Shift towards automation won't hurt hiring in India, says Capgemini

French IT services and consulting major Capgemini, which has bulk of its global workforce located in India, has indicated that the company will continue to expand its offshore presence in India despite a strong shift towards automation across the organisation. 

 
As on December 31, 2018 (end of FY18), the Paris-headquartered company had a total of 211,300 employees globally, of which close to half, or 106,000, were based out of India across its different delivery centres.  

"... We continue to leverage our strong offshore capabilities for both innovation and profitability, notably in India, where we have, I think, reached 106,000 people," said Paul Hermelin, chairman and CEO of Capgemini, during the company's post-earnings call with analysts on Thursday. Overall, 58 per cent of Capgemini's global employees are located in offshore locations, including India. 

However, the company reported 310 basis points higher attrition in the December quarter on a year-on-year basis at 22 per cent. "In the first half, our headcount in India was rather stable and with good growth in H2 and it looks like a continuing trend. And notably, if you opt for the economic slowdown, you would think that costs obsession will come back, which should push offshore again," a senior official of the company told analysts in response to specific queries on the onshore-offshore mix.

"We are planning certainly mid-single digit growth (in term of headcount) in India and maybe more, in spite of automation where we accelerate." The main concern, said the management, is in terms of digital talent management where attrition is high. 

Over the past three quarters of FY19, Indian IT services companies have seen a huge demand uptick, which has forced them to spend more on talent acquisition, including onsite hiring and hiring of subcontractors to cater to the pent up demand. Many of them are mitigating its impact on the margin by offering clients more location-independent services and leveraging offshore more.

In the December quarter, Capgemini's financial numbers were mostly in line with expectations. The group generated revenues of €13,197 million, up 5.4 per cent compared with 2017. Growth was 8.1 per cent at constant exchange rates, significantly above the 6-7 per cent target that was communicated at the beginning of the year. 

The management further said that digital and cloud activities grew over 20 per cent at constant exchange rates and now account for around 45 per cent of the company's overall revenues. The overall order booking stood at €13,393 million in 2018, a y-o-y increase of 9 per cent at constant exchange rates. 

The net profit for 2018 was €730 million, compared with a net profit of $820 million the previous year.