Ladies and gentlemen, welcome to the Capgemini 2020 H1 Results Conference Call. I now hand over to Mr. Aiman Ezzat, CEO. Sir, please go ahead.
Thank you. Good morning, everyone. I am delighted to welcome you to my first Results as CEO of Capgemini. I am joined by Rosemary Stark, our Chief Sales Officer, and Carole Ferrand, our CFO. Over the last few years, we shared with you the positive evolution of our business with the confidence that in case of a crisis, we will show resilience. This is exactly what our H1 figures show: increased resilience and agility compared to the financial crisis, and our 2020 outlook further strengthens this point. In H1, our revenues grew by 7.9% in constant currency, supported, of course, by the Altran acquisition starting in April. Our organic growth was a limited decline of 3.4%.
Our booking was strong, notably in Q2, in spite of the lockdown, leading to a book-to-bill for the second quarter of 1.1, which was clearly above expectations, notably thanks to a strong month of June coming out of the lockdown. Digital and cloud, as we expected, resisted well during the pandemic, with a double-digit growth in H1 and especially a Q2 growth of 7%. Now, this is a clear demonstration that digital and cloud are critical to our clients' business and that the investments done in the last few years in the portfolio are paying off. The margins stood at 10.8%. It's another important aspect of our increased resilience, with a limited erosion of 0.6 percentage points. This led to a -4% in a normalized EPS.
Our organic free cash flow remains healthy, taking into account the seasonality of our cash flow generation and in spite of deferred payment requests by a number of clients. All in all, a good H1 in the light of this very severe crisis. I will never say enough that this sudden and abrupt crisis was unprecedented. We reacted in a fast and efficient way, managing priorities around people, clients, and operations, leveraging years of investments. Beyond the initial response, the importance has been our ability to operate in this new environment for months. Health and security for our teams across the world was and will remain our number one priority. Not only were we able to ensure business continuity for our clients without degradation in service levels, we have now proven that we can continue to operate in the new normal mode as long as required.
We hire, we onboard people, we train them digitally. We sell, we transition, and deliver in a remote manner. Now, even if our work from home globally remains around 90%, with variations across countries, it's true that the ability to go on client sites, in some cases, have physical meetings when needed, is a huge plus. Finally, we took serious cost containment measures, as you have seen, but leveraging what I call smart cost management, which implies that not taking decisions that will damage our future. For example, we maintain promotions and salaries for our people. We increase and accelerate training. We did not cut budget in investment in innovation and offerings. In a word, we are preserving our future.
I cannot thank enough our leadership and all our employees for their dedication, and I'm very proud of what we are achieving on the CSR front to support our communities in this terrible crisis. Now, looking a bit more detail at how this resilience materialized, we analyzed the evolution of our organic growth rate between Q1 and Q2. It clearly reflects what we shared with you late April, which means that we had already a pretty good perspective of what's going on. From a sector perspective, manufacturing and services suffered the sharpest decline, led by the industries of aerospace, automotive, and transportation. We also suffered in some of the consumer business. On the other side, we resisted well, notably in financial services, and even showed an acceleration of growth in the public sector.
On the business line front, unsurprisingly, the biggest dips were in strategy and transformation consulting and engineering, which are the most cyclical. On the other side, our operations business, notably business services and cloud infrastructure services, resisted quite well. Finally, on the geographic front, France was by far the most affected due, notably, to the unfavorable mix of sectors in line of the pandemic and business lines, combined with a pretty severe lockdown. On the other side, most other regions resisted better, and APAC remained in growth. Capgemini diverse portfolio, from a sector business line and geography, was a clear plus, and Altran, which, as an engineering and R&D business, is more cyclical, resisted better than many of its European competitors.
Now, looking at our constant currency growth, we clearly see the impact of Altran, whose weight is important in France and North America, but also contributes to the expansion of our footprint in Spain, Italy, and Germany. Now, let's talk a bit about the Altran integration. Altran is fully consolidated in our account since April 1, 2020. The Capgemini management processes are being rolled out. All integration planning activities are on track and progressing well. We finished the discovery phase, are finalizing the integrated organization design, which will be aligned with our lead operating model that we launched, as you know, two years ago. It is fully focused on bringing the full value of Capgemini to all clients while accelerating the development and rollout of our innovation offerings. On the commercial front, cross-selling and joint opportunities are increasing every month.
We now have over 250 opportunities being pursued, and we already closed more than 20 of them. This great progress in four months, in a pandemic and lockdown situation, allows me to confirm our target annual run rate of revenue synergies of EUR 250 million-EUR 350 million by 2023. The cost and operating model synergies identification and implementation are developing well. We now expect to reach an annual run rate equivalent to two-thirds of the EUR 70 million-EUR 100 million range by the middle of 2021. The development of joint offerings, which will underpin our intelligent industry leadership, are moving ahead, and we expect to launch a first set of offerings, notably in areas like 5G and edge, in the coming weeks. Above all, for me, the cultural fit remains excellent, and the leadership on both sides is fully engaged in making the integration a success.
I remain confident on the value creation potential based on the market opportunity that the intelligent industry offers and the quality of the teams and the progress we are making after only four months. Now, we have seen that I have set a development of a renewed climate ambition as a group priority for 2020, and we announced it in July. Carbon neutrality for our operation, no later than 2025, and a net zero ambition by 2030. We are building on a successful track record, having delivered already 30% reduction in carbon emissions per employee since 2015. Our new ambition is going to set us on a trajectory to be in line with the requirement of the 1.5-degree science-based target pathway.
