Thank you. Good morning, everyone. I'm delighted to welcome you for this Q3 results of Capgemini. Of course, I am joined this morning by Carole Ferrand, our CFO. I would like exceptionally to start this presentation differently. Not starting with numbers, but with our purpose, which we adopted three weeks ago. Unleashing human energy through technology for an inclusive and sustainable future. What does this purpose mean for us? First, for the Capgemini group, we believe in technological innovation. It's a lever of progress for our clients, and our role is to make technology useful, accessible, and ethical. Second, technology should benefit humanity at large. Capgemini intends to be a benchmark in terms of its contribution to society, in terms of sustainability, diversity, and inclusion in particular. Third, the group's men and women are at the heart of our ambition.
With more than 600,000 employees or former employees over the past decade, and probably 1 million in the upcoming decade, the group intends to be recognized as a school of excellence, whose talents and skills now resonate well beyond the company. This purpose is now one of the fundamentals of our group. It was developed together with all our Capgemini team members, but also with client, other stakeholders, and NGOs. This purpose will act as a compass for each and every employee. You will also have noticed that we'll be unveiling in the coming days our new brand platform. It had been a long time since we last appeared in advertising. This "Get the Future You Want" platform is bold for both our customers and our employees and truly reflects the spirit of the present day.
I am very proud of Capgemini values, and I'm convinced that our high standards in terms of behavior is key to success in the coming years. Now moving to the Q3 results. This Q3 strong performance improvement particularly highlights our increased resilience and agility. On Q3, we saw a solid improvement versus the Q2 growth rates, both at constant exchange rate and on an organic basis. The group grew by 18.4% year-on-year in Q3 at constant currency, supported of course by the Altran acquisition starting in April. Our quarterly revenue exceeded for the first time EUR 4 billion. Our organic growth saw a limited decline of 3.6% in Q3, significantly better than - 7.7% recorded in Q2.
The level of order intake remains solid with a book-to-bill of 97%, essentially stable year-on-year, but 8 points above the average of the last five years for a third quarter, which you know is usually seasonally weak. Digital and cloud growth accelerated in Q3. We are back to double-digit year-on-year. Digital and cloud represents now over 60% of the group activity in Q3. All in all, this quarter came in better than anticipated. Now if you look at the recovery overall, we saw a marked improvement in performance compared to the Q2. It's visible across all the dimensions of the group. This slide shows the path to recovery of our business. It's representative of the organic performance, and is consistent with what we shared with you in April. We can see that all sectors, geographies, and activities are recovering.
Of course, as anticipated, the speed of recovery varies. For example, in sectors financial services and public sector, TMT are doing well. On the geographic side, U.K., rest of Europe, and APAC are also recovering well. On the business side, applications and operation are also in good shape. They are either recovered or close to recovering their pre-COVID trends. Some of them, such as public sector and financial services, have even more than recovered, meaning they post higher growth rate than the ones pre-COVID. Conversely, not surprisingly, the manufacturing sector, notably with auto and aerospace, and the services sector, notably with transport and hospitality, are still suffering. France, on the geographic side, and not surprisingly, engineering and strategy and transformation, which are both quite cyclical, are still impacted.
Even if we have recorded some material improvement, notably when we see, for example, what happened in France between Q2 and Q3. We are quite confident that in the coming quarters, things will continue to improve. The new demand is now back to the level it was in January. We see some clear trends at our clients in terms of requirement. They look for cost reduction and resilience, in particular via accelerating movement to the cloud, and they also look for areas of vendor consolidation, as we mentioned before. We also see two specific areas in terms of demand, which are really growing very fast: AI and analytics, and also Cybersecurity. Finally, we see more and more clients working on improving their environmental sustainability, where we are investing heavily to increase our offerings to assist them.
We continue to operate at 90% work from home. As such, our model is really stabilized in the current operating mode for the coming months or as long as needed be. A word about the Altran integration. The integration is on track. I remain very positive about where we are. We have finalized the integrated organization, which will be implemented in January. If I can just take two elements to illustrate progress. First, we have now launched our initial joint offering in the field of Intelligent Industry. We announced last week the creation of new services focused on 5G and Edge. These new services will enable communication service providers, network equipment suppliers, and large companies across industries to deploy 5G and Edge technologies at scale.
Our 5G and Edge offerings are designed to ensure our customers make the right investment, allowing them to build the foundation of their data-driven transformation and make the most of this next industrial revolution. We ran already over 90 5G projects since 2019 across the industry value chain, from network equipment providers to use cases for industries. It's not something new. We have been packaging. We're now launching for a strong growth boost in terms of growth. Also, Capgemini first offers dedicated to Intelligent Industry reflect the increased capacity of the group to design, develop, and offer the product and services of tomorrow, will continue in the coming weeks with offers in the field of autonomous cars and data-driven R&D in life sciences and consumer products. That's the first element. The offerings are there, the Intelligent Industry offerings are born, and we have launched now in the market.
