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July 28, 2023updated 01 Aug 2023 10:19am

Atos losses mount as Capgemini plans €2bn AI expansion

The two French IT giants are enjoying contrasting fortunes, with one planning big investments and the other fighting to stay afloat.

By Matthew Gooding

French IT consultancies Capgemini and Atos experienced contrasting fortunes in the first half of 2023, interim financial results show. While Capgemini boosted income and operating profit, and revealed plans to invest €2bn in AI services, Atos saw losses grow as the company continues to restructure its business.

Capgemini has big plans for AI. (Photo by Michael Vi/Shutterstock)

Both companies published their financial results for the first half of the year today, and the duo are anticipating revenue growth throughout 2023, with Capgemini issuing guidance saying it expects revenue growth of 4–7% for the year, and Atos forecasting an uplift of up to 2%, having previously issued a guidance range of -1% to 1%.

Capgemini plans AI investment

Capgemini’s results for the six months to the end of June show it brought in €11.42bn, up 6.9% year-on-year, with an operating profit of €1.15, an increase of 8% on the first half of 2022.

The company is a major supplier to private and public sector organisations in the UK and around the world, and its UK and Ireland business unit outperformed the rest of the business, reporting 12% revenue growth. This was “mainly driven by public sector and manufacturing, consumer goods and retail and financial services sectors”, the company said. Contract wins in the UK have included a £13.5m deal with the Cabinet Office, announced in April, which will see Capgemini help migrate the government department from Google Workspace to Microsoft’s Office 365.

AI is also likely to play a big part in Capgemini’s future, the company said, and it is making a €2bn investment in the technology and doubling the size of its data science team.

“We continue to gain market share as we accompany our clients in their transition towards a digital and sustainable economy,” said Capgemini CEO Aiman Ezzat. “I am convinced that generative AI will play a major role in this transition.”

Ezzat said its AI investment, which will be made over the next three years, will help “build its leadership” in a “breakthrough technology, that must be deployed responsibly, reliably, and sustainably”.

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He explained: “We are developing a portfolio of industry-specific offers and signing strategic partnerships, notably with Google Cloud and Microsoft, while training most of our workforce through our Data & AI Campus to fully leverage the power of generative AI in our operations.

“We have many client projects under way, a strong pipeline, and plan to double data and AI teams to 60,000 in the next three years.”

Can Atos plot a course out of the doldrums?

Things are more gloomy at Atos, though the beleaguered ITSP says there is light at the end of the tunnel following years of struggle. The company, which is seen as strategically important by the French government and holds a host of major public sector contracts, reorganised its business last year, splitting into two separate units – the IT infrastructure-focused Tech Foundations and Evidan, which provides cybersecurity services.

Revenue was slightly down in the first half of the year, at €5.54bn, compared with 2022’s €5.56bn, while its operating loss grew from €294m last year to €434m this year, owing to costs related to the restructuring. The company’s share price plummeted by as much as 20% on Friday morning.

Atos leadership team Nourdine Bihmane, Diane Galbe and Philippe Oliva tried to strike an optimistic note, saying in a joint statement that the first half results “reflect our continued operational improvement and demonstrate the effectiveness of our strategy” and have led the company to upgrade its full-year performance expectations.

The statement added that the company has successfully completed the planned sale of non-core assets worth €700m, and now expects to divest a further €400m. This includes the sale of sustainability consultancy unit Ecoact to Schneider Electric, which is expected to go through by the end of the year.

Read more: UK government buys second quantum simulator from Atos

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