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December 24, 2007

Google’s Biggest App Distributor May Be Moving To India

Duncan Riley

51 comments »

capgemini.jpgIndian IT services giant Wipro is said to be in “hectic negotiations” with bankers over financing a deal to acquire uber-consulting firm CapGemini for $7 Billion.

CapGemini became the largest distributor of Google Apps with a deal signed in September. Under the deal CapGemini collects a £25 licence fee for each install, plus additional fees for service and maintenance, and Google gets exposure to over one million corporate desktops.

According to a report at El Reg, CapGemini shares closed up 11% on news of the potential acquisition, closing at €45.

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This entry was posted on Monday, December 24th, 2007 at 5:21 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. John Minnihan

    December 24th, 2007 at 5:31 pm

    Exactly what ’service and maintenance’ is to be done to a Google Apps installation? Is the corporate (paid subscription) version really that different from the personal version?

    What *exactly* gets installed and where?

  2. Duncan Riley

    December 24th, 2007 at 5:37 pm

    John
    installation fee was the language used when the deal was announced but perhaps it should have been a spotters fee I’d think :-)

    ChrisR
    true, although it does show how seriously they want to buy into this space at the enterprise level.

  3. Daya Baran

    December 24th, 2007 at 6:13 pm

    Thanks Duncan for the news. Capgemini has thousands of clients that is why Wipro is interested in the acquisition as per your story. Google revenue related revenue is a drop in the bucket compared their overall revenue from other sources. I am confused why the focus on Google?

  4. Duncan Riley

    December 24th, 2007 at 6:32 pm

    Daya
    we’re a site that covers Web 2.0/ online news. The angle (in terms of interest) on the Cap Gemini sale for us is in the Google relationship (indeed without it I would never have run it). For the record though I am aware though that it is a drop in the bucket, my wife worked for Capgemini briefly in the late 90s…it’s why I used the word “uber” in the description, this is one very, very big company :-)

  5. James

    December 24th, 2007 at 6:41 pm

    The best looking Indian woman I’ve seen so far worked at GapGemini. On that basis alone, I think Wipro is making a great acquisition.

  6. Jon

    December 24th, 2007 at 6:47 pm

    That is some money that sure adds up quickly… I wish money was that easy for all of us to acquire :-)

    Jon

  7. rc

    December 24th, 2007 at 8:05 pm

    good deal for wipro

    rc

    trading tennis blog

  8. Garth

    December 24th, 2007 at 9:15 pm

    CapGemini has a big Microsoft Alliance, which individual websites using adsense do not. Since the potential revenue is higher for an enterprise software vendor, it makes sense they would pay a higher commission.

    Just to get CapGemini to put out the press release probably took a sizable revenue guarantee. Everybody dealing with google knows the best way to benefit big is to get a guarantee like MySpace or AOL.

    Business is not about being fair, it is about maximizing profit for stakeholders.

    Chris R, if your site was providing actual enterprise leads, you could easily demand more and get more per user. I think they are being pretty generous giving you a dollar to sign up an individual user for a free product.

  9. heimer

    December 24th, 2007 at 10:16 pm

    very good thing

  10. Anand

    December 24th, 2007 at 11:33 pm

    I am not sure if you can actually call this ‘moving to India’. CapGemini anyway has a good presence in India. And I guess much of the Google apps work was done here..

    http://www.b4uindia.com/Busine.....deals.html

  11. other

    December 24th, 2007 at 11:55 pm

    Duncan,

    Please don’t force a non-web 2.0 story into a techcrunch article just so you can fill your holiday quota. Square pegs don’t fit in round holes.

  12. udkl

    December 25th, 2007 at 12:19 am

    ^^ @other

    Whatever

    @

    Awesome!
    Tata motors from India buying Jaguar , Tata steel buying European ‘Corus’ , Mittal buying another big company….and now this …. Indian companies seem insatiable….

  13. Zaid

    December 25th, 2007 at 12:47 am

    Billion dollar acquisitions by Indian *tech* companies is a *new* trend. I thought that is what TC was all about?

