio
n
Legacy WrappingClient System Integration
…
Inte
grat
ed S
ervi
ce P
latfo
rm
…
Inte
grat
ed S
ervi
ce P
latfo
rm
Microsoft Technology
platform
MicrosoftDevelopment
Expertise
CapgeminiGlobal BPOexperience
CapgeminiProcess &Productivityexpertise
16
Complex Projects with Significant Consolidation Ratio’s
Client Dairy Farm Dow Corning Syngenta Danfoss
Countries servedINCLUDE…
Hong KongChinaAustraliaIndonesiaJapanSingaporeMalaysiaNew ZealandUSThailand
...includingUSUKBelgiumFranceAustraliaJapanKoreaThailandChinaMalaysia
KrakowGuangzhou
20:2
…includingGermanyHungaryItalySwedenSwitzerlandSpainAustraliaChinaIndiaMalaysiaPhillippinesSouth KoreaTaiwanThailandVietnam
…includingNorwayFinlandSwedenDenmarkGermanyFranceUKAustriaCzechHungarian
Capgemini RightshoreTM Solution Centres Guangzhou KrakowGuangzhou
Krakow
OverallConsolidationRatio
10:1 20:2 24:1
17
Full Scope F&A BPO – International Paper
Solution:
10 yr + contractFull Scope F&A : GL, AR, AP, T&E, and Treasury240 FTE’s in Krakow, PolandSupporting 32 separate legal entities in 12 countries Languages: English, German, French, Dutch, Polish, Russian
Benefits:50% cost reduction on processingFTE’s reduced by 10% yr1, 5% yr2.1.5 million invoices are processed per annum; unified SAP platform and electronic workflow implementedEnhanced quality (e.g. error rated reduced compared to pre-outsourcing) and improved control environmentClean external and internal audits
(Contract expanded from $25bnIntl. Paper in 2004 to include:-$6.5bn subsidiary with afurther 64 fte’s Full Scope)
Kraków
Inverurie
Svetogorsk
Kwidzyn
ParisBrussels
Stamford
Memphis
18
Where to draw the service split-line: Hydro One – Full Scope F&A
Accounts Payable
Customer Billing
Accounts Receivable
T & E
Vendor inquiries
Customer Inquiries
Employee Inquiries
INTERNAL CONTROL FRAMEWORK
Fixed Assets Projects Inventory
General Ledger/Trial Balance
Management Reporting &
Analysis
Financial Reporting
ReconciliationsJournal
Processing
Hydro One
T/O: $5bnCustomers: 1.2mill.
Need• costs down• Compliance• Transformation
In a de-regulated environment.
Solution: Full Scope F&A, > 750 FTE’s
• AP, AR, T&E, FA, PC, GL, Pay, Decision Support, Planning, Budgeting, Reporting, Settlements, Billing, Logistics, Sourcing, Procurement + IM, AM & ITO
Hydro One retained:• Ext. reporting, Corp a/c consolidation, Acctg. Policy, Financial Planning, Treasury, Tax
Benefits:• Cost reduction – 30%• Quality increases• AP days outstanding down 30%• Enquiry response time down 75%
Scope increased over c
ontract d
uration
19
BPO - expanding our capabilities
New Tools
Building ScaleIn Our Delivery Network
The Collaborative Business Model
Increased BPO Growth Rate
No.1 in Shared Services
Industry Experience
Quality – ISO & Six Sigma
Compliance - SOX
BPOpenTM - Speed to Value
RightshoreTM
Krakow - the best BPO centre
Transformational - CS, TS, OS
20
BPO Summary
Resources
Partners
Key Sectors
• Manufacturing
• Retail
• Energy & Utilities
• Financial Services
• 3500 Staff & growing
• BPOpenTM
• RightshoreTM
• Dallas, Toronto, Krakow
• Mumbai, Guangzhou, Adelaide
• BPOpenTM powered by …
• CoE in ….
• BPM technologies inclu…
• Multi-domain BPO - F&A, P2P, HR
• Complex multi-language, multi-country
• Consolidation ratio’s > 10
Experience
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