Latest news with #Bendor-Samuel
The Hindu
07-07-2025
- Business
- The Hindu
Capgemini makes Big 4 sit up with its plan to buy WNS for $3.1 bn, say global tech analysts
Capgemini, the Paris-based technology and digital transformation major, made the Big 4 – Deloitte, PwC, EY, and KPMG – sit up globally on Monday with its announcement of buying the India-grown business process management firm WNS for a total cash consideration of $3.3 billion, said global analysts. 'This acquisition will give Capgemini a new positioning in the global tech market against the Big 4 comprising Deloitte, PwC, EY, and KPMG, which have traditionally dominated the consulting and technology services,' Phil Fersht, CEO, HFS Research, a Cambridge-based analyst firm told The Hindu. Mr. Fersht said, from a competitive perspective, a potential big win for Capgemini was its new positioning against the Big 4, which have traditionally dominated consulting and technology services. 'With Capgemini's global scale and depth of technical capabilities, the addition of WNS could create an ideal incubation business to develop leading-edge Services-as-Software solutions to attack this huge $1.5 trillion emerging marketing opportunity,' Mr. Fersht said. 'The long-rumoured acquisition of WNS is finally here. Capgemini is returning to its acquisition lead growth model and acting as a major force in industry consolidation.,' said Peter Bendor-Samuel, founder and executive chairman of Dallas-based Everest Group. According to the Everest Group's chief, Capgemini is betting that the WNS book of business will provide a fertile ground for AI-driven transformation and allow it to develop new transformative AI-powered platforms. 'The potential is clearly there, but the journey will require significant additional investment and a resolute leadership team,' Mr Bendor-Samuel cautioned. The deal may trigger a new consolidation in the tech industry, he said. Mr. Bendor-Samuel said BPO (BPM) as a space has held up well in a world rocked by AI which has yet to have a significant impact on the space. 'However, this deal could be the start of a significant industry consolidation,' he opined. 'This may well kick off another round of industry consolidation as the large strategics look to grow inorganically and prepare for the massive changes that AI is starting to bring,' he forecast. According to tech industry observers, Capgemini, with WNS's operational expertise integrated into its offerings, could deliver end-to-end transformation services that the Big 4 cannot – and at lower price points. In some cases like procurement services, Capgemini acquires a well-established strategic sourcing capability built on WNS's 2017 Denali acquisition, strengthening Capgemini's F&A and procurement capabilities. Also, WNS's North American and U.K.-centric client base allows Capgemini to expand its geographic footprint. To a firm like Capgemini, Mr. Fersht further said, WNS's client base was a gold mine of sales opportunities where its client operations executives could easily explore to replace BPO services with Services-as-Software. 'Further, WNS's deep domain expertise, the cornerstone of its client growth rate, provides Capgemini, which has historically lagged behind other companies in terms of domain-specific operational BPO delivery,' he added. Earlier in the day, Capgemini and WNS had entered into a definitive transaction agreement under which Capgemini would acquire WNS for a total cash consideration of $3.3 billion. The French tech major said it would US-listed WNS for a cash consideration of $76.50 per WNS share, which represents a premium of 28% to the last 90-day average share price, of 27% to the last 30-day average share price and a premium of 17% to the last closing share price on July 3, 2025. The transaction would be accretive to Capgemini's normalised EPS by 4% before synergies in 2026 and 7% post synergies in 2027, it said. 'Capgemini's acquisition of WNS will provide the Group with the scale and vertical sector expertise to capture that rapidly emerging strategic opportunity created by the paradigm shift from traditional BPS to Agentic AI-powered Intelligent Operations,' said Aiman Ezzat, Chief Executive Officer of Capgemini. Keshav R. Murugesh, Chief Executive Officer of WNS said, 'Organisations that have already digitised are now seeking to reimagine their operating models by embedding AI at the core—shifting from automation to autonomy.' The transaction has been unanimously approved by the board of directors of both companies and is expected to close by the end of the year.
Mint
03-07-2025
- Business
- Mint
IT's pay puzzle: Wipro, TechM median salaries drop despite rise in headcount
Median remuneration to employees at Wipro Ltd and Tech Mahindra Ltd fell simultaneously for the first time in eight years in FY25, despite both companies expanding their workforces. Analysts said that this indicates that the two IT service providers likely added more freshers as well as hired replacements at lower salaries to boost profitability. In FY25, Wipro and Tech Mahindra reported a decline of 0.6% and 6.52% in annual median salary, respectively, according to their annual reports. At Wipro, median salary totalled ₹9.78 lakh (around $11,000), whereas median salary at Tech Mahindra worked out to ₹18.3 lakh for males and ₹15.4 lakh for females. Median salary is the mid-point of a set of salaries arranged in ascending order, where half the salaries are higher and half lower. In contrast, the country's two largest IT outsourcers—Tata Consultancy Services Ltd and Infosys Ltd—increased their median salary to employees by 6.3% and 9.6%, respectively. Median salary at the country's third-largest software services provider HCL Technologies Ltd is not yet known as the company has yet to release its annual report for FY25. Wipro and Tech Mahindra—India's fourth and fifth-largest IT firms—last reported such a simultaneous decline in median salary in FY17. Individually, Pune-headquartered Tech Mahindra has seen its median remuneration decline six times in the past 10 years, whereas it is the third such instance for the Bengaluru-based Wipro. Median remuneration to employees at Wipro does not include whole-time directors. TCS and Infosys reported such a decline only once in the past decade, in FY21 and FY15, respectively. HCLTech is the only company among the country's top five software services firms to have never seen its median salary decline. Emails sent to Wipro and Tech Mahindra remained unanswered till press time. The fall in the median remuneration comes at a time when profitability of the country's largest IT outsourcers has been under pressure. These companies are exploring various ways to improve operating margins and one such way is to hire junior employees at lower costs. Lower median remuneration at Wipro and Tech Mahindra could imply that the companies added more freshers and/or hired candidates at lower salaries to replace talent at mid-management and senior levels, which led to a decline in median salaries, analysts said. 