One IT services provider delivering superlative performance in recent years is Capgemini, recording over 20% revenue growth in the first half of this year while also enjoying growth in operating margins, despite all the inflationary pressures and high attrition across the industry.
As it approaches its $20bn revenue milestone, it’s high time we caught up with Group CEO Aiman Ezzat to understand what’s driving this growth since he took the helm over two years ago…
Phil Fersht, CEO HFS Research: So I’ll dive straight into this, Aiman. Did you always want to be a CEO of a €20 billion services giant? Was this what you always wanted to do when you started out?
Aiman Ezzat, CEO Capgemini Group: I’ve been with Capgemini almost 27 years now, Phil. I am a chemical engineer, but I started my career with IBM in the mid-80s, IBM Europe, actually. I stayed there for a few years and then went to do an MBA at UCLA. After that, I was curious about consulting, so I joined what was called the Mac Group, at the time, which was a strategy consulting boutique which was created by Harvard professors, and as I joined, this company got acquired by Capgemini to create what was, at the time, called Gemini Consulting, which was a transformation consulting arm of Capgemini. I stayed there for nine years, half of the time in Europe, and half of the time in the US, I was based on the West Coast. I left in 2000 to join a smaller firm that was supposed to go public, it never happened. I stayed there for four years. At the end I was running the non-US business; I was based in D.C., but running Europe and Asia. I left in 2004 to come back to Capgemini.
My career restarted in Capgemini, after that four years’ divergence, I was first in group strategy, I was Deputy Director of Strategy, I did a lot of the transformation programmes, I did a lot of the acquisitions. And I moved to help one of the acquisitions, which was Kanbay, to help create our global financial services P&L. I joined as COO, and after one year, I became the CEO of that business, to make it a global business for Capgemini. That was 2007, and I became CEO of our financial services entity on the 1st of January 2009, perfect timing to see the financial market crash. This was an interesting experience, of course. At the end of 2012, I became the CFO of the group, I stayed CFO until mid-2018. In the meantime, I was chosen as being one of the two people to potentially become the successor for Paul Hermelin, so I also became COO. And then you know the rest. In September 2019, I was confirmed as being the next CEO, and I became CEO on 20th of May 2020. So that’s kind of my career, very, very Capgemini, but very diverse in Capgemini, as well, because I touch a lot of things, strategy, operations, finance.
Have I always dreamed of becoming a CEO? No. There are some people who, when they are 18, they want to become a CEO. Me, I wanted to do interesting things in life. So I followed my career, from one thing to the other, always trying to find a way to be able to add value and learn something. I was quite successful in the CFO role, I was chosen to be one of the two potential people to succeed Paul, and it was only then that I realized that I could potentially become the CEO of Capgemini. That’s kind of how my career went. So I’m not a big power guy; I was interested in taking the CEO job because I had ideas about what I could bring to the group. This is it. When you take the CEO job, it’s for that. It’s not for power; it’s because you have a vision, and you see that you can add value, and see what you can bring.
Phil: So who have been your influences along the way that you can share, maybe some personal and professional ones, Aiman?
Aiman: There are a few things that marked (ph 05.28) me through my career. When I was younger, I was interested in strategy and did a lot of reading, one the persons that influenced me was C.K. Prahalad with Strategic Intent and Core Competencies, that was early 90’s. In the late 90s, one guy that influenced in terms of thinking was Chan Kim, who is a professor at INSEAD, who with Renée Mauborgne wrote a piece called Value Innovation and Fair Process, and then went on later to write Blue Ocean Strategy. That influenced me in terms of how you need to focus on the client, and how to create value for the client; moving away a bit from the notion of competitive advantage, and much more around value creation being focused on the client. This influenced me, in terms of thinking.
In terms of people, you look at a lot of people, you learn from a lot of people, I cannot say I have one role model. But someone that impressed me, in terms of what he did, is Steve Jobs. He was passionate, he had a vision, and people could tell him whatever they want, they didn’t necessarily agree with him, but he was convinced about what he wanted to achieve. He created a lot of value. That’s someone I like, in terms of personality, in terms of his commitment to achieving something, his vision., He drove it all the way to the end.