The second element to illustrate that we are moving fast forward is the number of business opportunities that continue to develop. We have already won more than 30 new deals, and the pipeline has expanded now to 350 joint pursuits. Let me illustrate some of them. We recently signed exciting deals that really demonstrate the value of Capgemini plus Altran. If I take the first example, Capgemini and Altran have recently signed a deal with a global industrial group to build the digital twin of its factories. Considering the unique set of capabilities required, this has been a sole sourcing deal. That means we have not been in competition. This would not have been possible for either Capgemini or Altran alone. It illustrates the unique combination of value that the new group really brings to its clients. The second example is for a global energy and industrial company.
Altran and Capgemini Intelligent Industry expertise was applied to support the client's network elements across multiple geographies, spanning from Mexico, Spain, China, India, and France. Thanks to the unique combination of skills and geographic footprint, again, we won this deal post-acquisition without an RFP. For the last example, because of the diversity of capabilities required for the deal, only a consortium normally would have been able to bid. The deal was awarded to the group due to the ability to deploy all the required skill with a single accountability. Only one company managed to bid standalone and stand as a credible long-term partner. It was us, and we won. These three examples really show the value, which is created by the unique combination of Altran and Capgemini in the field of Intelligent Industry. I believe very much in the potential of what we can develop here.
It's a vast transformation which will take place. The current crisis does not call into question at all the potential of the Intelligent Industry, quite the contrary. Beyond Intelligent Industry, in vendor consolidation, I'll just take the example of financial services to illustrate a bit what we see. In Q3, we won four consolidation deals. We now embarked on consolidating smaller player at two other large clients. On cloud, just one data point, our booking growth is more than 50% year-on-year with large public cloud providers. That give you two data point beyond Intelligent Industry of what we see both on vendor consolidation and on cloud pickup. For the full year outlook, we confirm all the objective we set for 2020 at the time of the publication of the H1 result.
The constant currency top line is expected to increase between 12.5% and 14%. This is equivalent to an organic growth of -3%- -4.5% for the full year. The margin contraction will be limited to 60 basis points to 90 basis points, versus the 12.3% reported last year, and our organic free cash flow will exceed EUR 900 million. We expect Q4 to confirm the positive trend we are in and record a further improvement in top line, although more limited than the one we have seen, due notably to the ongoing instability in the environment. We are still quite confident the group targets to achieve a performance above the midpoint of the growth and margin range. Now we are telling you that we will be above the midpoint of the objective we have given you for both the growth and the margin.
Of course, we are comfortable on our cash flow targets. In addition, we shoot for another solid book-to-bill in Q4, confirming the solid booking trend we see since Q2, and we remain confident on the prospect for further improvement for 2021. On this, I pass the call to Carole.
Thank you, Aiman. Let's start with the key trends of this quarter of 2020. Q3 came better than expected, as Aiman just explained, with an improvement in terms of underlying trends across all our regions, sectors, and business lines. With revenues of EUR 4.008 billion, our growth at constant currency reached 18.4% in Q3 compared to the same period last year. This represents a visible improvement compared to the 13.4% growth recorded in Q2. Capgemini also benefited this quarter from the full effect of the integration of Altran, as it did in Q2. Therefore, this improvement is representative of the underlying organic growth improvement. Indeed, on a like-for-like basis, the improvement is also quite significant, with a decline in revenues, which was contained in Q3 at -3.6% year-on-year, compared with a contraction of 7.7% in Q2.
FX had a 2.8 points adverse impact in Q3, leading to an overall negative impact of 0.7 point on a year-to-date basis. Our reported growth does stand at 15.6% in Q3 and 10.6% for the first nine months of the year. For the full year, we expect that Altran and other acquisitions will contribute to an estimated 15 points to group growth, while FX should represent around 1.5 point of headwind. Let's now look at our revenues by regions. Each of the group regions reported a visible improvement in the year-on-year growth rates in Q3 compared to those observed in Q2, both in terms of organic and constant currency growth. North America, which grew by 10% at constant currency in Q3, still reported an organic contraction in the past quarter, but smaller than in Q2, thanks notably to a stronger performance in TMT and financial services.
U.K. and Ireland constant currency growth reached 9.1% in Q3, with also a much smaller organic decline in Q3 versus Q2. Financial services are progressively recovering, while the public sector further accelerated. France remained the most impacted region in Q3, with the largest organic decline. However, the underlying trend improved significantly in Q3 with a solid public sector and meaningful improvements in the industry, financial services, and other services sectors. With the contribution of Altran, France revenues were up 20% at constant currency in Q3. Rest of Europe went back to organic growth in Q3, thanks in particular to the recovery observed in many sectors, industry, retail, and financial services sectors. Finally, the Asia Pacific and Latin America regions further accelerated in Q3 and thus remains the group's most dynamic region in terms of organic growth.