In addition, we have been developing offerings to help our clients reduce their own carbon footprint and set ourselves a target to help our clients reduce their carbon footprint by 10 million tons by 2030, which is more than 20% of our own footprint in 2019. Now, of course, looking ahead, it's important to recognize that there are changes in the market. COVID has accelerated demand evolution and created some new client expectations. For example, more than ever, there's a continuous and growing demand for digital and cloud. Clients really realized during this crisis how important it is to have made these investments and the need to continue to progress in these areas. Areas like supply chain transformation and cybersecurity have become in high demand. We see an increasing pipeline of large deals driven by vendor consolidation and cost transformation.
Rosemary will detail for you some of our most recent wins and some of the key success factors that we had that enabled us to do that. There are also things that are changing for us. We have become much more proactive, driven by the pandemic, notably in terms of shaping deals with clients and also continuing to nurture our CXO relationship. We also have leveraged the lockdown to significantly accelerate our reskilling programs, and our handling of the crisis has increased the engagement of our teams and improved our perception in the talent market. We are investing in promising domains and prepared for the bounce back, new best-of-breed offerings in the areas of 5G and intelligent industry, which we expect to launch, as I said, in coming weeks.
We are leveraging our consulting capabilities, where we had a bit more capacity in the last few weeks, to accelerate our own internal transformation projects and design our future model of work at home and new normal. I'm confident that we'll come out stronger from the crisis. Now, let me recap some of the key messages. We resisted well to COVID crisis. We proved resilience and agility. The Altran integration is on track, and we confirm our synergy target. We have a clear ambition to be the leader in the intelligent industries market. We are accelerating on climate with clear targets, both internally and externally, and we use the pandemic as an opportunity to transform some of our operations and fully embed the new normal. I will be providing my priorities and ambition as CEO during a capital markets day to take place within the next few months.
Timing will depend on market conditions, but it won't be later than the end of the first quarter of 2021. Now, based on the improved environment, we are in a position to provide guidance for the full year. The constant currency top line is expected to increase between 12.5% and 14%, which is equivalent to an organic growth of minus 3% to minus 4.5% for the full year. The margin contraction will be limited to 60 to 90 basis points, and the organic free cash flow should exceed EUR 900 million. The range that I give you on the top line and the margin accounts for the degree of uncertainty that still remains as of today due to the pandemic and potential measures that could be taken by governments to contain it. Right?
It is very important to put these ranges in the context of the uncertainty we still see. I am quite confident about the improved outlook and expect to enter 2021 stronger than before the crisis. I'll pass it to Rosemary to talk about sales and some of the deals that we have won in the first half.
Thanks, Aiman, and good morning to you all. It is a pleasure to be with you. Looking at sales, in H1 2020, we delivered strong sales momentum. We had H1 bookings of EUR 7.8 billion, an increase of 10.3% year on year at constant currency, and with that, a book-to-bill of 1.03. In Q2, we closed EUR 4.4 billion of new sales, an increase of 18.8% year on year at constant currency, and our book-to-bill improved in Q2 to 1.1.
Sales were fueled by digital transformation, often to support our clients' new ways of working. During Q2, we saw many clients stopping or delaying discretionary spend. It definitely affected our project pipeline, but now we see that recovering, and projecting discretionary demand is close to its pre-COVID level. As a result, our H2 pipeline is fueled by both strong funnel of large deals and this improving demand for projects I've just mentioned. We see an increase in the number of deals above EUR 100 million in the pipeline, and they're largely driven by our clients' need to accelerate digital transformation. For example, many clients are looking at supply chain transformation. There's a marked increase in the demand for cloud migration.
We see our cybersecurity, AI, and analytics pipeline is also strong, and there's definitely an increased demand for vendor consolidation, really driven by cost reduction and simplification requirements of our clients. The pipeline is growing well, particularly in consumer products, in energy and utilities, and in telco. Although the manufacturing sector was clearly affected by COVID, it's now showing signs of recovery too, and we expect that to continue for the rest of the year. While in Q2, we saw some delays in client decision-making, we also see that improving, and we expect decision-making timescales to be back to normal over the remainder of the year. Now, let's cover some of our wins in more detail. As I mentioned, several common themes we've seen driving our Q2 sales: digital transformation, supplier consolidation, and cost reduction.
What's been interesting is, with COVID confinement, our Q2 sales cycles have been really different from what we would see normally, and we've had a number of deals that we've been able to solution to win and to deliver entirely remotely, which is quite different for us. In consumer products, for the John Lewis Partnership, one of the U.K.'s most iconic retailers, we've been chosen as their strategic partner for applications development and maintenance through to 2026. This agreement consolidates a range of existing supplier activities that the John Lewis Partnership has, and it moves them into a single strategic relationship, and it will ensure that our John Lewis Partnership can benefit from interesting new operational practices and technologies, and that the applications are supported and running to the agreed performance levels.
Moving on to telco, for a leading telco provider of networking and telecoms equipment, Capgemini has been chosen as the partner to transition their Indian R&D Global in-house center. The client's objective for this transition was to gain greater efficiency and productivity, to better align skills with the product strategy, and to be able to take advantage of more flexible staffing, better management of employee attrition. We've won this three-year deal based on Capgemini's strong relationship and history of high-quality service delivery for the client, but also because of our ability to offer additional assets and capabilities, and of course, strong product support services. Moving on to financial services, for our global investment banking client who needed a next-generation data solution, we've been working on a new solution that integrates operations and IT-managed services, bringing different parts of our business together. We've designed a transformative solution.
