Barrilla Spa

Organizational Change

Earnst and Young

PSY 428 Organizational Psychology

Introduction

In June of 2001, the SEC filed suit against Arthur Anderson (SEC, 2001) and the revelations caused major changes in the accounting world. One significant change was that all of the big five accounting firms narrowed the focus of their business. This change was informed by the fact that Arthur Anderson LLC had used it's IT consulting business to facilitate wrong doings in the accounting practices of companies like Enron and the World Cup.

This paper explores the transformation of the IT consulting business sold off by Earnst and Young.

The Transformation

CapGemini was founded in 1967 and developed its consultancy practice exclusively in Europe until the 1990s. In the 1990's it began a phase of growth in the Netherlands and the US. But the acquisition of Earnst and Young's consultancy practice in 2001 doubled the size of the company and tripled the size of its practice in North America (CapGemini, 2006.) The company doubled in size again by 2004 by acquiring consulting companies in India.

CapGemini had not only experienced explosive growth by acquisition, but also began a new consulting practice. The industry calls this "On Site/ Off Shore", "Offshoring" but CapGemini calls it "Rightshoring". Essentially they began a method of consulting that leverages less expensive but qualified labor homed in parts of the world that may be distant from the customer.

CapGemini has managed to transform itself from a small European IT consulting firm into an international heavyweight. They made some mistakes along the way, but managed to adapt and transform itself into one of the worlds largest and most prestigious consulting companies. What did it take to make this happen?

Facilitating Change

In the post dot com era, CapGemi grew at unprecedented rates, but in 2004 they stumbled. They missed earnings for two quarters in a row. They had been able to sell off unprofitable parts of acquired businesses to make numbers work, but it was time for a real transformation. At this time of need, they turned to their own consulting practice.

One significant thing CapGemini had to do was invest leadership authority in members of its regional leaders. Significantly, CapGemini had purchased talent pools in India and China, but they failed to capitalize on these investments. The leadership team from the 1990s were smart enough to make the investment, but had failed to use the new strategy. According to Nicolas Dufourcq the CFO of CapGemini, the company invested in training for every manager to describe how to sell services from the "Rightshore"