As a reminder, Altran did not substantially change the group geo mix since both companies are rather similar in that respect. Let's now have a look at our revenues by sectors. Our performance by sectors remained contrasted in Q3, but all sectors recorded an improvement compared to the situation observed in Q2. Financial services, which is still our largest sector with 25% of group revenues, returned to organic growth in Q3 and reported 7.4% growth at constant currency level. The public sector further accelerated in Q3 with solid organic growth across all regions, recording a 14.8% growth at constant currency in Q3. The sector that has been the most severely impacted in Q2, namely industry, 23% of the group, and services, 5% of the group, which includes transportation and hospitality, recording an improvement with a smaller organic contraction in Q3.
On a constant currency basis, the industry sector grew by 38.5% in Q3, while services slightly declined by 1.3%. The TMT sector also improved in the past quarter but remained slightly down on an organic basis. With the integration of Altran, this sector grew by 79.2% at constant currency in Q3. The consumer goods and energy and utilities sectors recorded a slightly smaller organic decline in Q3 than in Q2. Now let's have a look at our revenues by business lines. Let me remind you first that the integration of Altran has a more visible impact on our business mix, which becomes slightly more diversified. As illustrated on this slide, our operations and engineering business line now accounts for 33% of group revenues.
All our business lines experienced an improvement of their year-on-year growth rates in Q3 compared with those observed in Q2, both at constant exchange rates and on an organic basis. While still being our most affected business line, strategy and transformation consulting services recording a smaller organic contraction in total revenues in Q3 than in Q2. Taking into account the high-value services from Cambridge Consultants and frog, it reported a 13.5% growth at constant currency in Q3. Application and technology services, our core business line, also recorded in Q3 a significant improvement in their activity, but nevertheless reported a slight organic decline in the past quarter.
After taking into account the consolidation of Altran, the constant currency growth is slightly positive at 0.3% in Q3. Lastly, the operations and engineering services also reported a smaller organic contraction in Q3 versus Q2, driven by a stronger growth in cloud infrastructure services and a slight improvement in performance in the engineering businesses. Thanks to the contribution of Altran, they posted a 70.4% growth at constant currency in Q3. A quick look now at our bookings. Bookings amounting to EUR 3.896 billion in Q3, up 17.4% at constant currency. This brings our nine months bookings to EUR 11.7 billion, which represents a steady 12.6% growth at constant currency. The book-to-bill stands at 97%, 8 points above the five-year average for a third quarter. This solid performance supports our confidence in a gradual improvement of revenue growth over the coming quarters. Finally, a few comments on the headcount evolution.
The total headcount reached 264,600 employees at the end of September, up 20.6% year-on-year, but slightly down since June, and down by 2% compared to December 2019 on a like-for-like basis. The offshore leverage stands at 53% on a combined basis, stable over the past months. Lastly, with an attrition in line with expectation in Q3, the last 12 months attrition stands at 14.3%, down by 7 points versus September last year. Operator, can you please detail the instructions?
Thank you. Ladies and gentlemen, if you wish to ask a question, please press 01 on your telephone keypad. The first question comes from Adam Wood from Morgan Stanley. Sir, please go ahead.
Hi. Good morning, everyone, and thanks for taking the question.
Morning.
Hi. Good morning. I've got two, please. Just first of all, one of your major partners, SAP, had a very significant set of announcements yesterday, and I think the key message from them was that their core, large enterprise ERP customers would be moving to cloud. That's obviously one of the biggest install bases in the world. Could you talk a little bit about what opportunities that brings Capgemini as those customers move from on-premise infrastructure into cloud in terms of the revenues and opportunity set that you can get from that? Maybe just secondly, as we look out through the quarters, on the current situation in terms of the bookings you have, obviously a little bit more caution on the health situation going into Q4, could you help us when you think the group might return to organic growth overall? Thanks very much.
Thank you, Adam. Two good questions. First on SAP. Again, I was a bit surprised by the reaction of the market yesterday. I'll first try to talk a bit about dependency on SAP. I'd like to remind everybody that the big ERP wave is behind us, in terms of basically the very large implementation of the years 2000 to 2010. Our dependency on implementation of ERP, like SAP, is in low single digits in terms of revenue. I think there's a bit of an overreaction and over tie-up between basically SAP results and the reaction on some tech stocks, including ours. Now, putting that aside, we'll talk about the opportunities. First, you have to know that year- on- year, our bookings and revenue linked to S/4 is up. Okay? We are growing on S/4. Second, I think the movement to the cloud can only accelerate.
I think we started an offering more than three years ago, helping clients move their SAP, basically environment to the cloud. In a number of cases, we haven't seen clients really moving so fast. If we see an acceleration as SAP basically points out of basically helping to move some of this workload to the cloud, of course it's a project and it's going to increase the project work linked to basically helping clients do that. For us, it's positive. The second question was on the organic, if you remember.
Yeah, just when you think the group can get back to organic growth.
Yeah. When we can get back to organic growth. Listen, today I really bet on Q2. Okay? We'll improve a little bit in Q4, but we see it's limited. I think we'll have a bit of way from the current health situation. We'll continue to improve in Q4, and we should see some further improvement in Q1, but I really bet on the return to organic growth, at least with some good confidence level in Q2.
Perfect. Thanks very much.
The next question comes from Stacy Pollard from JP Morgan. Madam, please go ahead.