Phil: Yeah. I love watching some of his old videos, including when he launched the iPhone, he could accurately see 15 years into the future. It’s incredible if you watch that 2007 launch.
Aiman: Exactly.
Phil: But when he relaunched the Apple brand, he was all about experiences, not products. It’s like when you watch Nike commercials, you don’t see products being sold, do you? You see athletes, you see health, you see what this brand stands for. And I think he brought that into the consumerization of IT, which is fascinating… he really did change the industry.
So Capgemini has grown a lot over the years, and with a lot of M&A… you’ve done a lot of acquisitions as a business. But I feel that one of the defining acquisitions you’ve made is Altran. You’ve built this unique OT/IT focus, it gets you really heavily into supply chain, and engineering, and sustainability. One, do you agree with this? And two, how do you see Capgemini’s DNA today, as you hit this €20 billion milestone?
Aiman: Yes, it definitely was defining, Phil! I think some others in the history of Capgemini were defining in different ways. There were many geographic expansions in Europe: Hoskyns got us in the UK, Volmac got us in the Netherlands, and Programator in Sweden. So a lot of the expansion was geographic, a lot of the expansion was around getting us into new territories. We changed a little bit, after that. The Kanbay one was really around India, and how to learn the India model, and the one-team model, etc., so we had to move from a western model, to a much more Indian integrated model. IGATE was about scaling in the US. But yes, the Altran one was defining in terms of it was probably one of the more strategic ones, because this one was really around a vision we had around the concept of intelligent industry, and how the convergence between the digital and physical worlds is going to happen, and the need to be able to have people really understand the physical world, to be able to create that value around intelligent industry.
So I fully agree that this is definitely something defining, in terms of Capgemini’s evolution, in terms of strategy, as well. It’s about a space that was being created in the market. People bring it to Industry 4.0, and the concept of intelligent industry goes beyond that. Because it’s not just about digital manufacturing and intelligent supply chain, but it’s also about the creation of the new products and services of the future, and their platforms. A car now becomes an intelligent product, full of software, and it needs to run on a cloud platform. So it’s not just how we manufacture the car, and the supply chain that goes with it; it’s how we create, how we conceive the car.
And this is where the understanding of the physical world becomes important. If you think about it… look at the financial services industry. What was specific in financial services, compared to other industries, from an IT perspective, is that it was already in the product and the service. A credit card is made out of IT. A bond, an equity, a payment system is made out of IT. In most other industries, IT was not in the product or in the service. IT was not in the car. And suddenly, IT comes into the car. And what was specific in financial services is that you moved out of the horizontal needs. You were not in finance, in HR, etc. Of course, you could do that. But when you talk to the business, when you talk about credit card, you need to understand the credit card business. You cannot develop products or functionalities for a credit card if you don’t understand the credit card business. And when it comes to a car, it’s exactly the same thing. You cannot develop the software architecture of a car if you don’t understand how a car operates, or what a car is made of.
And that’s really what we got through Altran. We had people who knew how to build cars, how to build planes, understand how a factory operates, understand the pharma companies, in terms of 3D manufacturing, and engineering, and R&D. And when you bring that with digital, that’s really when you are able to give birth to the intelligent industry concept, which, as I said, goes beyond the digital manufacturing and intelligent supply chain.
Phil: As we get into manufacturing and supply chain, the role of providers with sustainability becomes much more relevant, doesn’t it?
