Capgemini announced it will buy Altran, a leader in engineering services, R&D, and design. It’s a timely acquisition, given the convergence of R&D, operational technology, and IT. Capgemini, with Altran, will deliver a coherent offering in enterprise technology across every part of its clients’ businesses. Enterprises want technology services beyond the standard IT portfolio. This deal positions Capgemini to seize that opportunity.
The deal expands Capgemini’s appeal to C-level executives with technology budgets who are not in the IT organization. These non-IT buyers are eager to leverage service providers to deliver digital initiatives. In short, outsourced Engineering and R&D is a good and growing business now. The combined company is a leader in that space, with capability and global scale.
The acquisition makes sense because of developments in the broader technology transformation market. For years, digital business has been a top priority for enterprise executives. Many digital projects originate in Marketing or IT, aiming to converge back-end systems to better serve customers. Most digital spend is decentralized: siloed experiments aimed at solving obvious pain points, but not in sync with a holistic enterprise technology strategy. Enterprises are now focused on implementing digital operating models beyond IT, so they can innovate at scale. They have recognized that “digital” is today’s “shadow IT” and are keen to prevent the likely disaster.
Implementing these operating models requires advanced talent from many disciplines, including design, engineering and R&D; but also organizational change, complex program management, and technology infrastructure. Enterprises cannot fill that talent pipeline, an opportunity for service providers to step in and provide broad expertise. Labor won’t be the model of the future, but Capgemini's new skills will deliver on the promise of digital.
Capgemini will also get to benefit from Altran’s M&A strategy. Last year, the firm acquired Aricent, which brought Frog Design with it. Coupled with Capgemini’s design capabilities, the combined company is better positioned as an end-to-end provider of R&D, managed services, and marketing. Capgemini is betting on being a one-stop-shop for enterprises’ digital needs, and this deal should expand the portion of the enterprise technology estate they serve.
About the authors
Alex conducts research and writes about emerging trends and markets for ISG Insights. He focuses specifically on integration, analytics, social business and super emerging technologies, including the Internet of Things, 3D printing, virtual and augmented reality and drones. Alex manages and analyzes survey data, conducts briefings and interviews, and publishes research documents as a part of the ISG Insights team.
Blair Hanley Frank is a technology analyst covering cloud computing, application development modernization, AI, and the modern workplace.