We've reinvented some of the client's business processes, and using a very modern data architecture, we have this solution up and running on the cloud. It has really established some state-of-the-art data platform and processes using intelligent automation and cloud capabilities, really at the heart of the solution for this client. I'm moving on to manufacturing now, and I'd like to talk to you about a really interesting example with one of our global power tools manufacturers, and it really illustrates where Capgemini's complementary capabilities with Altran bring together something new for clients. This client wanted to consolidate its vendor base in a context of quite tough cost pressure. They also wanted to create a stronger partnership with a smaller number of tier-one providers.
By bringing together Capgemini's long-term knowledge of the client and their IT systems, our engineering services presence in Europe, and now Altran's research and development capabilities, we've been chosen by the client as the preferred partner for their R&D consulting services. It really brings Altran's operation technology skills to the client for the first time. The agreement covers a range of product and software development, IoT, analytics, and testing services. The client has gone on record as saying they've chosen us specifically because Capgemini obviously has a strong history with them, but now with their expanded value proposition in engineering capabilities, again, our combined global and local presence, and the ability to provide this seamless IT and operating technology skills that the addition of Altran to their group allows us to do.
In public sector, a key deal is the significant five-year partnership that we've recently signed with the U.K.'s Ministry of Defence, and it's for the provision of the MOD's IT services centre. The services centre is at the core of the operational service management, which the MOD needs to deliver essential IT services. Through the partnership, we'll be applying Capgemini's leading AI and smart analytics capabilities, the objective being really to increase the digital self-service and to empower MOD's end users. I think it's great to see so many interesting and diverse sales in Q2 despite the COVID crisis. I'm going to hand over to Carole now to talk you through our financial results. Carole, over to you.
Thank you, Rosemary, and good morning, everyone. Let me start by stating that the estimated results communicated at the end of July are virtually identical with those published today.
Also, as you would expect, our H1 results are a little less straightforward to read than usual. It adds two quarters with contrasted top line trends. Additionally, our Q2 combines the opposite impact on revenues from the COVID pandemic on one side and from the first consolidation of Altran on the other side. However, this complexity should not overshadow the stronger resilience of our activity and financial performance. Now, let me walk you through the financial highlights of H1 2020 results, as you can see on slide 16. Group revenues reached EUR 7,581 million in H1, up 8.2% at current exchange rates and 7.9% at constant rates. Our operating margin stands at EUR 880 million, or 10.8% of revenues, down only by 60 basis points year on year. This limited contraction supports our expectation that 2020 will demonstrate our improved resilience compared to the 2009 crisis.
After the operating expenses, other operating expenses, financial and tax expenses, which I will comment later on in more detail, the net profit stands at EUR 311 million for H1. The normalized EPS, adjusted for the transitional tax expense, stands at EUR 2.95, down only 4% year on year. Finally, we generated an organic free cash flow of EUR 106 million for the period compared to EUR 90 million in H1 last year. As discussed in April, Q2 was set to differ materially from Q1. In Q1, in view of the COVID outbreak, we did not face any material issue on the supply side, and the quarter came quite in line with Q4 2019 trends, with a constant currency growth of 2.3%, including 0.3 percentage points from M&A. With lockdowns and restrictions enforced in many geographies, our Q2 reflects a lower demand with an organic growth of -7.7%.
This number combines minus 6.9% on Capgemini Legacy scope and minus 11.6% for Altran. Further to the success of our public offer, Altran is fully consolidated since April 1. The Altran revenues more than offset the pandemic impact on revenues in Q2, leading to a constant currency growth of 13.4%. For the entire H1, these contrasted quarterly performances led to an organic growth of minus 3.4% and constant currency growth of 7.9%. Effects had a slightly adverse impact of 0.3 percentage points in Q2, leading to an overall positive impact of 0.3 percentage points in H1 2020. Our reported growth, thus, stands at 13.1% in Q2 and 8.2% in H1. For the full year, we expect Altran and other acquisitions to contribute an estimated 17 percentage points to group growth, while Effects should represent around 1.5 percentage points of headwind.
Let me now have a quick look on our revenues by sectors. I will not further develop the various organic trends by sector, as already exposed by Aiman, but let me just highlight the key impact of Altran mix on our mix of Altran and our mix. Manufacturing accounted for 22% of group revenues in Q2 2020, but that is not materially different from our exposure to the sector prior to the acquisition, with 19% of group sales in 2019. Conversely, we are getting scale in TMT, which represented 13% of group revenues in Q2 this year versus barely 9% in 2019. Let's now look at our revenues by regions. As presented by Aiman, France was heavily impacted in Q2 and recorded the largest organic decline. However, with the consolidation of Altran revenues starting April, French revenues are up 7.6% at constant currency in H1.
For the other regions, I will not repeat the impact of Altran, predominantly on manufacturing and TMT, nor the organic sector trends. I will just highlight geo-specifics, if any. In North America, which grew by 4.2% at constant currency in the first half, financial services further strengthened over Q1 and Q2 and posted slightly positive organic growth. U.K. and Ireland, constant currency growth was slightly positive at 0.6%. Rest of Europe stood at 15.1%. Asia-Pacific and Latin America kept its momentum with 11.4% growth at constant currency. This is a remarkable performance since the impact of Altran is less material in this region. Finally, please note that Altran does not substantially change our mix, geographically speaking, since both companies were rather similar in that respect. You have the combined Q2 geo mix in the appendix section. Now, let us have a look at our revenues by business line.
Altran has a more visible impact on our business mix, which becomes a little more diversified as Altran is mainly an engineering business. It is now fully visible in the H1 mix presented on this slide, but on the Q2 combined basis, the weight of operations and engineering in our mix is up to 33% of group revenues. Application and technology remains our core business, but now represents 60%, while strategy and transformation remains at 7% with the innovation consulting capabilities of Altran. For the first half of the year, strategy and transformation reported an 8.6% growth as it now embeds the high-value services from Cambridge Consultants and Frog. Application and technology services reported -1.3% with a very limited impact from Altran. Operation and engineering grew by 37.2% at constant currency. Now, moving to our operating margin by regions.