Aiman: Sure, Phil. When we look at sustainability –we are pretty big on sustainability – there is, of course, the internal part. We are doing the job, but we are a service firm, we are not a big emitter. A lot of it is linked to business travel; you reduce business travel, your footprint goes down quite a bit. realizedTechnology, digital and data have a big role to play, in terms of helping to drive sustainability solutions. So we made a commitment to help our clients reduce their carbon footprint by 10 million tonnes of CO2 by 2030. Following that commitment, we started developing an offering architecture around focused on “How can we make this happen? What value-add can we bring to our clients?” So, of course, there is the strategy. How do you get to net zero? What are the levers, depending on your industry, that you can act on, to be able to get to net zero? (? 13.17) That’s the business consulting, the strategy consulting part, you need an industry understanding, understand the levers that people can use, energy efficiency, or others depending on their industry. And from there, you can say, “Okay, these are the levers, this is how you can get there, this is how you can do the saving, this is what you need to change, these are the technologies that are available to you to do it.”
At the other end, you have one of the most complex parts, which is measurement and monitoring. On one side, you have to be able to measure the carbon footprint, and I think that’s an area where we evolved, we’re working with a number of technology partners around developing calculators, and other tools, and measurement, including on the procurement side. On the other side, you have the monitoring; how do you monitor the evolution of your carbon footprint? And in the middle, I call it the doing part. The doing part has three legs, for us. It’s green IT, or sustainable IT. We are definitely in that business, we help our clients reduce their technology footprint. The second part is sustainable operations, that’s really by industry. We’ll not cover all industries, because it’s very industry specific. There are things that are common, like energy efficiency, and energy transition that you can work on, but there are things that are very industry specific, and there you really have to go to the heart of the industry to understand what levers you can use. And here again, the engineering capabilities are important. And the third leg is sustainable products and services. We work on helping clients redesign a gearbox to reduce its size, and also the materials to make it lighter in order to reduce the carbon footprint. We worked with a forklift manufacturer for a completely redesigned forklift in order to reduce the carbon footprint over the lifecycle. This is the doing part. It’s the sustainable IT, it’s sustainable operations, and it’s helping clients to redesign their products and services to make them more sustainable, with the monitoring and measurement and, of course, the strategy part. We are starting to do a lot of projects, it’s really taking off, and I do believe that it’s going to become a big business.
And one other positive thing about this, besides being good for the planet, is that it’s a talent magnet. Young people love to work on these projects.
Phil: And in that vein, I know you’ve mentioned this is a long-term change in the way that we’re approaching talent and work. Can you share a bit more about your thinking here, Aiman?
Aiman: There are two different things happening at the same time, Phil. On one side, a big shortage of technology talent, because we are moving to a digital economy. Companies are impacted across the value chain, and they all need technology talent. Whether you are talking about your customer relationship, how you manage your company, how you design your products, how you manufacture them, or how you move them through the supply chain, so the whole value chain now requires technology, not just the management of the business. This has significantly expanded the demand for technology capability in most companies… in the economy overall., Technology spend is becoming a bigger part of the economy, , and to be able to fuel that, you need more talent. That talent does not exist. The growth of demand is far too fast. We have a big imbalance between supply and demand of talent. That’s one side.
The second side is the evolution of the new generation, Gen Z, which is coming with different expectations, and the whole evolution of the workforce, and the model of working, coming from hybrid. You have to combine the two, the two are happening at the same time, and you need to deal with the two. First, there is definitely the reskilling of talent, and we have done a huge reskilling of talent internally and we are also helping our clients reskill talent. Going beyond reskilling, we take people with no technology background and train them. We work with universities to develop new curriculums. We even tried to influence a bit some of the governments, saying “We need to think differently. The technology talent is not just engineers.” Otherwise we’ll never have enough talent. You need people who can do coding. They don’t need to do five years of engineering to write code. We can train people, if they have the right math background or logic to write code, we can train them in 12 to 18 months, or 24 months. We need to find a way to diversify the education model, to be able to bring more people up to speed to fuel that digital economy.
