Capgemini’s Q1 results have revealed total revenue growth up 14.5% year-on-year to EUR2.4 billion. On a like-for-like basis (at constant group currency and exchange rates), that equated to a respectable growth rate of 6.4% - very much in line with Logica’s Q1 reported yesterday (see UK, Benelux mar pleasing Q1 growth at Logica. Capgemini remains confident of achieving 9-10% growth for the year. In Q1, like Logica, it was the UK and Benelux that pulled down the numbers, with both geographies failing to grow (Benelux flat and UK up 1.2%).
Looking at the UK in more detail, we are told that consulting revenues declined by a whopping 31%. This was partially offset by 5% growth in technology services (SI) and 11% growth in outsourcing. In technology services the performance across sectors varied enormously with the Barclays and RBS contracts pushing financial services revenues up 60%, but revenues from other sectors (including public sector) declining by 10%. In outsourcing, growth was achieved despite the expected decline in HMRC Aspire contract revenues, with much thanks going to a 54% increase in BPO. However, this will be from a small base of about £35 million in annual UK BPO revenues according to our estimations – or about 2% of UK revenues. Globally, BPO still made up just 3.8% of total revenues in Q1.
Looking ahead, worldwide outsourcing bookings were down 6.8% in the quarter (compared to 12.5% growth for consulting, technology & professional services). We are told that the “funnel is strong” and to expect signings in the next couple of quarters. The UK, we know, will be boosted by the signing of a new outsourcing deal with insurance provider, eSure, during Q1.
Overall the impression given was that the UK & Benelux regions are not out of the woods yet. Indeed, bookings continued to decline in the UK for application development and consulting. Nonetheless, that does mean that there is good news for graduates. CFO Nicolous DuFourcq talked extensively of “heavy pricing pressure” across UK SI & consulting in the analyst call this morning. This, we are told, means that Capgemini is looking to “balance (its) pyramid accordingly” and accelerate or refresh its search for more onshore “freshers”.