Altran Benefits from its Diversified Client Mix in Q2 2020

/ September 4, 2020/ Altran, Aricent, Capgemini, Financials, France

We got a glimpse of the performance of Altran when Capgemini announced its H1 2020 results yesterday. In Q2, the revenues of Altran were down by 11.9% yoy at cc/cs. The performance was much better than Akka (-31.4%) and also Alten (-18.4%), and in line with Assystem (-13.4%). Unsurprisingly, Atran suffered in its automotive and aerospace accounts but did decently well in telecom. Thanks to Aricent, Atran now has a diversified sector and geo mix and has a significant presence in India.

Looking back, Dominique Cerutti did the right thing with its USD 2bn acquisition of Aricent. Investors considered the purchase pricey, although the USD 2bn acquisition by DXC of Luxoft showed it was a reasonable price. Atran’s stock went down and never recovered until Capgemini acquired the firm.

Aiman Ezzat, the new CEO of Capgemini, seems in line with Mr. Cerutti’s strategy. He is looking at a continued push in the service portfolio and wants to drive usage of offshore for Altran’s European clients. In the short-term, Capgemini and Altran are focusing on cross-selling and later on combined offerings. Capgemini and Altran are targeting 250 clients and have identified 38 significant common accounts, for which they have developed account plans.

Finally, Capgemini believes that the pandemic will change its delivery model. The company has operated for the past twenty years, an in-country and offshore delivery model. It is now expecting clients to open up to remote work, where a Toulouse-based engineer can now work for a Swedish client remotely. Capgemini is hoping remote delivery will help it raise its utilization rate, especially in Europe, where country preferences still are significant.

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