First, we are happy to report that our operating margin improved again in North America by 150 basis points year on year. In U.K. and Ireland, our operating margin is down to 14.3% in H1 2020 versus 15.9% in H1 last year, but remains largely above the group average. With the largest organic revenue contraction in Q2, France unsurprisingly reports also the largest margin impact with 250 basis points. Finally, our operating margin in the rest of Europe and Asia-Pacific and Latin America regions reports a limited contraction of 110 basis points and 90 basis points respectively. Considering the very abrupt and intense nature of this crisis, I believe that the resulting limited margin contraction of 0.6 points at group level illustrates how much our operating and financial model has been reinforced. Moving now to the headcount evolution.
Our total headcount reached 265,100 employees at the end of June, up 22.3% year on year, but down by 2% compared to December 2019 on a like-for-like basis. The offshore leverage on Capgemini Legacy perimeter remained stable at 57%. Altran added close to 50,000 people who came with an offshore mix in the low 30s. As a result, the reported offshore stands at 53%. There is no change in our operating model, and we expect the offshore ratio at Altran to increase in the years to come. Our attrition stands at 17.4% as of June 2020 on the last 12 months basis, down by 5 percentage points versus June last year. As a point of reference, 2009 attrition stood at 10%. Moving on to the analysis of our operating margin by destination. Obviously, the operating margin contraction in H1 is mainly coming from the Q2, where we faced the revenue contraction.
However, thanks to our flexible operating model and cost containment measures, and after the dilutive impact of the consolidation of Altran, we report a gross margin contraction in H1 limited to 1.2 percentage points. We managed to partially offset this impact thanks to a reduction in our selling expenses, notably on travel costs, while remaining with strict monitoring on our G&A expenses. Moving on to the next slide. Our financial expenses are up to EUR 64 million in H1 2020 versus EUR 39 million in H1 last year, with the increase of our net debt due to the Altran acquisition. Our income tax expenses decreased from EUR 232 million in H1 2019 to EUR 204 million in H1 2020. The impact of the U.S. tax reform amounting to EUR 26 million in H1 this year versus EUR 30 million in H1 last year.
Setting aside the transitional item, our effective tax rate is up 2 percentage points to 34.6%. This is mainly due to the temporary consequences of the consolidation of Altran into group tax scope. Finally, here is a recap of our P&L from operating margin to net income. The other operating income and expenses increased to EUR 241 million in H1 2020 compared to EUR 139 million in H1 last year. This increase is notably due to temporary impact from Altran. Acquisition costs are up to EUR 36 million as expected. Integration costs are up to EUR 25 million on the combined basis, and we confirm EUR 150 million of total integration costs over the first two years of integration. Beyond the transaction impact, we incurred EUR 17 million in other costs corresponding to some limited one-off expenses directly related to the pandemic outbreak.
In addition, the higher restructuring cost reflects both a seasonality effect and a scope impact. For the full year, with around EUR 30 million-EUR 40 million of restructuring per year coming from Altran, we can expect an amount closer to EUR 150 million, which represents a limited increase on a like-for-like basis. Finally, please note that the Altran purchase price allocation will only be set at year-end, so H1 results do not include new amortization charges. Our operating profit stands at EUR 577 million, or 7.6% of our revenues, down 12% year on year. After the financial expenses and taxes, our net profit amounts to EUR 311 million in H1 2020, down by 20% from the same period last year.
Our normalized EPS for H1 2020 records a limited contraction of 4% at EUR 2.80 and EUR 2.95 before the transitional impact of the U.S. tax reform. Looking now to the evolution of our organic free cash flow and net debt. As you can see, 2020 will be following the usual seasonal pattern in terms of cash flow generation. In terms of capital allocation, we returned to our shareholders virtually the same amount as last year, EUR 426 million, with balanced amounts for dividends and buybacks. The cash outflows for acquisitions were EUR 3.234 billion, largely relating to Altran. Therefore, our net debt increased to EUR 6 billion at the end of June compared to EUR 600 million at the end of 2019. You'll find a detailed bridge in the appendix section.
The AlphaTrain refinancing plan has now been fully executed as planned. We took EUR 1 billion from our cash available and made two bond issuances to cover the remaining equity part and the term loans. I am very pleased with how it has been received by the market. With this, we managed to extend to 6.6 years the average maturity of our debt, which now bears an attractive average cost of 1.8%. I am fully confident in the group ability to deliver rapidly our balance sheet thanks to our strong cash generation profile. A couple of words to conclude. All in all, under unprecedented circumstances, I am pleased with our strong performances in H1. We have demonstrated agility to limit the crisis impact on our profitability with strong cost containment. We also maintained a strict financial discipline to keep our working capital under control and protect our cash generation profile.
We just started to demonstrate our stronger resilience. With this, let's now open the Q&A session.
Okay. Brettan, we are back to you for the Q&A session.
Thank you, ladies and gentlemen. If you wish to ask a question, please press one on your telephone keypad. We have a first question from Adam Wood from Morgan Stanley. Please go ahead.
Hi, good morning, and thanks very much for taking the question. I've got two, please. Hi, good morning, Aiman. Maybe just first of all, Aiman, you actually alluded to the changes that you're seeing in the market, and this is, I think, a question that many investors are asking in terms of what are the longer-term structural changes that happened to technology because of the pandemic.
