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 three recently won 10-year multibillion euro contracts; The ongoing improvement of internal controls and risk management (particularly to avoid the repeat of abnormal contract overruns beyond 2004); and Fixing or selling loss-making units representing €350 million ($455 million) to €400 million in revenues and an EBIT loss of €40 million. The recent downgrade