    Why stretch unnecessarily to related everything to google?

  14. Josh

    December 25th, 2007 at 12:48 am

    Our main processing facilities are in India. If you look at the cost structure, enterprises in the West just can’t compete. You simply can’t justify spending more for exactly the same thing, which is why more and more IT work will continue moving to India and similar countries.

  15. 이정일

    December 25th, 2007 at 12:51 am

    구글랭크가 9인 캡제미니가 어떤 회사인지 궁금하군요.
    IT 컨설팅회사인가요?

    놀랍습니다.

  16. Duncan Riley

    December 25th, 2007 at 1:03 am

    Zaid
    we don’t generally cover consulting firms/ enterprise stuff unless there’s a strong *web* element. Also not everyone will know, or care who CapGemini is, if it wasn’t for my wife working for a company that was acquired by them a long time ago I wouldn’t have either, it’s just not on our general radar in term of coverage area etc, hence the Google tie in.

  17. sinha

    December 25th, 2007 at 2:35 am

    The cheesy headline/title just shows how knowledgeable is TC about the non-web2.0 world.

    Maybe it’s time to rename TC to web2.0crunch?

  18. Duncan Riley

    December 25th, 2007 at 2:39 am

    sinha
    I’m more than aware that CG is a lot more than a Google distributor (read the comments), however we are a web 2.0 site, the main relevant point is the Google relationship, without it I would never had run it, and given all you whiny types who cant read my comments first before commenting keep trashing the comments I wish I hadnt. Merry Christmas.

  19. TH

    December 25th, 2007 at 2:44 am

    I thought the article was interesting, informative, and relevant. The sort of thing I come to TC to learn about.

  20. Parul Bindra

    December 25th, 2007 at 2:46 am

    Though the brand dsnt hold a very strong Brand presence in India. But it looks like Capegemini with its strong European presence and impressive delivery capability stands a good chance to alter the entire operational outsourcing model for good. With multinationals pouring in India they will have to play at a very good level to survive.

    Parul
    http://www.bhopu.com

  21. sinha

    December 25th, 2007 at 2:53 am

    Hey Duncan
    Relax :D Point that I was trying to make was that google apps is not really relevant in the entire discussion..but maybe, it’s important to cover this topic for the “complete” web2.0 coverage!
    Merry Christmas to you (wondering what are you doing in the late hours)

  22. Chameleon Headsets

    December 25th, 2007 at 3:17 am

    “Just to get CapGemini to put out the press release probably took a sizable revenue guarantee.” — That’s for sure, and they darn well knew their stock would jump per the announcement, too!

    Bill Burke
    http://www.phoneportals.com
    Your Audio, Live Streams, and more…
    To every phone: On-Demand or Shouted-Out

  23. Anand

    December 25th, 2007 at 3:21 am

    “and given all you whiny types who cant read my comments first before commenting keep trashing the comments I wish I hadnt.”

    The same whiny types who commiserated with you guys when you were whining about the Edgeio loss..

  24. Bhaanu

    December 25th, 2007 at 3:25 am

    Merry Christmas.

  25. Small Business Marketing

    December 25th, 2007 at 3:26 am

    With CapGemini’s entre into “enterprise world” this will be a win-win for WIPRO, GooGLE and for the Indian Technology Industry. It’s just a matter of time before they try to buy GooGLE. Another uber step in the dismantling of American Technological Infrastructure

  26. harsha

    December 25th, 2007 at 3:44 am

    Relax Point that I was trying to make was that google apps is not really relevant in the entire discussion..but maybe, it’s important to cover this topic for the “complete” web2.0 coverage!
    Merry Christmas to you (wondering what are you doing in the late hours)

    http://techindemand.blogspot.com/

  27. Chris R.

    December 25th, 2007 at 5:39 am

    I heard somewhere that Mike Arrington has a double chin, is that true?

  28. अभि

    December 25th, 2007 at 7:21 am

    लगे रहो अज़िम भाइ. केप जेमिनि को मत छोडो!