So upskillingbut also the creation of new talent is important. That’s why we hire a lot more young people, train them, sometimes people with no technology background.In our industry, we are big employers in terms of tech; with all our large competitors, we are the ones who can really train massive amounts of people, and fuel these people into the economy, going to startups, to other tech firms, to our clients. This creates attrition, because of the imbalance between supply and demand, you cannot do anything about it. That attrition is coming because the demand for talent is so high. You have to learn to live with it, for the time being, until we come to a more balanced environment in terms of supply and demand. Attrition will probably remain high for a while. It will probably come down a little bit, quarter after quarter, as this imbalance gets reduced.
The second part is the whole evolution of the interaction between employees and the firm, but even going beyond that, it’s people who you want to associate to what you do, who are not necessarily going to be your employees. That’s why I talk more and more about the talent ecosystem. First, there is, of course, your employees, and here people join because of your purpose, because of what you are trying to do, because of the interest of work, because you care for them, the whole people experience becomes important, the whole trusted work culture becomes important. The leadership model has to evolve. You have a generation that doesn’t want to be told what to do, but wants to be given a direction, be motivated, be cared for, and have some freedom in how they get things done. Which is quite different. . So it’s much more an alignment, and a leadership model, than it is a management model. I’m going a bit from one extreme to the other, it’s somewhere in the middle, but there is an evolution in the way you have to lead, with all this generation, if you want people to stay with you.
And the realisation, as well, that the workforce is going to become more fluid, people move easily from one company to another, you have to learn to live with that. The fluidity of the workforce will increase, and it’s a fact. We will not go back to where we were pre COVID, where people will stay for a long time in companies. You definitely need your core of employees, of people who stay longer, but you’re also going to have people moving faster. Which means that you need to start to learn to live with what I call a talent ecosystem, which is not only your employees, but also people that go beyond your employees, gig workers, potentially people who have retired, potentially students, people who only want to work three or six months a year. All this is an ecosystem of talent. They are not employees. But I put a very important concept in that; that you need to identify them. It’s a bit like personalised marketing. I can work with them, if I know who they are, because I know when to call on them, and they might or might not be available. In a certain way, I need to identify them, I need to get to know them. And maybe I get to know them because I am certifying them. I give them a Capgemini certification, they have been trained by me, and they can go and valorise that certification somewhere else. By doing that, I also get to know them, and I can ping them when I need. It’s at will. But having identified a much larger pool of talent, which goes beyond my own employees, I can be in touch with them, and associate them with my work.
So it’s really an evolution, the foundation is going to be your employees, but you enlarge it with an ecosystem of talent that you know, and to whom you are connected.We can really make it happen.
Phil: My final question, just a quick one, is how are your feelings about the future, when we look at the chaotic times we’re in with geopolitics, and inflation, and things like that? Are you feeling slightly positive? Are you feeling negative?
Aiman: Of course, like everybody, Phil, we are closely monitoring the situation. There are a lot of complexities today between geopolitics, inflation, and the big evolution in terms of what’s happening in the economy: we cannot be ignoring it. On the other side, I am optimistic, because the fundamental trends, the structural trends are positive. In the past it was the Industrial Revolution, now this is the Digital Revolution. Everything is moving on a technology platform, on a cloud platform, we’re going to have a lot of new digital services, we’re going to be able to use quantum computing to discover new drugs. So there’s plenty of positive trends. As an industry, we are in the middle of that, we are in the middle of the transformation of business and society. I can only be positive about the structural trends, being part of digital transformation, being part of inventing new products and services, being part of inventing new public services, being part of enhancing people’s lives, being part of finding solutions to sustainability. I am very positive about the fact that we are creating a digital economy. Structurally, the long-term trends are good. In the short term, we have to monitor closely what is happening, and learn to be agile and adapt to what’s going on in the market.
Phil: Well, thanks for your time, this has been really insightful, I look forward to sharing this with everybody… it was great getting some time with you today, Aiman.
Aiman: Thanks, Phil.
Posted in : Business Process Outsourcing (BPO), Cloud Computing, Consulting, Digital Transformation, IT Outsourcing / IT Services, OneEcosystem, Outsourcing Heros