Thank you very much. A little bit follow-up on Adam's question. I was going to say, we've heard many vendors, including SAP of course, talking about faster shift to the cloud. I'm sure you're seeing the same. Could you maybe comment as to which vendors you're working with the most on this front, and where you think are the biggest opportunities for you over the next year or two? Second question, any differences that you're seeing in closure of sort of larger deals versus smaller deals? How are you seeing trends from that perspective?
Okay. On the first one, as I said, if I just consider the three hyperscalers, our booking growth is 50% year-on-year. I think we are well organized, and well positioned to really take advantage of all this cloud revolution, and we only see very big acceleration year-on-year. We expect to gain a strong acceleration next year. We work with all of them. It's a bit like, in a different wave that happened before. It's really dependent on the client. The clients make the decision. We also have some specific partnership around some sectors with some of the public cloud vendors, around specific solutions, around specific sectors. We work collaboratively with them, but we're also dependent on some of the client decisions when it comes to that. We also have to point out the fact that, there's a very strong pickup in the native cloud development.
Remember, it's part of our business, of course. One more client are basically, some have migrated, or some have migrated what they consider is important. They not tend to migrate what they have the rest right now. Now we really have the huge pickup in terms of native cloud development. With that, we see the pickup of relationship like IBM coming from Red Hat, where suddenly this is booming again. The growth rates are really becoming quite impressive in some of these areas. We are back on that big wave, which for me is a big wave of new developments which are not linked to packaged software in that case. We have to remember that. Your second?
Trend in large deals.
Yeah, the trend on the large deals. Listen, we're not back yet. If I think from a decision-making perspective, I think on the small deals, things are doing well. We still have some hesitation on some deals from some clients, I have to say that. Clients will still hesitate a little bit based on the current environment. I can point out, for example, in the auto sectors, things have started to pick up. The slope of recovery is slower than what we'd have expected in a sector like that. I think it will end up by coming. It was a bit slower than what we expected. On the large deals, when I ask our head of sales, Rosemary, she believe we are in a trend that by the end of the year, we'll have normalized basically the decision cycles. Okay? It's improving.
We signed a number of large deals this quarter. We have now some which were pushed or that have been decided but not finalized yet, so they're moving into Q4, hence probably a stronger Q4. We're not yet in a normal situation in terms of speed of decision-making, if that's what you have in mind.
That's useful. Thank you.
The next question comes from Michael Briest from UBS. Sir, please go ahead.
Thank you. Good morning. A couple from me as well. Aiman, I noticed that the Odigo business is up for sale. I think that's the old Prosodie asset. I just wonder strategically, how you view the sort of software portfolio within Capgemini and whether there's other assets like this that might be sold. Just in terms of Altran, I think you gave some additional color in Q2 about how it performed on a standalone basis. Is it possible to give that for this quarter? More broadly, talk about auto and aerospace are important verticals for it, what trends you're seeing there and whether you're becoming more positive or not on the pace of recovery.
First on Odigo. The reason we are basically in the process of selling Odigo, and remember, it is not Prosodie, it's part of Prosodie, so it's not the same thing. It's because when we bought Odigo in 2011, it was on the premise that we were trying to develop the non-FTE-based models of revenues that everybody was dreaming about in the industry. That was to learn really how they were able to do that. At the time, Prosodie was really a service business. What's happening now is Odigo is developing into a SaaS platform. I consider that we're not good at managing products. Haven't had any great success in the history of Capgemini basically managing a product life cycle.
We basically disposing with, because we consider it will expand better, with somebody who's really focused on trying to develop a software product than it'll be with us. Our position on product is basically, we still believe that product and services don't mix well, and we really focus on basically, on the services business. On the Altran Q3, again, we gave the indication in Q2 because it was the acquisition. We gave the organic growth to show it was doing better than the rest of the engineering world. It continues to do better than engineering world, and there was some improvement between Q3 and Q2. As we have seen in the chart, of course it's an improvement, but it's not a marked improvement yet. Yes, the aerospace and auto sector continues to weigh.
If I talk about these sectors, the aerospace is still slow, although I think we have won some deals in digital, for example, in aerospace, that continues to help us consider that we are better positioned than most of our competitors there. It's still very slow when you see basically the challenges they have to go through. On the auto sector, it is recovering, but the pace of recovery, notably in Europe, is a bit slower than what we'd expect. It's improving. But the pickup is not there. On the other side, I looked at the auto numbers, for example, in North America, we're in growth, and in China it's booming.
We have a bit of a contrasted picture, which basically give me good confidence on the fact that next year we should really see a more significant pickup in the auto sector, notably on the acceleration of the evolution of the product lines.
Okay. Are there many more assets that you might see as non-core there on the product side?
We don't have products. That was one. That was a service that moved to a product. To be frank, we don't have a product in our portfolio, at least that I'm aware of which I hope I'm aware of everything.
Okay. Thank you.
The next question comes from Stefan Slowinski from BNP Paribas. Sir, please go ahead.