  29. Saim Baig

    December 25th, 2007 at 9:04 am

    Wow another big acquisitions by Indians.
    Nice….

  30. Jay

    December 25th, 2007 at 10:04 am

    Commendable aspiration. Sadly, watch the exodus in 6 months once CG partners can cash out. And their rock star employees and clients will follow. AOL Time Warner will look like a success compared to this. Its a shame but that’s how the culture clash will shakeout

  31. Bhangu

    December 25th, 2007 at 2:25 pm

    Google and India are two big things in IT today.. that’s why there is no mention of CapGemini in the title…

    So if Wipro acquires CapGemini will their work force move to india?

    I highly doubt it..

    it’s just a power shift.. nothing much..

  32. Ujwal

    December 25th, 2007 at 2:32 pm

    In the age of globalization, business moves everywhere as long as there is an opportunity. This is a sign of good corporate policies led by US and followed by emerging leaders like India and China.

    Looking forward to this.

    Ujwal
    exoticbuddha.com
    Nepal.

  33. Pranav Chavda

    December 25th, 2007 at 3:00 pm

    IMO, it’s the thing that most corporates don’t understand -yet - that having a workforce in India is actually more expensive than in the US - I know this because I run a company here in India.

    The typical computer science graduate here is a lot less talented, knowledgeable and contributive to production than a typical american CS graduate. A lot of factors go into this, It’s much easier to get a university degree here. Many IT workers have had their primary education done in various Indian languages - not English, there is a shortage of local IT workforce in urban areas, most people migrating from smaller towns and villages to work in big-city IT companies aren’t adept at all at understanding and working for a market that is thousands of miles and many cultures away .

    Riya, the Indian company behind like.com is I guess the only web (2.0) company that made a very intelligent cost saving decision a few months ago to move their entire tech staff to the US.

    Apple shut down their call-center in India less than a year ago too, they apparently thought they’d rather pay more somewhere else for better performing staff than to waste thousands of hours to train their Bangalore customer support staff.

    Don’t get me wrong, There is a lot of scope in Indian IT, India is a wealthy country (of the one billion people, the middle class is but a small percentage, but it’s more the the US population), there is a huge and quickly growing local market for tech and web companies. Put into a marketplace america perspective, however, having your entire workforce in India is a terribly bad deal in the long term.

  34. Joshua Walters

    December 25th, 2007 at 3:46 pm

    I hate all this going to India crap.

    I hate calling any sort of customer service line because of it to.

    Oh, and BTW, its been dugg. Get it up there!

  35. Ballmer

    December 25th, 2007 at 7:52 pm

    … who isn’t?

    fakesteveballmer.blogspot.com

  36. uploadchoice

    December 25th, 2007 at 9:50 pm

    Yup, I agree with Daya, wipro eyes is on CapGemini’s client base.

  37. Ghaus

    December 26th, 2007 at 1:41 am

    Hey guys i think this cant be true….how can Wipro purchase this company for $7billion when according to wikipeia the revenues of Wipro is only $2.6 billion.

    From where is Wipro taking another $4.4 billion from ???

    Does anyone know….??

  38. Binaryday

    December 26th, 2007 at 5:38 am

    @Duncan

    A good post. I have been reading TC for more than a year now and I think many of us TC readers do not mind the non web 2.0 news. Actually that will give a much needed diversity to the content of TC. Otherwise TC runs the danger of contents becoming a re run of earlier stories with the name of the companies being changed.

    @Pranav
    You seem to have missed the IITs, NITs and many other good institutes altogether. In India you can always hire the exact quality of engineer you want.

    @Others. Even I do not think that India will replace the US workforce. This is not a zaro sum game. Actually India will help US move ahead on the learning curve instead of continuing to do the same things repeatedly. If you look at the history of US, everytime US has faced a threat of this nature, it has come out stronger. Any1 remembers the threat of Japan in automobiles?? The gains in computing more than compensated the loss of jobs in automobiles.