Could you maybe just go a little bit more into detail around what you're seeing around client demand and maybe more importantly, how this could impact the financials of the group? Could we see a stronger acceleration and stronger growth in digital and cloud? Does that mean more investment needed in reskilling and innovation? Equally, does it mean that the legacy part of the business may actually be more impacted? If you could help us around that. Also, specifically around Altran, I think rationale for the deal was the digital manufacturing side. Manufacturing has been weak, no surprise in the short term, but what are you seeing there around demand as we look a little bit further out?
Then maybe secondly, and I know you'll be reluctant to talk about this, but there's going to be a huge number of moving parts as we look out to next year's margins. I wonder if you could give us any framework in terms of the moving parts there. I guess normally we'd expect margins up maybe 30, 40 basis points, but we're going to have the Altran synergies coming through. We're going to have a very easy base comparison, but equally, we're going to have some of these short-term cost measures fall away and possibly benefits from furloughs fall away. Any help you could give us in terms of framework for how margins move next year would be really helpful. Thank you.
Thank you, Adam, for these very interesting questions. First, I just want to clarify something I said.
When I talk about climate, I think what I said was not correct. We intend to save with our clients 10 million tons of their carbon footprint by 2030. This corresponds to 20 times our carbon footprint in 2019. It is not 20%. We do not emit 50 million. We actually emit about 500,000 tons. For clarification. Going around the changes. I think it is important to make the difference between what I would consider as being more our client's reaction to the pandemic and the implication in terms of structural changes. I think the client impact on the pandemic, what we see is the evolution in terms of more deals and larger deals around cost transformation and vendor consolidation. Like many others, like us, they are looking for cost savings. They are trying to restore the economic model.
Of course, they're looking to see how they can do cost savings, including leveraging their partner base and consolidating it and looking for cost transformation deals. That's more, I'd say, short-term, or at least the next 12-18 months. We definitely see an increase. Longer-term, I definitely see an acceleration in digital and cloud. We already see it in the cloud because cloud transformation is a big driver of flexibility, agility, and cost. We see a really big boost in terms of demand during the pandemic already, also driven by the need to connect remotely, have a more secure environment, manage higher levels of data, being more digitally connected with their clients. Cloud is already booming. The digital part has resisted quite well in the pandemic.
Clients saw there was a difference between the ones that have invested in digital and in digitally enabling their client relationship, but also their operation, their supply chain, their manufacturing plants, etc., and the ones that have not. Definitely, there is some catch-up from some people to be able to get back on the bandwagon of digital investment. I am pretty positive around the long-term impact in terms of the fact that there will be further increase and acceleration in digital and cloud over the coming quarters and years. In terms of impact of legacy, the net growth at the end of the day becomes the growth of your new and potentially the speed of erosion of the legacy. What we call legacy for me remains quite important for companies. You have to continue running your environment for a long time. We continue to work on that.
We have renewed our ADM offerings. We have relaunched an ADM Gen offering, and we continue to work with clients on helping them manage the environment in what we call legacy today. It remains a smaller area of investment. Most of our money is going into the new, but definitely, we continue working there. Do we need to accelerate reskilling? To be frank, our reskilling programs are pretty intense. We have actually accelerated them during the crisis. We have to manage the evolution with the evolution of demand. I do not believe that we're in shortage in terms of new skills, and we continue to manage that in an efficient manner. When it comes to your on the digital manufacturing side, which is an important part, of course, of what we are doing now, we call it intelligent industry.
The addition of Altran is showing the opportunities in the market. I mean, we tell you that we already have 250 opportunities coming from initial convergence of capabilities, but also cross-selling. We are launching new offerings in the coming weeks and months around that. Clearly, the pandemic stresses the need to increase areas like supply chain that need more flexibility, and that requires intelligent industry to manage the data, but also in terms of new product development and introduction of new offerings to basically address client needs. For example, the stress that the pandemic is putting on the increased focus on the climate is seeing an acceleration in terms of electric vehicle sales. This is going to force the auto manufacturer to accelerate their programs, and this has a big impact, for example, on their investment in digital manufacturing.
Here again, I remain quite positive about the fact that in spite of seeing a decrease in the short term in terms of the spend from some manufacturers like auto and aerospace, the long-term impact of what is happening today is going to be an increased spend. Margin for 2021, you're a bit ambitious in terms of the question, and my answer is it's a bit early to talk about that, notably because I still don't know what will happen between now and the end of the year. I mean, just want to clarify that. I mean, we gave, for me, a range on the guidance, which is still high, right? We gave a range which is still high in terms of basically when we see -3% to -4.5%.
It's still a big range for me than more I would say at this time of the year. The reason is I don't know what will happen between now and the end of the year. Look at the case of France, where we have an increase in number of cases. What will be the government measures of the next weeks? I cannot anticipate them, but I want to make sure that whatever we tell you is covered, right? For me, we cover the cases of basically degradation in the environment between now and Q4. That's why we're giving a guidance, because now we are comfortable saying that even if there are degradations, there is a lockdown in some countries, etc., our targets and guidance are not going to change.
That's why it's a bit ambitious to say what happens next year from now on, because we don't know yet where we're going to end the year.
That's fair enough. Thank you very much, Aiman.
Thank you. Next question from Mohammed Moawalla from Goldman Sachs.
Good morning, Aiman. I had a couple of questions. First of all, just in terms of your relative visibility now versus, say, at the end of Q1, you've obviously reinstated the guidance, but I think some of the qualitative commentary of sort of larger deals coming back in the pipeline, also digital supply chain sort of improving. Can you maybe just talk us through that, sort of how you kind of look at the second half and sort of 2021 pipeline?