Yes. Thank you. Good morning, Aiman and Carole. Just a question on the working from home trend. I think you mentioned 90% of staff are still working from home and obviously delivering quite seamlessly. Have you made any decisions about any kind of permanent changes to working practices, maybe more permanent working from home across the group and more flexible utilization of the workforce in terms of allocation of projects? Any other decisions about potentially reducing real estate footprint? Any thinking along those lines that could help us understand maybe the cost evolution would be of interest.
Okay. First, since May, we have launched initiative called the New Normal, which is basically actually addressing that, which was one on how to leverage all the knowledge that we gathered across the different countries in the group in terms of how to address finance, HR, delivery, operation, sales, et cetera. At the same time, trying to start developing what the future model would look like. We have gone through the first set of conclusions on that. We have a pretty good view of what the future we would want would look like in terms of how we would operate this New Normal. We can only start experimenting really it once we move.
We have defined HR policies, we have defined models depending on the level of experience of people, their role, et cetera, in terms of what could be the balance of percentage of work from home potential for them. We are currently working to basically validate our flexible working policy with the different legislation in the different countries and our representatives. All of this for me is in motion, and at high speed. We have developed some videos, even we have some clients now much more interested to look in detail at what we have done. For me, we're quite advanced. Yes, we have looked at real estate footprint and yes, there'll be some reduction overall.
Notably, we'll get rid of some old offices, and we'll focus more around reinvesting and basically modifying some of our existing office space, to increase both the flexibility but also to make them more like meeting points. We have pretty much, for me, designed our future from that perspective, and I'm quite comfortable on where we are. What I don't want to do is throw out numbers because I believe that until you really start trying it in a normal environment, which we are not in, it's difficult to really assess what is the right percentage at the end of the day. It's also depending on what your client will accept. Let's not forget that 80% of our people work in delivery for clients, and it depends what the client will accept.
Today it's difficult to basically foresee what some clients in some countries will accept as the model. I have clients who telling me, "As soon as all this thing is finished, I want people back on site." I don't want to throw out numbers, but definitely we'll have a pretty high percentage of work from home.
Okay, maybe just to follow up along that same theme, if I may. You mentioned the increased health crisis and impact in Q4 may kind of limit further improvements. I mean are you actually seeing a step backwards in some instances? Or is it just kind of slowing the pace of recovery here as we go into the fourth quarter?
It's slowing the pace of recovery.
Yeah.
I still see an improvement in our top line compared to what we have seen in Q3, but it's slowing a bit the pace of recovery. I'm still, as I told Adam, quite confident on the return to growth in Q2, but I don't see it yet in Q1 because of that. I think the current environment will slow down a bit the pace of recovery in Q4 and Q1. We're still recovering, and we'll still see an improvement in the top line in the upcoming two quarters before more confidently returning to growth in Q2.
Okay. Thank you very much for the detail.
The next question comes from Toby Ogg from Bank of America. Sir, please go ahead.
Yeah. Hi. Good morning, and thank you for taking the questions. So firstly, just on the guidance, perhaps you could just talk a little bit around the puts and takes that are baked into the range. I know the low end assumes a worsening in the macro environment. Perhaps you could just talk to just how bad of a worsening that might be. Equally, what does the top end of the range assume when it comes to the lockdowns and the macro? And then just secondly, on the margins, perhaps you could just help us with a framework for thinking about how the margins should evolve into 2021. Clearly there are a number of moving parts, whether it be cost savings from COVID, synergies from Altran coming through, and then obviously just underlying improvement in the business from 2020 levels.
Any thoughts just around the shape of that margin improvement in 2021 would be really helpful. Thank you.
I'll take the top line one. I'm going to leave the nice margin one for Carole, to see what she wants to say there. Listen, on the top line, overall, we clearly said that our Q4 will make that we deliver in the top half of our guidance. Right. We can say basically, if you make the calculation, that mean will be between -60 basis points and -75 basis points year-on-year compared to last year on the margin, and between -3 and -375. As you see, the range on movement in Q4 becomes more limited in terms of range we're talking about. Of course, we're keeping some caution on Q4, take into account the evolution of the environment. For me, we are in too narrow range already to have a discussion about what will bring the top or the bottom. We already narrowed it by half.
It's too detailed in terms of going what will make it a bit more better or other. It will depend, to be frank, on how the situation will evolve in the next eight weeks or nine weeks, which are remaining in the year. That's what will make the difference in terms of which part. As we said on the cash, we are also quite comfortable in terms of the guidance where we are today. For me, it's pretty solid. We were more concerned about basically the potential impact of COVID basically for the last four months of the year. We closed September very well and Q3 was strong. Q4 has started well. Now we have a good level of confidence and that's why we're showing that to you. Carole, on the margin for 2021 and the elements there.
Just to start with on the margin side, I remind you that we have demonstrated our resilience and agility with the figures we provided at the end of H1, and with our group guidance for the full year. That's the starting point, agility and resilience. Moving to 2021, I will not disclose any guidance today, as you can imagine, speaking more on short-term and headwinds and tailwinds than we may encounter. On the headwind side, what we can list is some elements, of course, saved in 2020, will be partially returned in 2021. Travel or purchases as an example. We may also incur some new investment in the frame of the New Normal implementation, we also have major tailwinds.