'Firms such as Wipro and TechM are following the lead of TCS by moving work to tier-4 locations and increasingly hiring from universities which are less prestigious. This is significantly lowering the cost of these employees and bringing down the average wages paid," said Peter Bendor-Samuel, founder of Everest Group, a Dallas-based tech research firm. He added that this was done to boost operating margins. 'The relentless focus on reducing cost is having its desired effect of allowing these firms to post higher margins," said Bendor-Samuel. TCS, Infosys and HCLTech reported operating margins of 24.3%, 21.1% and 18.3%, respectively, in FY25, respectively. TCS's margin declined by 30 basis points, while Infosys and HCLTech's margins grew by 40 basis points and 10 basis points, respectively. Wipro and Tech Mahindra improved their profitability the most last year. Wipro increased its operating margins by 100 basis points to 17.1%, whereas Tech Mahindra's profitability jumped 360 basis points to 9.7%. Hiring more employees can increase the median, or the mid-level salary. If a company adds headcount, the median salary is expected to increase because there are more employees in the company. Still, if the median salary goes down, it means that the number of employees earning salaries below the median amount has increased and that middle and senior-level employees have decreased. Both Wipro and Tech Mahindra added headcount last year by 732 and 3,276 employees, respectively. Wipro ended with 233,346 employees whereas Tech Mahindra ended with 148,731 employees. TCS added 6,433 employees to end with 607,979 people, whereas Infosys added headcount by 6,338 to 323,578 people. In contrast, HCLTech reduced staff by 4,061 to end with 223,420 people, becoming the only IT outsourcer of the top five to cut headcount last fiscal. A second analyst said churn at the top may also have contributed to the decline in median salaries at both Wipro and Tech Mahindra. 'The reduction in median remuneration to employees is a reflection of the fact that the companies may have hired more freshers and/or let go of lateral and senior staff," said a Mumbai-based analyst on the condition of anonymity. Both Wipro and Tech Mahindra have seen churn at the top. Mint reported on 26 June that Tech Mahindra saw at least 20 senior management movements at leadership levels, including service lines and geography heads, since March 2024. Even at Wipro, despite chief executive officer Srinivas Pallia's emphasis for promoting internal candidates to top roles, the company has seen significant leadership churn. Over the past two years, at least 30 senior executives at the level of senior vice-president and above have exited, driven either by better opportunities, or limited growth prospects under Pallia's predecessor Thierry Delaporte, who stepped down last year after four years at the helm. However, a third expert attributed the falling median salary to experienced employees accepting roles at lower salaries in a challenging job market. 'Because growth has been flat for these companies, they are refocusing on investing in their experienced staff while also lowering the overall wage bill. During this challenging market, there are also many experienced workers available, and it's easier to hire experienced talent at lower wage levels," said Phil Fersht, chief executive of HFS Research. He added that this trend is not a one-off and that IT outsourcers are looking at hiring employees at lower costs. 'There is a lot of flux in global services at the moment, with many providers laying off staff, which is making the talent pool of experienced people larger and bringing down wage demands," said Fersht. Wipro and Tech Mahindra were the only two companies in the top five Indian IT firms to see a second successive full-year revenue decline in FY25. Wipro and Tech Mahindra reported revenue declines of 2.72% and 0.21% to $10.5 billion and $6.3 billion, respectively, in FY25.
The Hindu
17-05-2025
- Business
- The Hindu
Trump's backing away from tariffs diminishes chances of recession, boosts tech services, says Everest Group founder
The Trump administration's 'backing away from tariffs quickly'' would diminish the chances of a recession in the U.S and this in turn would give a boost to the global tech services market comprising key systems integrators such as TCS, Infosys, Wipro, HCLTech, said Peter Bendor-Samuel, founder and executive chairman, Everest Group. ''There has been a lot of uncertainty in the United States and this has slowed demand for technology. But, it now appears that the Trump administration is backing away from tariffs quickly and the chances of a recession that materially affects the tech services market has diminished,'' Everest Group Founder told The Hindu. He said the U.S. has been showing a fair amount of resilience now, plus there was a significant amount of pent-up demand waiting to be unleashed which has been postponed by the tariff uncertainty. 'However, I see this demand is likely to emerge in the next quarter onwards,' indicating a healthy second half of FY26 for Indian tech providers. Mr. Bendor-Samuel further said all tech services firms were having a tough time with AI deals with the exception of smaller, specialised firms which appear to be gaining traction. According to him, the challenges for the Indian firms are twofold. The first is that most of their clients have not adopted AI in a significant way and are still working on pilots. The second is that when AI is applied to the coding function it creates significant cannibalisation (internal competition between new and old products and services of a company which could adversely impact sales/revenues) and business model issues which are difficult with firms that are currently dependent on offshore or Indian-based production. On the most pressing issues encountered by the IT industry currently, the global analyst commented, ''The uncertainty created by the Trump tariffs and the corresponding delay in spending on discretionary spending is by far the most pressing issue in all tech services markets at this time.'' Lurking behind this were the changes that AI would bring and the likely challenge to the industry operating model, although the latter would not emerge until the tariff questions are answered, observed Mr. Bendor-Samuel. He also said, ''If at all a recession does occur, it is likely that it will send the tech services market into a corresponding swoon and it is likely to contract by 2-3%.''
