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Continental Europe posted another strong quarterly growth notably in Germany, Sweden and France, while in the UK we didn’t notice any material impact from Brexit. North America is still strongly impacted by the contraction of the energy sector, activity in that sector is expected to stabilize at Q3 level.
We continue to expand in market segments driven by innovation, with our Digital and Cloud activities growing 25% over the quarter.
Finally, we want to make bolt-on acquisitions to accelerate the transition of our business portfolio, particularly in North America. These acquisitions could represent 2 additional points of annual growth over the next two to three years.”
Digital and Cloud revenues grew 25% year-on-year at constant exchange rates in Q3. Growth is driven by a cross-business approach and leverages the management consulting business. Digital and Cloud generated 29% of Group revenues in the first 9 months of the year.
Consulting Services (4% of Group revenues) revenues grew by 3.1% at constant exchange rates. This number does not take into account the rapid development of Digital consulting missions initiated and invoiced by the other businesses. Technology & Engineering Services (15% of Group revenues) reported revenue growth of 1.3% at constant exchange rates, mainly supported by the North America and Rest of Europe regions. Application Services revenues (61% of Group revenues) grew 4.4% at constant exchange rates and continue to drive Group growth. In France, Central Europe and Scandinavia, demand for innovative offerings boosted Application Services revenues to over 10%. Other Managed Services revenues (20% of Group revenues) declined by 3.3%: the robust momentum of Business Services only partially offsets the contraction of infrastructure activities in the United Kingdom – anticipated since the beginning of the year – and in Latin America.
North America reported an increase in revenues of +0.4% year-on-year at constant exchange rates in Q3. The Energy & Utilities sector weighed again on performance as all the other sectors combined reported a 3.7% year-on-year growth. The Brexit did not materially affect the activity in the United Kingdom & Ireland in Q3. Revenues in the region declined by 1.5% at constant exchange rates as a result of the public sector contraction, anticipated since the beginning of the year, notably with the evolution of a large contract. On the private sector side revenue is growing by about 10% at constant exchange rates. Driven by its key sectors, France continued to grow at a steady pace this quarter with a 4.6% year-on-year growth at constant exchange rates. In line with the first half of the year, Rest of Europe revenues (which includes Benelux since January 1, 2016) increased by 5.4% at constant exchange rates. Scandinavia, Central Europe and Italy keep driving the performance in this region. The good momentum in Europe therefore continued in Q3 with an acceleration in the Manufacturing & Automotive sector. Finally, the Asia-Pacific and Latin America region grew 1.2% at constant exchange rates, with contrasted trends: a marked drop in Latin America (related to equipment resale), while Asia-Pacific continues to be very dynamic with a double digit growth.
At September 30, 2016, the total Group headcount stood at 187,616. Offshore leverage, with over 103,000 employees in the Global Production Center network, stands at 55% of the total workforce.
New orders recorded in Q3 2016 amounted to €2,792 million. This represents a 14% increase at constant exchange rates compared to Q3 2015.
The Group confirms its guidance for 2016, as upgraded on July 27, 2016: it forecasts revenue growth at constant exchange rates of 7.5% to 9.5%, an operating margin of 11.3% to 11.5% and organic free cash flow generation in excess of €850 million.
The Group now estimates the negative impact of currency fluctuations on full year revenues slightly below 3 points, primarily due to the appreciation of the euro against the pound sterling.
Paul Hermelin, Chairman and Chief Executive Officer and Aiman Ezzat, Chief Financial Officer, will comment on this press release during a conference call, in English, at 8.30 a.m. Paris time (CET) today. You can access this conference call by webcast, either live or on replay for up to one year, from Capgemini’s investor website or directly by clicking on this link.
All publication materials will be posted on Capgemini investor website and will be directly accessible from https://www.capgemini.com/results.
This press release may contain forward-looking statements. Such statements may include projections, estimates, assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product development, as well as statements, regarding future performance or events. Forward-looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates”, “plans”, “projects”, “may”, “would” “should” or the negatives of these terms and similar expressions. Although Cap Gemini’s management currently believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking statements are subject to various risks and uncertainties (including without limitation risks identified in Cap Gemini’s Registration Document available on Cap Gemini’s website), because they relate to future events and depend on future circumstances that may or may not occur and may be different from those anticipated, many of which are difficult to predict and generally beyond the control of Cap Gemini. Actual results and developments may differ materially from those expressed in, implied by or projected by forward-looking statements. Forward-looking statements are not intended to and do not give any assurances or comfort as to future events or results. Other than as required by applicable law, Cap Gemini does not undertake any obligation to update or revise any forward-looking statement.
This press release does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction.
With 180,000 people in over 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2015 global revenues of EUR 11.9 billion. Together with its clients, Capgemini creates and delivers business, technology and digital solutions that fit their needs, enabling them to achieve innovation and competitiveness. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.
Note: 2015 utilization rates have been restated to take better account of the onshore / offshore mix.
Paris – Capgemini Group reports consolidated revenues of €3,019 million for the third quarter of 2016, up 2.2% at constant exchange rates compared to the same quarter of 2015. Revenues grew 10.2% at constant exchange rates over the first nine months.
Rightshore® is a Capgemini trademark
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