Broad and diversified services, wide geographic reach, and solid client bases; and Prudent financial policies and solid liquidity. Poor operating performance over the past three years, coupled with significant challenges for management; Substantial capacity adjustment costs that have weakened debt measures since 2002; and Strategic shift toward more outsourcing, further delaying margin restoration. The ratings on France-based IT services group Cap Gemini S.A. reflect its below-peer-average profitability and ongoing restructuring challenges, which are partly offset by prudent financial profile and policies. Although management recently was strengthened, the company still has to deal with significant issues in the areas of: Its cost base (ongoing headcount reductions are about 1,500); Its strategic shift toward more outsourcing, which requires the profitable execution of