If you were to rank some of the factors that are probably shifting the greatest, whether it's the kind of share gains, whether it's the larger deals, and what's really driving that, is it primarily digital and cloud? Secondly, just on the book-to-bill, the 110%, what was the organic number, excluding sort of Altran for sort of core Capgemini, if that's sort of a way you can frame it? Lastly, again, coming back to kind of the margin and kind of the margin levers, I think you sort of alluded to Altran synergies and two-thirds being recognized by the middle of next year. I think the original assumption was kind of a minimal amount in Q4 this year. What's changed there, and could we see the kind of pace of some of the cost synergy realization potentially accelerate? Thank you.
Okay. H2.
I mean, what I can tell you is basically our visibility, the confidence that we see from the team, the stability of the forecast has increased. As you imagine, when we started in March with the pandemic happening, we saw forecasts degrading months on months. Now we have started seeing for the last two or three months stability of forecasts, and some of them are now improving, which basically shows the confidence that the team have in terms of the perspective. Of course, we remain cautious because we cannot anticipate all what is going on with the pandemic and the reaction of clients to basically some potential government measure or degradation in the environment. This is factored today in our guidance. Overall, we have seen stabilization, improvement, increased visibility overall in our business.
When we look at the deals, yes, the final is actually increasing year on year now. The larger deals are coming driven by the vendor consolidation and cost transformation. We see definitely some of the smaller projects also coming back because if you think about Q2, of course, we had a dryout of all what is small projects, small enhancements, etc., because clients were cutting everything. The good news, we start to see that coming back. Also, as Rosemary told you, we expect to start to see normalization as well in terms of decision timelines, which is one of the important aspects. Of course, we'll still continue shift between Q3 and Q4, Q4 and Q1, but we remain quite confident in terms of what we see. We start to see not normalization yet, but greater improvement.
We expect that if the situation remains stable until the end of the year, we will come back to normalization in terms of decision-making and commitments from clients. The book-to-bill is linked to the revenues. The book-to-bill of Altran is lower than the book-to-bill of the group by definition a little bit. The book-to-bill of Capgemini is a bit higher than the 1.1 of, let's call it the legacy, excluding Altran, is a bit higher than the 1.1 that you see, but not materially higher because Altran is a bit less than 20%, so. You had the last question around the margin levers. First, coming back to the synergies to clarify, the cost and operating model synergies are EUR 70 million-EUR 100 million.
We did say that we'll achieve them in annual run rate after three years. That means basically after three years, the fourth year, we'll have the full 70-100 million in terms of cost synergies. My philosophy around that, a lot of the cost aspect, if you don't do them very quickly, you never get them. Today, based on the identification that we have in terms of the action that we need to take, we are confident that two-thirds of these 70-100 million will be in place by the end of H1, which means we'll start getting them in full starting in the second half of H2 next year, okay, and in full basically in 2022. The margin levers come a bit with the top line.
Remember that one of the challenges of the crisis is the abruptness of the crisis, which basically increased quite a bit the benches in a number of countries. In France, you saw the impact of the increased bench on the margin. We do not see erosion in basically our margin on project with clients. There is, of course, some pressure from some clients, but it is not abnormal in this kind of environment. We have been able to protect quite well overall our client margin. The main impact that we see today is really coming from a bit of scale because when the top line goes down, your cost does not go down as fast sometimes, but especially coming from the increased bench, the non-utilization of resources.
One of the levers going into next year is basically as we adjust bit by bit the recruitment versus attrition and the demand that will start to come to more normalization, and that will help, of course, improve the margins.
Great. Thank you very much, Director.
Thank you. Next question from Stacey Pollard from JPMorgan. Go ahead.
Thank you very much. A few questions from me. Did you say that 90% of your staff is still working from home? Can you talk about the long-term new normal, what you think that work-from-home rate would be? Can longer-term travel costs maybe remain at a slightly lower rate? For example, is there any potential margin benefit from that angle over the longer term? Second question, how are you thinking about Brexit risk versus opportunity?
Third, just offshoring, do you think you can get back to the sort of 60% including Altran? Because of course, you mentioned Altran would be taking more advantage of offshore.
Okay. Thank you, Stacey. All good questions. The 90% work from home is not of our making. It is basically the situation in different countries, as you can see in, I mean, outside of Europe, when you look at countries like Brazil, Mexico, U.S., or India, based on the current situation, it is primarily work from home. You look at the evolution in Europe, and even there, we still have very high percentage of work from home. Your question is basically, can we continue with that forever? For me, we can continue for that.
Not 90%, but maybe what would you imagine?
No, I do not want to put a number for now.
I know some people, it's nice to be able to throw numbers at this stage. What we have done, we have done very detailed work to define actually for our delivery operation, for our sales, for our enabling staff, what the new model should look like depending on the age, the experience of people, the type of work they're doing, what could be the new normal. Now we have to experiment that a little bit more as we get out of the pandemic before I commit to a number. We tend to be a bit more careful than sending numbers without experimenting. We have done the work. We have a pretty clear view of what we can achieve, but I think it's too early to give you a number. I've seen some people, the people have done extreme things like saying 75% work from home.
I don't believe that model. I think it's too extreme. I do believe that we will not come back to where we were before, and we'll be basically at a pretty high percentage. Now, I want to take advantage of that to talk about work from home. For me, work from home is interesting. Remote work is even more interesting because what the pandemic has shown to us, but also to our clients, is that we can do remote work. When you can do remote work, it's not just like we have today an onshore and an offshore in a certain way. For me, remote work is that it can have somebody sitting in Toulouse working for a client in Germany, having somebody sitting in the Netherlands working for a client in Sweden.