To start with, the first one is the better utilization rate, of course, notably onshore, with the return to the gradual recovery and then the return to growth and the better absorption of our fixed costs. What is important to understand as well beyond 2021, is that on the medium term, we have a list of tailwinds, notably the New Normal on real estate, higher flexibility. Of course, the growth rates will bring a higher level of flexibility in terms of margin and the growth of the new and like we said, and what we have in terms of differentiation of offers and of course, Altran synergy is both short-term and medium terms.
That's brilliant. Thank you.
You have a more comprehensive answer than what I thought.
The next question comes from Amit Harchandani from Citi. Please go ahead.
Good morning, all. I'm H archandani from Citi. Thanks for letting me on. Two questions, if I may. My first question goes back to the topic of talent. You talked about your attrition rate, which is down year-on-year, which is understandable in this environment. At the same time, there are other industries maybe which are struggling a bit more than your business, which potentially might have talent that might be attractive for you. I'm just trying to understand how are you leveraging the pandemic as an opportunity to potentially address the topic of war for talent. What kind of measures should we expect from your side to maybe get attrition back to right level, maybe use this as an opportunity to hire the right people. You talked about demand coming from AI and Cybersecurity.
Very keen to understand how the talent side of the equation is shaping up. I have a second question.
Okay. Listen, on your first question, it's a very valid question. I mean, attrition will continue to come down because it's 12 months attrition. As you imagine, Q3 was below that number, and that will console the basically 12 months attrition will continue to come down. As you know, we like some attrition, so we don't like to go to zero attrition because it makes our economic model more complicated to manage if it drops too low. When you think about how we're trying to develop talent, there's definitely attraction from other industries. By the way, part of our development, when you think about Intelligent Industry or Customer First, which is all the customer front end, requires more and more industry-specific skills. You're going to see us more hire people with strong expertise coming from the industries we are targeting.
To bring content and to bring more skills and industry expertise, and that's something we are looking at and we're developing plans around. We have already start doing some movement, and that will be global, including in India. That the first focus. The second focus we have is that we working more and more on trying to develop the talent that we want to hire. There is a big development in France called L'école, which is school. A basic initiative where we help develop basically skills and talent, including from people from poor neighborhoods, to try to bring basically digital talent and digital skills, and to be able to prepare them to join us. We commit to hire a bunch of them. The second thing that we are doing as well is, for example, we are co-investing with some other French firms to create an AI School.
Basically, we have two large French schools that came together, business school and engineering school, to create a new curriculum around AI, and we are basically co-investing and sponsoring that. We are also part of, for example, in France, of launching the Cybersecurity Campus, a new Cybersecurity Campus to basically develop Cybersecurity skills. To be frank, we have a lot of effort in basically developing the skills that we need. I'm talking about the one we're doing in France, but we have some in India, and we'll probably develop as well some in the coming months in the U.S. to basically prepare the skills that we need to bring in. That will work. As you know, through the pandemic, we have taken very good care of our talent, in terms of basically compensation, in terms of continuing to pay bonus, et cetera.
Of course, that will play as well in a very positive way as we get up out of the pandemic.
Okay. Thank you, Aiman. Secondly, if I may, you commented upon the geographic performance earlier and how some of your regions are making a comeback. At the same time, you have also commented on the health crisis that's coming up a bit in the near term. Could you give us a sense for how would you expect your geographies to evolve over the next couple of quarters? Which ones are trending better than you expected? Where is it where investors might need to show a bit more patience as you go through the recovery over the next, say, one or two quarters? In that context as well, what kind of visibility levels do you have today versus history? Because the bookings performance was definitely solid relative to history. Thank you.
Okay. First, in terms of geography, when I look, I expect to continue to see improvement in basically our emerging geography, right? Asia, Pacific and LATAM, we start to see an acceleration. I expect that to continue to be good. North America will continue to improve. Remember, we still have a transformation plan basically currently being deployed, and what I see from the bookings that we see in North America, and when I see the perspective we have, I continue to see basically some improvement coming in North America. In Europe overall, listen, even if things are degrading, we're not back to March and April. There's two things. One, we are working from home [origin], right? There's no fundamental change. A number of our clients have also adapted to that.
I don't think there'll be any jerk reaction like we have seen in March, April, in any case. For me, it's not the fact that there will be degradation, at least at this year. I don't foresee degradation. I see it's more the slope of recovery, right? How fast will France recover to come back to organic growth? It's going to take a bit more time because of the health situation. I don't see a degradation. I see more a slowdown of the recovery than it is a degradation. I would tend to say Europe, probably people will have to be a bit more patient in some countries like France, potentially, or Spain. It's more the speed of recovery versus basically a degradation that we see today.
Got it. Thank you, Aiman.
