Capgemini, the French IT services company that has recently emerged from a major five-year slump, received an another important boost this week, when it was revealed the UK Financial Services Authority (FSA) has awarded the French company a £6.5 million contract to design and build the watchdog’s new Mandatory Electronic Reporting platform (MER).

The French consulting and outsourcing company will serve as the FSA’s application development partner, under a long-term application delivery agreement originally signed by both parties in July 2006. The MER platform is the first major project contracted to Capgemini under the agreement.

According to the FSA, the new MER platform, scheduled for implementation from July 2008, will streamline the reporting process, while improving the consistency, accuracy and availability of information within the FSA. The custom designed platform replaces a range of IT systems that the FSA inherited from a slew of former regulatory bodies, says the FSA.

According to Capgemini, it will deploy its so-called ‘Rightshore’ delivery model under its contract with the FSA, which will largely be serviced from the French company’s offshore locations in India, with 80% of its 60-strong project team based in the Application Development Centre in Mumbai. According to Capgemini its trademarked Rightshore model optimises cost-efficiencies by delivering IT services from a number of locations.

The French IT services company will employ an SOA approach in designing the MER platform and integrating it within the FSA’s new overall IT architecture.

The FSA deal represents something of a coup for Capgemini and will serve as a welcome endorsement of its strategy to push into the financial services sector, now regarded by the French company as a key vertical market.

While the £6.5 million contract is not as meaty as those traditionally seen in the lucrative financial services outsourcing space, winning over the FSA – whose position as market watchdog makes it particularly stringent in its choice of suppliers and partners – will do a great deal to prove Capgemini’s financial services competency to the marketplace.

This will be all the more important for Capgemini given the French company recently made a hefty investment in the space when, in Februrary 2007, it forked-out $1.25 billion in cash for Kanbay International, a US-based financial services specialist with a strong presence in India. The Kanbay acquisition brings Capgemini some impressive financial service expertise, as well as some heavyweight clients such as HSBC Credit Card Services.

Of more importance for Capgemini, however, for whom the offshore outsourcing model has become a key strategy over the past three years, Kanbay will allow Capgemini to diversify the locations from which it delivers IT services to clients, and will allow the French company to scale its ‘Rightshore’ model.

Cornering such key verticals will become an increasingly important strategy for the major outsourcing players, as competition in the global outsourcing market heats up, and the cost-base of traditional offshore locations, in particular India, grows.

Last week it was reported that Indian outsourcing giant Infosys has been eyeing Capgemini as a potential acquistion target.  

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