This increased significantly the agility of our model, our ability to deploy the best resources to the right clients, and potentially also improving our own utilization. I see that as being a great opportunity to think differently about how we work and how we deploy resources, which, as you imagine, is a very important driver in terms of both value creation on the top line, but also in terms of economic model. That for me is really what we're working on now is beyond the percentage of work from home, what we do. The travel cost is an interesting thing. Honestly, I think there's an overall overfocus on this part. The challenge with the travel cost is that a lot of it is rebuilt to client when it is on projects. It has an impact both on the top line and on the cost.
It is neutral in a certain way in terms of impact on the operating model. There are, yes, some travel costs that have decreased, which are not linked to client work and not being rebuilt. They will probably swell a little bit back compared to there, but it will be in our overall operating model. I do not think it will have a significant impact from that side. Brexit quickly, nothing new. I mean, for us, we see it for the moment as neutral in our operation. The question is always going to be around what is going to be the impact on some of our U.K. clients' investment cycles. I think it is positive on the public sector because we will see an increase with Brexit of additional investment in the public sector to adapt to basically working now outside of the EU.
Will it have a negative impact on some of our private sector clients? To be frank, it's again to be seen. The question on Altran was around offshore. Offshore. Yeah. Listen, it's definitely, we talked about that when we talked about some of the operating model synergies. It's really coming from there. We do believe that there will be an increase in clients in terms of trying to innovate at a faster pace and working a lot around the evolution and digitization of the manufacturing supply chain processes. That will require more movement to offshore to be able to find the investment capacity to be able to be done. We do see definitely a potential in doing remote work and engineering from offshore. It's already a very high percentage in North America. There's no reason we're not able to do that in Europe.
That's great. Thank you. Thank you.
Next question from John King from Bank of America. Please go ahead.
Yeah. Good morning. Thanks for taking the questions. Just two follow-ups. Maybe first for Carole on the margin, and excuse me if I missed this, but I think I'm right. The North America margin was pretty strong. Is that purely just a function of Altran or anything underlying you could talk about there in terms of recovery of the North America margin? The second question, just as you look into the second half, do you need for there to be a sequential improvement in Q4 in order to meet the guidance? Or actually, are you thinking more reverse that there's a risk that things get worse when it comes to the pandemic as we move into the winter, and therefore, you're looking at a fairly normalized Q3, Q4? Thank you.
To come back to your first question, John, on North America, I think the improvement of margin is linked to both Capgemini legacy. Step by step, we see again an increase of the margin in North America. Of course, Altran margin in that region is slightly accretive to the group. On your second question on the evolution of margin in H2, of course, what we are targeting is really an improvement step by step compared with Q2 because, of course, we have been, as you can see, affected by the bench, especially in some regions. Gradually, with the slight recovery step by step that we are anticipating, we are also anticipating the related improvement of our H2 margin compared to Q2. Thank you. I should have been more precise. What I actually meant when it comes to Q3, Q4 was more around the revenue growth.
Could you comment something on that?
Yeah. On the top line, right now, when we see our forecasts, we see an improvement, I mean, a good improvement already in Q3 on the top line and some more improvement in Q4. We do not have a material, like Q3 is a small improvement compared to Q2, and suddenly Q4, we have a big expectation, right? As I said, we are also covering the fact that there is not an improvement in Q4 or potentially even a deceleration compared to Q3. Our guidance covers that.
Okay. That is helpful. Thank you.
Thank you. Next question from Michael Brist from UBS. Please go ahead.
Morning. Congratulations on the results. And Aiman, you obviously started the press release talking about the resilience of the business. I am just wondering, could you give any color on what the guidance would look like without Altran?
Because obviously, it underperformed in Q2, and I'm just wondering how much weaker it's expected to be in the second half. Secondly, on the manufacturing side, France and manufacturing generally were pretty weak, and I know aerospace is an important sector for Altran. Can you talk about the outlook there in some of these sectors that are so severely pressured? Finally, in terms of furlough, could you give an idea of how many of your people today are still tapping into furlough support from government and how that compares perhaps with the low point of the crisis?
Okay. Altran, I mean, Altran, remember, we also have an engineering business. I'd like to talk about engineering overall versus Altran versus Capgemini legacy. The engineering business with the strategy and transformation consulting business have been the most affected.
They are the most cyclical, and we said it since the end of since the Q1 results. Of course, they will not have recovered by the end of the year, and they will remain negative. By definition, the rest is going to the rest outside of engineering is going to be better. We see improvement in engineering. We expect further improvement in Q3 and Q4. The same applies, to be frank, to our strategy and transformation consulting business. Both, which are highly cyclical, will improve as we go into Q3 and Q4, but they will remain basically behind the rest of the business. The trend will improve, but we'll still have the lag compared to the apps business or the operation business. On the specific sectors, France heavily impacted definitely by business and mix in terms of business line and sector.
We expect to see improvement in manufacturing overall. We expect automotive to restart over the next couple of quarters. On the aerospace side, I think it will take a longer time. I mean, we do not see aerospace investment coming back to normal in the next two, three, or four quarters. I think it will take a longer time. Hence, we're looking at different solutions, including potentially redeploying some of our capabilities out of some of these centers, reskilling them, and redeploying them remotely in that new model where we can basically work remotely even from places like Toulouse or some other places to other centers across the world. Finally, on furlough, I can tell you that today, going into Q3 and even more in Q4, we have a very limited impact from furlough, right? We had a higher population, as you imagine, in France on furlough in Q2.
It was primarily France. To be frank, it was pretty limited outside of France in terms of impact. That impact in France has gone to a very small now population going into Q3, and I think it will have been negligible in Q4. The guidance we are giving you is not really impacted by this furlough from government in the second half, and it will not basically be a headwind, as I say, going into 2021.
