Verizon Business and Capgemini – Both aspire to top shelf Asia Pacific status. One won’t reach it.

Whilst on the surface, Verizon and Capgemini could be considered poles apart as services organisations, the commonality of their challenges in the Asia Pacific market is worth considering. Put simply, they both have been active in the market for many years and have failed as yet to really drive scale.

Clearly Verizon Business as a subsidiary of Verizon is focused on networking and trying to move on from perceptions as a legacy Telco to an integrated provider. At the same time, the European application based services legacy of Capgemini carries a fair burden for them. Whilst they both have a large base at home (US, and France/Western Europe respectively), they both struggle for scale (and as a result a consistently high level of skilled employees with deep benches) in the Asia Pacific region. Furthermore, both have met a range of domestic issues as they entered markets such as the struggle by Verizon Business in China, and the divestment of Capgemini New Zealand and scaling back in other emerging Asia Pacific markets (CGNZ was far from successful for HP, but that is another story).

This struggle for scale has reduced their ability to offer broad client experiences and engagements across the geographic spread of the region. Both would benefit significantly from in region acquisition. Unfortunately, both struggle to identify suitable regional players who give the scale and reach that makes the headache go away. Capgemini has looked closely at many firms in Australia, India and other markets without being able to commit to significant investment. It should still kick itself for not buying Frontline in ASEAN.

In the 10 years that I have covered Capgemini, progress in the region has simply been too slow. Capgemini has successfully accelerated global delivery in India, but diverse customer engagement, integrated and scaled Asia Pacific solutions are difficult. It is stuck between not having enough resources at the country level and not being able to provide regional resources with local market insight and understanding. Furthermore, the head office exerts significant control over operations in the far reaches of the region, and it has been hamstrung by the tenuous economic environment that has hit Europe in recent years. This is frustrating. Feedback from customers is that overall when Capgemini undertakes a client engagement they do it well. There are just not enough to build the momentum.

Verizon Business has similar scale issues. It has started to build momentum in Australia and Hong Kong, but is a mere speck in the Japanese market despite the strength of the relationship with Mitsui.  It has been trying now for several years to grow in the market. Like Capgemini, it is dominated by the home market, US in this case, and a services terminology and conversation that cannot hide the Telco roots of the organisation.

Where it differs from Capgemini is that it has a tangible differentiation across the market. The Verizon network is unparalleled. Whilst Capgemini is caught in tight competitive pricing with competition from Indian based firms (even more than Accenture and IBM), Verizon Business is able to point to its network capability as a genuine differentiation that frankly is impossible to replicate.

It is a critical part of Verizon Business. Whilst it needs to do more to grow scale, and acquisition at the corporate level beyond Terremark is essential, it has differentiation; Capgemini doesn’t. Capgemini also does not have the massive amount of capital available to Verizon. Unless it can find a customer compelling differentiation the top shelf of services providers will remain out of reach in the Asia Pacific region.

About capioIT - Phil Hassey

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world. +61422231793
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1 Response to Verizon Business and Capgemini – Both aspire to top shelf Asia Pacific status. One won’t reach it.

  1. Richard says:

    I’d also suggest that the Verizon purchase of Savvis also supports their AsiaPac goals.

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