Visibility, to be frank, is pretty good. I think for teams, basically, demand is coming back to more normal level, okay? Which basically is good for the upcoming quarters, where we start to see improvement bit by bit. We remain cautious because the depth of the health crisis can slow down little bit things, as we go into the winter. It's not going back. It basically continues to improve, but it's more the slope of recovery, which slows down a little bit.
Got it. Thank you.
The next question comes from Mohammed Moawalla from Goldman Sachs. Sir, please go ahead.
Yes. Morning, Aiman.
Morning.
Just a couple of quick ones from me. We saw the cloud digital business back to double-digit growth, in Q3. You sort of made the comments around cloud ERP being positive, also kind of with the hyperscalers. Can you give us a sense of how quickly you see this business going back to, I think it was kind of mid-teens to high teens growth, that we saw pre the crisis? Specifically within the sort of digital cloud portfolio, what are the other areas and where is the kind of customer demand right now, that you're seeing kind of the strongest growth? The second question was, I remember as we were kind of entering into Q2 and as the health crisis hit, you had sort of reminded us that you see a lot of opportunity for sort of wallet share or market share gains, in customers.
What do you see on that front? How does the pipeline look and what are the opportunities, and when can we see some of the evidence of that sort of increased share of wallet?
Okay. Plenty of questions from you. Listen, first on digital and cloud. I just said we are above 60%. Getting back to 20% growth rate, that mean it will fuel pretty nice organic growth. I would love it. I don't know if we get back to 20% growth on the more than 60% in digital and cloud. For me, I'd like to maintain the double-digit growth rate, which basically should end up should fuel a pretty nice organic growth. Can we get back to 20% maybe? But it might start to become a bit stretched, to be frank. I remain confident on the fact that it continue to track quite a bit our growth in the future. Where do we see the strongest growth? Definitely cloud, AI analytics, and Cybersecurity are where we see the most traction today. Digital manufacturing or now Intelligent Industry, we see traction.
It will pick up, as industry at large, automotive, aerospace, et cetera, are a big component in this Intelligent Industry. Of course, it's growing, not growing at a normal pace. We'll see the pickup in the coming quarter there, it will become more significant overall at the group. The part where we have seen a bit of slowdown is some of the aspects on the customer front end. The growth rate remain healthy, they're not as big as they are, for example, for cloud. It's really cloud and cyber and AI and analytics are probably the strongest growth engine in digital and cloud today. Finally, on the last question was.
Market share plan.
On the market share gain. I exemplified a little bit, the vendor consolidation in financial services to explain what basically happened there. We see, as I talked about it before, the two aspects, a real vendor consolidation in terms of taking out potentially one player out of four or five. On the other side, the clients trying to basically reduce the number of small suppliers, again, of reconsolidate because of the expansion of small suppliers in the last few years with the growth. We see both. From my perspective, when I see the growth rate today that we have in a number of cases, I consider we are already taking market share gains at some clients. Now it will take two or three quarters to exemplify in a more substantial way because you need to win deals, but then they have to build up.
You need to ramp up some of these resources. Again, I take the example because I dived quite a bit with our financial services guy to see what's going on. When I see the ramp-up numbers they have in terms of headcounts, I know that the growth is there.
Great. Thank you.
Is it the market share? Probably.
The next question comes from Neil Steer from Redburn. Sir, please go ahead.
Morning. Thank you for taking my question.
Sure.
I think during the presentation, you called out the public sector, in the U.K. and France in particular, as showing an acceleration in trend. In each of those markets, can you give us a sense for how big the public sector is? Can you talk a little bit about the kind of work that you're doing that's driven that acceleration in demands there?
Listen, the public sector, in Europe, it's above 10% in most countries now. I talk about Germany, Netherlands, France, et cetera. It's a bit bigger in the U.K., as you know. More in the searches. Right now, to be frank, even in North America, our public sector is growing. It has never been a key focus, but we see good level of demand, and we see good level of growth, and it's becoming as well a focus area in some of our Asian countries. It's a lot of digital investment. It's a lot of public sector is also moving to cloud. We have a lot of project work around all the digital service to the population, which are developing more and more.
I think it's increasing with the pandemic, where there's a bigger effort in terms of investment to be able to reach out to people and to try in a number of cases, as well, to try to close the digital divide by enabling people to be able to have access to public services through a digital manner if they cannot physically move or have a hard time moving or at risk in terms of some of this movement. I think that's what's fueling it. I have to be honest, I don't think it's specific to Capgemini. I see a number of our competitors as well who have healthy public sector and health. They're usually the two in terms of growth rates. I think overall, there is a good environment and a good level of demand that we see in the market around the public sector.
It seems to be continuing now for the upcoming quarters.
Okay. Just a quick follow-on question, if I may. When you talk about, obviously, cloud, AI, and cyber in general as part of the digital portfolio, have you had the opportunity to look into that and what you feel is work that's being carried out today by clients as a direct response to the pandemic? What is, if you like, underlying core strategic initiative?
