Analysts have questioned Cap Gemini and Cisco Systems' move to form a new services company, claiming it may jeopardise the management consultancy's vendor independence into the future.
The unnamed joint venture company, which is to provide systems integration, consulting and internet related services, will be run as a subsidiary of Cap Gemini. The supplier will hold a 95.1 per cent stake in the firm compared with Cisco's 4.9 per cent.
Cisco's total investment in the new company will amount to $835m, but will be split into two parts. Only $164m will be invested directly in it, while $671m will buy the networking giant a stake of 2.6 million shares in Cap Gemini.
But Anthony Miller, an analyst at Richard Holway Limited, warned that the partnership should ring alarm bells for customers wanting independent advice.
"Impartiality can be coloured if a hardware vendor takes a stake in a systems integrator. Traditionally, companies go to them for independent advice. Customers should handle with care," he attested.
By teaming up with Cisco, however, Cap Gemini hopes to win business from corporates that want to branch into new areas such as data, voice and video integration for the internet economy.
Cap Gemini said the new company's main focus will be European, but it will also have a global scope extending throughout the US and Asia.
It hopes to accelerate the creation and deployment of offerings for telecom service providers and suppliers of services and internet access sites, which Holway's Miller believes is a good move for the company.
"Anything to do with telcos is the place to be. Until now, arch rivals Sema Group and Logica have been the established force in the telco sector," he said.
Paul Hermelin, a member of Cap Gemini's executive board, claimed the new company would provide a professional services capability "unmatched in the world in its ability to help telecoms operators and large enterprises move in full-force into the networked economy".
Cap Gemini has promised to staff the new company with 4,600 people, including specialists from its international division, which heads the Telecom & Media sector, and management consultants from its Gemini Consulting organisation.
"In practical terms the company will be staffed by Cap Gemini, but clearly it will have privileged access to Cisco's skills and support," Hermelin said.
This is not the first such deal for Cisco, however. Last summer, it invested over $1bn in KPMG's US business.
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