  39. joseph

    December 26th, 2007 at 6:12 am

    “Our main processing facilities are in India. If you look at the cost structure, enterprises in the West just can’t compete. You simply can’t justify spending more for exactly the same thing, which is why more and more IT work will continue moving to India and similar countries.”

    – Umm yes the west can compete …. the fact is companies like Wipro and TCS are crap. I have worked with their developers on a multitude of projects and the fact is their code often doesnt work, and if it does work good look trying to ever upgrade it.

    I have seen first year college students with better development skills.

  40. Ben

    December 26th, 2007 at 9:12 am

    Do yourselves a favor and look at what happened to CapGemini after they acquired E&Y consulting about 6 years ago. The “new” company shed a ton of value early and often. Expect more of the same.

    I am trying to imagine a list of companies that have engaged CapGemini and either:

    A) don’t already have a services contract with Wipro and will look to consolidate the contracts, or

    B) had a services contract with Wipro and threw them out of the building

    I can’t see how this list adds up to $7B. Wipro is doing CapGemini a favor and they’ll regret it later.

  41. Kevin

    December 26th, 2007 at 11:46 am

    “I can’t see how this list adds up to $7B. Wipro is doing CapGemini a favor and they’ll regret it later.”

    Exactly!

    And using Google in the headline of this story and using the term “uber” is a joke (sorry). Too bad this guys wife wasn’t with this “uber” company when it was selling off parts (hundreds of millions of dollars worth) of the recently acquired E&Y consulting business. And the tens of thousands that lost jobs because of a very incompetent CG management team!

    Again, Wipro is doing CG a huge favor. Too bad they’ll get burned in the end…

  42. Pranav

    December 26th, 2007 at 12:57 pm

    @BinaryDay:

    I didn’t leave the IITs etc out, if you are going to hire engineers off these premium institutes, you are also going to pay them as much as you would an MIT or stanford graduate, there is no cost-benefit in that case whatsoever. The only point I was making is that there are no cost-savings in having a workforce in India for US companies. With that being the case, it just makes more sense having a local workforce that understands their own market.

  43. Sean Graham

    December 27th, 2007 at 10:30 am

    As per your comment # 4, # 16 and # 18 - you keep saying that you are site that covers Web 2.0. How come you TC is not covering Web 2.0 Conference & Expo on Jan 29, 2008. As a reader this is more important to me than some of the crap I read.

    I went there last year and it was a blast http://www.webguild.org/meetings/web20/2008/

  44. Ultimate Diligence Blog (=^ v ^=)

    December 28th, 2007 at 3:17 am

    Thanks for sharing! ^o^

    hi, if you have time, go to my blog take a look, thx!!!!! ^o^

    The blog have many informations, hope to able to help you!!!^^

    Ultimate Diligence Blog (=^ v ^=)

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  45. Nippotam

    December 29th, 2007 at 1:32 am

    Thank a lot for this news and your interest for Capgemini

    Wypro or any Indian take over to Capgemini is impossible because the shareholders value of the buyer will decrease after the deal. India SSII have an average growth at 20% whereas Accenture and Capgemini are below 10% and bigger. The global firm after the take over will have a far lesser growth, which will not benefit to Indian firm’s shareholders.

    Happy new year

  46. Sheba

    January 9th, 2008 at 6:58 pm

    Its true…majority of Indian engineers are under trained grads coming out of dubious colleges based in farming villages, run by local politicians, taught by professors who couldn’t make it in the IT rat race (read less bright) and driven by a blind urge to join an IT firm at any cost. It is immaterial whether they have an aptitude for IT or dancing….they just got to be in IT. That’s the only place these duds will get big (by Indian standards) salaries and a comparatively cool life.

    I have worked closely with Indian engineers and their code quality is pathetic. No offense meant, but that is the sad truth.

  47. Sheba

    January 9th, 2008 at 7:27 pm

    On the other hand, I have also worked with a few brilliant Indian engineers but let me remind…they are FEW :)

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