It becomes a bit tricky to try to decide what is accelerating what, to be honest. Listen, fundamentally, I do believe the move to work from home, et cetera, is accelerating that because it is difficult to sustain the amount of demand in terms of video and others by basically without moving to the cloud. By definition, the fact that, listen, people are struggling, for example, to run some of their factories. The people who are able to run a number of activities, including maintenance, et cetera, remotely to support with almost no intervention in some factories remotely from central places, with this command and control system, which seems to be working on now. They are definitely in a much better place than the people who need to have the footprint in the factory to be able to operate.
All of these are basically getting into people's mind that there is a difference between being digitally enabled with a cloud environment and not being digitally enabled. It's pushing people to accelerate whatever they were doing because they really see a difference in the value of the digital enablement, which requires, as a fundamental, a cloud platform. It's basic to be able to be digitally enabled.
Thanks very much.
I believe that's what's driving that. The cyber is also linked to the work from home, that's for sure. The increase in cyber is basically the increased number of attacks because people are working more from home, and clients are looking for more prevention in terms of Cybersecurity.
Thank you very much.
The next question comes from Laurent Daure, Kepler Cheuvreux. Sir, please go ahead.
Yes, thank you. Good morning, everybody. Most of my question have been answered. I just have two left. You commented on the engineering space of some modest improvement in the quarter. In 2021, you're going to have weak comps for most of the year. Is it reasonable to expect a return to growth for the full year or at least at some point during the year? My second question is back to headcount. How do you see 2021 shaping in terms of wages, prices, and what kind of headcount addition on an organic basis are you planning at this stage? Thank you.
First, on engineering. I would expect that we are back to growth at some moment next year. I don't want to bet on which quarter because of the heavyweight of some sectors like aerospace and engineering. By Q3, for me, we should be back to growth, since Q2 might be a bit early, we will see. Again, I really don't have some details around that at this stage. I think it's a bit early and speculative based on the slope of recovery. Definitely, I would expect us to get back to organic growth in the second half of next year in engineering. On how does 2021 shaping in terms of headcount, we are hiring right now. We have slowed down a bit the pace in terms of the intake of young graduates, et cetera. In September, we are basically increasing headcount.
I see our global platform is called India, I see in India, the pace of growth is basically picking up and the amount of recruitment is becoming very healthy. That, for me, is a good sign because that's our global central sign of the development of our business is India. When India grows, that mean we have growth basically in many parts of the group. I cannot give you a number about the growth in number of headcounts, but we'll be growing next year. On salaries, prices, et cetera, to be frank, it's too early. I don't want to speculate. These decisions are made as we go into next year and look at the overall environment, client growth plans, et cetera, and it's a little bit early still, Laurent, to speculate about this. We start planning, but a bit early for me to comment.
Okay. Thank you so much.
The last question.
Thank you.
Yeah.
The last question comes from Charles Brennan from Credit Suisse Securities. Sir, please go ahead.
Perfect. Thanks for taking my question. I'll try and squeeze two quick ones in if I can. Firstly, Carole, just to clarify on your margin comments. You gave us some levers, both negative and positive for margins next year. It sounds like you've got an element of discretion over how you plan your margins for next year. If we see a return to positive organic growth for the year, do you think it's desirable to see margins expand, or do you think it would actually be a good opportunity to hold margins somewhat flattish to invest into this accelerating digitization? Secondly, can I just ask about big deals? It feels like some of your competitors have been a little bit more vocal about big deals returning to the market.
Can you say anything about your win rates for bigger deals at the moment, and does that give you any cause for concern as you think about vendor consolidation? Thank you.
I will answer the big deals and then, Carole will come back on the margin. Listen, on the big deals, we have been talking about it since April, so I can repeat myself. We definitely have an increase in terms of the big deal pipeline. Vendor consolidation, transformational deals are part of them. We should be announcing some, of course, in Q4. I'm pretty pleased about that. The win rate is pretty good. We lose some, we win some. Overall, for a big deal market, our overall win rate for me is pretty good right now, and it should fuel growth into next year. I'm pretty confident about that.
On the margin side, to comment further, as you have heard, we foresee a return to growth starting in Q2. With the recovery of the growth will come the most important tailwind that we have in terms of margin, which is a better utilization rate, and of course, a better absorption of our fixed costs. That's quite mechanical. We have levers, and in addition to that, we have demonstrated that we have, at scale, been capable to be very agile, so we can adapt to the circumstances, even though they are sometimes very abrupt. In addition to that both short-term and midterm, we've got the synergy with Altran. Of course, we are targeting an improvement of our margin next year with the recovery of our revenues. It's too early to give any guidance anyway.
Sure. The investment continues, huh?
Of course.
We're investing this year. We'll continue to invest next year. At this stage, I don't feel the need to accelerate significantly the pace of investment. If we need to, we will. Right now, it's one of the things we have preserved this year. Remember, when we announced the half year, I talked about the smart cost management. The smart cost management was not to cut salaries, increases, not to cut bonus payments. Continue to invest in talent and not to cut investment in new offering and new development. Thank you all. Thank you for that. We look forward to talking to you now on 17th of February for the full year. Bye-bye.