Capgemini

Capgemini, a French-headquartered global IT services and consulting company with approximately €16 billion in revenue (2019), completed the €3.6 billion acquisition of Altran Technologies in April 2020. Altran was a leading engineering and R&D services company with approximately €3.2 billion in revenue and 50,000 engineers, primarily serving automotive, aerospace, and industrial clients. While the acquisition created Capgemini Engineering — the world's largest engineering services practice — the combined R&D operation initially suffered from significant cost inefficiencies: two separate delivery organizations, duplicated project management overhead, incompatible tooling and methodologies, separate offshore delivery centers in India performing similar engineering work, and no shared R&D investment across the combined 52,000-engineer workforce. Altran's pre-acquisition operating margins were approximately 10-11%, well below Capgemini's group average of 12-13%.

Between 2020 and 2023, Capgemini executed a systematic R&D efficiency improvement program through the Altran integration:

• Delivery organization merger: Combined Capgemini's existing engineering and R&D teams with Altran's 50,000 engineers under a single Capgemini Engineering brand (launched April 2021). Eliminated duplicated management layers, project management offices, and quality assurance functions across the combined organization.
• Offshore delivery consolidation: Rationalized overlapping offshore engineering centers in India — where both Capgemini and Altran maintained separate facilities performing similar R&D work (embedded software, test automation, CAD/CAE). Consolidated onto fewer, larger centers with shared infrastructure and management.
• Purchasing and facilities synergies: Achieved annual run-rate cost synergies of €70-100 million through purchasing consolidation (shared software licenses, hardware procurement), real estate rationalization (office consolidation), and shared back-office services between the legacy organizations.
• Engineering platform standardization: Standardized engineering toolchains (CAD, PLM, simulation, test management) across the combined organization, reducing license costs and enabling engineers to move between projects without retraining on different tool environments.
• Revenue synergy capture: Identified and captured revenue synergies of €200-350 million by cross-selling Capgemini's digital transformation services to Altran's engineering clients, and engineering services to Capgemini's IT clients. This improved R&D output per dollar by increasing revenue without proportional cost increases.
• Utilization improvement: Shared resource pool across the combined 52,000-engineer organization improved utilization rates by enabling flexible staffing across a broader set of client engagements.

• Cost synergies: Achieved annual run-rate cost synergies of €70-100 million from purchasing, facilities, and operational consolidation, meeting the original integration target.
• Revenue synergies: Captured €200-350 million in revenue synergies through cross-selling, improving R&D revenue per engineer without proportional cost increases.
• EPS accretion: The combined entity delivered approximately 15% EPS accretion in the first year post-acquisition, with post-synergies normalized EPS accretion exceeding 25% by 2023 — ahead of the original target.
• Margin convergence: Capgemini Engineering's operating margins improved toward Capgemini's group average as integration synergies and scale efficiencies took effect, up from Altran's pre-acquisition 10-11%.
• Scale achievement: Capgemini Engineering became the world's largest engineering services organization with 52,000 engineers, providing R&D scale that improved competitive positioning and delivery efficiency.
• Timeframe: Integration executed over 2020-2023, with cost synergies largely captured by end of 2022 and revenue synergies building through 2023.

• Complementary geographic footprints (Capgemini strong in IT services geographies; Altran strong in engineering centers) reduced integration complexity and redundancy
• European automotive and industrial sectors' accelerating R&D investment in electrification and autonomous driving provided a growing market that absorbed the combined engineering capacity
• Capgemini's proven acquisition integration playbook (applied previously with IGATE and others) reduced execution risk
• Shared offshore delivery centers in India provided an immediate consolidation opportunity with clear cost savings