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Today, lag between new tech and offshoring is almost zero: Capgemini Tech CEO

Ashwin Yardi says Covid-19 validated and boosted the offshoring model, and India's IT services industry is expanding faster into tier II and tier III locations

Harichandan Arakali
Published: Apr 14, 2023 11:19:38 AM IST
Updated: Apr 14, 2023 11:32:13 AM IST

Ashwin Yardi, CEO, Capgemini Technology Services India
Image: Nishant Ratnakar for Forbes IndiaAshwin Yardi, CEO, Capgemini Technology Services India Image: Nishant Ratnakar for Forbes India

With India’s IT industry responding strongly to the Covid-19 pandemic, hardly missing a beat, even European customers are stepping up offshoring plans, while short-term macroeconomic circumstances will mandate cost savings as a priority, says Ashwin Yardi, CEO of Capgemini Technology Services India. On the other hand, there is now pressure to deliver experts from India, certified on the very latest technologies almost immediately, Yardi tells Forbes India in an interview. Edited excerpts.

Q. Beyond the hybrid office model, what other lasting changes do you see?
On the future-of-work front, except for the very manufacturing-intensive clients, our customers expect us to align with the hybrid model. Another change relevant for India is around talent: How we recruit, and where we hire talent from. Definitely, there will be more hiring from Tier II and III cities and towns.

Even in mature markets, you will see trends like clients having newer locations. For example, you see some talent moving out of the Bay area [in California, US]. And finally, there will also be a talent pool comprising people who work from home 100 percent of the time. With such workers, you will see new contractual models emerge; not just gig workers, but long-term relationships with people who aren’t employees.

Some of them can even be experienced specialists, for example, former nuclear physicists and engineers from, say, India’s Bhabha Atomic Research Centre or scientists from the Indian Institute of Science, and so on.

Such relationships could be around specific technology solutions or domains. In the bigger scheme of things, as Capgemini, we may not need to build scale and capacity in these areas; they could be niche technologies or domains.

It will also mean a lot more focus on security. Some of this was already implemented during Covid. But now that’s going to be long term. People will have much more well-defined security governance around work.

Another important change is, in the last five to six years, the intensity of various technologies has exploded—in digital, cloud transformation, artificial intelligence, data analytics and so on. These are some areas where experts are scarce. For example, if you want experts in SAP or ERP in general, there are hundreds of them in the industry. But do you have an expert in the latest module? Not so many. In the past, there was a lag of, say, two years between a new product and the time a customer decided to offshore it. Today, as soon as a product arrives, clients ask how many people we have in India who are certified on it. So that lag is almost zero, which creates its own scarcity and demand.

Q. You added about 35,000 people last year. Tell us about your recruitment in India, and in the context of the slowdown, is the process taking longer?
Generally, 40 to 50 percent of our hiring is from campuses every year. The campus onboarding happens over a period of almost nine months. This year, it’s probably delayed by a couple of months, but we are in touch with all the campus recruits to assure them we will onboard them.

We can appreciate [in the current circumstances] they have far more anxiety, this is their first job. We recognise it and are trying to keep them patient. But we are committed to onboarding all of them. We are rolling out dates, we aren’t stopping freshers joining us and we will not stop going to campuses even for future deployment.

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Q. Give us a sense of what your biggest customers are facing today.
Without being cliched about it, today, the amount of software in every business has increased manifold. In a recent survey of about 1,000 CXOs, we found that a large proportion still said they will use technology either for big investments in supply chain or cost-saving initiatives. So long-term, there are a lot more initiatives and focus to create new products, new solutions.

In the short term, there is focus on cost savings. There are also strategies emerging, such as China-plus-one. There is also some variation, depending on the industry. For example, aerospace, which was probably down two years ago is a booming business now. Similarly in hospitality, transportation and the auto industries. At times, we even see some very uniquely client-specific trends.

Q. With Capgemini’s home base, how are European companies changing their outsourcing and offshoring strategies?
Our business grew in double digits in Europe and the UK in 2022. We also have strong bookings for 2023. A lot of it also translates into bookings for 2023. In some ways, the entire Covid period reinforced the offshore model. The entire industry was able to demonstrate that we could very rapidly switch from most people being in offices to most of them working from home.

In India we were able to quickly pivot to a new hybrid mode. And for a lot of clients, it was in some ways a revelation that if I don’t see my French consultant or a German consultant sitting in front of me, unless there were very strong language limitations, it didn’t matter where they were.

If the talent was in India at scale, at a different price point, it actually made more sense for them. I think the model across industries for offshoring really got a lift-off as a consequence of Covid. Even in Europe, we are seeing many customers accelerate their offshoring journey.

Q. With the European base and the large Indian presence, would you say you offer a very global career opportunity to young recruits?

We offer a truly multi-cultural opportunity for our consultants, with our large European presence, but also strong local presence in the UK and the US. They definitely have opportunities to work in a European environment; we do offer that differentiator. I think at one point in time, outside of any schools, we might have been doing the maximum training in the French language for our consultants, and in several other languages.

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Q. What helps you retain people?

When I meet the freshers we hire, you know, I’ve spent more time in Capgemini than their age, which they can’t immediately relate to. One of the things unique to Capgemini is that with the many acquisitions we have done, we’ve been able to retain most of the best people.

I give my own example. I came from an acquisition [when Capgemini acquired a unit of EY, globally]. My CFO, who used to be in iGate, is now CFO of Capgemini India. And if you look at many other acquisitions we have done in the past, a lot of their leadership continues to be with us. So that’s one important factor, that we are able to successfully retain top talent after acquisitions.

Another trend I’ve seen is, once someone stays for about four years at Capgemini, they tend to stay longer. A new trend, with young people, and this is across the industry, is that they try out something like a tour of duty. It’s the way they look at their careers, and we’ve ensured that Capgemini remains attractive as a top destination on that tour of duty.

Q. Overall, what gives you optimism about India’s IT industry, and what worries you?

The scale of India’s STEM talent is something we should be proud of. This industry also is unique in having about 50 percent of its workforce, at least at the entry level, comprising women. Certainly, there is much more work to be done to help retain them as we move up the leadership chain.

Our vibrant startup ecosystem is another strong achievement; it’s the third largest in the world today. Today many more youngsters are attempting their own startups instead of joining the industry than in the past.

What worries me is, how do we continue to create engaging economic opportunities for our youth and it’s certainly not going to be limited only to IT. Our 500 million youth represent an opportunity, but it is one we need to intensely think about.  

(This story appears in the 21 April, 2023 issue of Forbes India. To visit our Archives, click here.)