CapGemini to boost India staff, eyes deals

By Sumeet Chatterjee

NEW DELHI (Reuters) - CapGemini plans to increase its staff in India by nearly a half to 25,000 by end-2008, a senior official said on Tuesday, making it the biggest operations for Europe's largest computer consultancy.

"We continue to remain bullish on the growth that we are seeing in India," Salil Parekh, executive chairman at CapGemini India, told Reuters in an interview at the World Economic Forum summit in New Delhi.

"Today we have just over 17,000 employees in India. Our plans are to get that to 40,000 by 2010 and we seem to be on track."

Currently, 22 percent of the company's employees are in India, its second-largest location in terms of headcount after France's 19,000 people, Parekh said.

The Indian operations would become the largest location by next year, he said.

That would underpin its position as one the country's biggest employers in the technology sector, though it is well behind IBM, which has 53,000 staff in India.

Global outsourcing majors such as IBM, Accenture and Electronic Data Systems are rapidly expanding in India to take advantage of a vast pool of English-speaking workforce that are available at one-fifth of western wages.

CapGemini, whose first-half operating profit rose 49 percent buoyed by the Indian expansion, is open to more acquisitions in India, to boost its presence in the domestic market that accounts for around 5 percent of the company's global revenue, Parekh said.

"India is becoming a larger part of our global mix. So, we see that percentage steadily increasing," he said. "We see a large potential ... we're now starting to increase our penetration of the local Indian market."

Firms like IBM and Accenture are increasingly competing for outsourcing deals in the Indian market, as government departments, banks, retail, and small- and mid-sized companies step up investments on technology in a booming economy.

CapGemini bought local services group Kanbay earlier this year for $1.25 billion to speed up its growth in India and bolster its position in finance consulting.

It is interested in acquiring firms in the business process outsourcing and engineering services sectors, Parekh said.

Parekh said the company planned to offer consulting, technology and maintenance services to the public sector, telecoms, retail and financial services companies in India.

Rising wages, which squeeze the margins of Indian software services firms like Infosys Technologies and Wipro Ltd, were not a constraining factor for CapGemini's expansion, Parekh said, adding he expected the level of salary rises in 2008 to be lower than 2007.

Wages in the sector are rising by about 10 to 15 percent a year, compared with 2-6 percent in the West, as companies try to retain staff from being poached by rivals.