Capgemini’s Reveals Plans for Expansion In Mexico for IT Services

In response to changing global market and needs of individual businesses, and the evolving manner in which consulting, outsourcing and professional services are being offered, the Capgemini Group …

Peter Kroll, Senior VP and CEO, Capgemini Mexico

In response to changing global market and needs of individual businesses, and the evolving manner in which consulting, outsourcing and professional services are being offered, the Capgemini Group has optimized the distribution of its resources on a global scale.

Peter Kroll, senior vice-president and CEO at Capgemini Mexico, has firsthand knowledge of these changes. Capgemini Mexico has expanded its nearshore coverage, collaborating more closely with companies operating in India and the United States, he said during a meeting recently with Nearshore Americas in Mexico City.

As well as the corporate offices situated in Mexico City’s exclusive Santa Fe neighborhood, Capgemini currently operates a Nearshore Delivery Center in the city of Aguascalientes, which, in the early stages, provided services solely to local clients.  “This development center caught the attention of our colleagues in the United States,” Kroll said.

Distance Brings Difficulties

The time difference between the United States and India (10 hours) has long offered certain business advantages such as greater productivity – someone in the Americas can go to bed and wake up the next morning with all the necessary information already stored on their computer. This same time breach however, can prove detrimental, for example, making instant communication and collaboration impossible.

“Communication is crucial.  Today projects are managed much more efficiently, and communication between front-office and back-office needs to be much more fluid and constant,” Kroll stated.  This is especially important in the initial stages of an outsourcing project, in particular during the designing phase, when representatives from the provider have to work closely with their clients, getting to know their needs, defining the terms and initiating the project.

Bringing experts from Asia to the United States would prove extremely difficult, incurring long journeys, increased costs and the increasingly difficult task of obtaining the H1B work visa that allows foreigners to enter the United States. Capgemini’s development center operated in Aguascalientes has provided the answer to this problem.

“The nearshore concept that we are proposing makes the most of the proximity of the clients, the benefits that come with working in the same time zone and the advantages afforded by the North American Free Trade Agreement (NAFTA), which makes obtaining works visas much more feasible,” Kroll explained.  While not a new concept, it does provide a great opportunity for the growth of the country.

Kroll emphasized that at no point is he suggesting that Capgemini gets rid of the personnel that it already has in India, which currently amounts to more than 50,000 employees; on the contrary, the company plans to add to them.  “We are not of the mind set ‘everything to India’, neither are we of the opinion ‘everything should be on site for the client’.  For each case we seek to spread out the services.”

In the United States, collaboration has been expanded to include development centers in Guatemala, Chile and Brazil, while taking care not to overlook the local clients, who continue to be the primary focus.

Local Growth

Kroll indicated that there are plans to expand the Nearshore Delivery Center in Aguascalientes. Capgemini envisages the construction of a new building to accommodate over 1,000 people sometime within the next three years.  This will be with the dual purpose of providing services to the local market as well as to the United States.

“Currently we have 120 people working in this center, which has proven scalable as we have the methodology, the equipment and the Capgemini Group standards,” Kroll said. He added that another advantage of this development center’s location is the links that it has with local universities, which allow Capgemini to recruit qualified personnel from IT sector.  Moreover, Kroll said, a lot of attention is given to bilingual education, there is a strong telecommunications infrastructure in place and there are governmental incentives that can be taken advantage of when creating new businesses.

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Human resources recruitment is extremely competitive in Mexico, Kroll noted:  “Mexico has somewhere in the region of 635,000 engineers working mainly in the local market.  The technology services market grows 10% annually, while 60,000 engineers graduate from University.” This results in a shortage of appropriately trained personnel, resulting in increased competition between rival firms.

However, Kroll said that “We haven’t, as yet, encountered this problem as we are an extremely attractive company to work for and have constant growth.” In the last five years Capgemini in Mexico has grown from 90 employees to over 700. Still, it urges the educational authorities to collaborate more closely with the business sector, tailoring study plans to the needs of the market.

On a global level, the Capgemini Group reported revenue of US$2.5 million in the first trimester of 2014.  Company growth was boosted by outsourcing services (3.7%) and technology services (2.5%) which together represent 80% of the company’s revenue.  The Asia-Pacific and Latin America regions reported the largest growth, at 11.7%.

According to Kroll, the firm hopes to grow by 20 to 25% over the next few years.  “It is a goal that is within our grasp.  We have met it in the past and I see no reason why we shouldn’t meet it in the future”.  This growth could be aided by collaborating with its affiliated company in the United States to provide additional services to the financial sectors of the countries that are operating in Mexico.  “We will work with our colleagues to bring about a transformation of the services that are currently being used in collaborating with the United States, India and Mexico,” Kroll concluded.

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