Thanks. Just finally, on the guidance, I mean, you do caveat it around the risk of second wave. Are you sort of assuming that the current restrictions that various governments have is sort of maintained through the end of the year? It is not improving. It is not deteriorating. It is sort of as it is today.
If it is today, we will not be at the lower end of the guidance, right?
Because the lower end of the guidance takes into account the fact that things will deteriorate. As I said, it's very important. My first slide was around the fact that we have got used to work in this environment. Remember, we had very strong bookings in Q2 in that environment. We know how to sell. We know how to deliver. We know how to manage people. We know how to recruit, to onboard, to train in that environment. It doesn't seem it's ideal to continue at such a high level because the lack of physical contact with people, etc., is not good because you lose bit by bit intimacy with your teams. We have learned to work in this environment, and we can sustain as long as the crisis is going to be there.
Okay. That's helpful. Thanks.
Thank you. Next question from Stefan Slavinski from Exand Viviva.
Please go ahead. Yes. Good morning. Just one for me. Just thinking about how you see headcount evolving over the remainder of the year, you mentioned in your opening comments about the improved perception in the talent markets as you push ahead with raises and promotions and hiring and retraining while some competitors are not potentially matching that. How important is it for you to continue to drive that perception versus more proactively managing the cost base and the headcount base to ensure that margins next year do step up relative to this year? Thank you.
You have a big theory behind that that if you are good with our talent, then we are not able to manage our people cost base. I think you can do both.
The question is basically how you implement some of these measures and how do you manage how fast did you react in terms of slowing down your recruitment, how you're managing your exits. I mean, do remember that we continue to manage performance. So we basically continue to have people leave because of poor performance. But we do not need to make a big plan to be able to do that. I think we are able to manage bit by bit the equilibrium between the demand and the supply. We are able to manage the cost base efficiently like we have always done. Even when we had, as you know, accelerated growth, we managed to manage our people cost. We also managed them on the other side in the downturn by proactively managing our pyramid and promotion and everything.
We're doing them, but we're doing them at a pace that we can afford based on the spread and the speed of growth in terms of the top line. We continue to hire young people because it's important to be able to continue to manage the evolution of our pyramid and our talent over a long period of time. We cannot just focus on the short term. We have found the right balance between motivating our people, managing our utilization, and basically preserving our future in what I'd call a reasonable balance. In a way, it will impact basically our future capacity to be able to continue to improve our margins.
Okay. Thank you very much.
Thank you. Next question from James Goodman from Barclays Capital. Please go ahead.
Yes. Thank you. Morning.
Before we went into COVID, we were very focused on the recovery in the U.S. It does seem like there's some pretty encouraging data points actually coming out of the U.S. now, both on the top line and the margin. I know it's hard to do, but if you try and look through the effects of the pandemic for a second, is there anything you can say about the sort of underlying situation in the U.S. and the sort of improvement that you've seen there? Is it largely a function of the better mix in the U.S. that we're seeing coming through? I've got a follow-up. Thank you.
We are in North America specifically. First, do remember that we had some challenges at the end of last year in North America. We launched a transformation program. This is ongoing.
We have a transformation program ongoing in North America. I did tell you that we engaged something. It is not suddenly under the carpet because we have the pandemic and other things to deal with, including the Altran acquisition. The transformation program is being deployed. We have seen an improvement in our apps business. For example, we see a number of wins around SAP S/4HANA in North America, including during the pandemic where we have signed deals. We have started deployment, including on merger and acquisition deals. Our digital customer experience, our digital front end is improving. We have done changes in terms of leadership. We have further integrated basically all our capabilities, and we have seen that relaunch. We have very ambitious programs.
A number of our technology partners in the U.S. that are very well in place and which are quite positive and basically driving growth in some of the new areas. I do believe that we are on a track of sustainability of improvement of margin in North America coming from the evolution of our business mix, but also all the transformation program and focus that we have been putting in place over the last few quarters.
Thank you. That's helpful. Just a very quick clarification. I'm just curious, really, but whether the profitability, you limited it to 100 basis points impact in Q2, whether that was feasible.
You mean what? You talking about margin?
The year-on-year profitability margin impact, yes, in Q2.
To be honest, based on our case, it's very difficult to look at margin by quarter because our teams work with targets which are basically per semester. How they fit some of their costs, some of their investment, and other things makes quarterly margin very difficult kind of to comply. They can fluctuate based on the fact that we do not publish quarterly margins. The margins are more managed on a semestral basis and not really on the quarterly basis. I can say that a lot of the impacts in terms of erosion of margin is definitely coming from Q2 and not from Q1. That is what is underlying question. We still have quite a few questions in the pipeline here. We will not be able to answer all the questions, so I'll take one more.
Vincent will be more than happy to be able to address some of the other questions at a later stage. I do apologize for that, but we're running a bit out of time. Can I go for the last question, please?
Next questio n from Laurent Daure from Kepler Chevreux. Please go ahead.
Yes. Thank you for taking my question. Just two questions for me. First, on the Altran integration, can we have a little bit more color? It is running. I'm not thinking about figures, but more in terms of management positions, maybe the relationship with Sogeti High Tech. Everything you could comment about that would be useful. My second question is on the resilience you had in utilization rates. In the second quarter, they look similar to Q1.
If you could explain why, is it just reduction of subcodes or is it the furlough that you have restated? Thank you for that.
Okay. So Altran integration color. Actually, it's a very good question because it is quite important. I have been involved in many acquisition integrations as a consultant in the 1990s and in Capgemini as well. I have to say this is probably the smoothest one I have lived through. We expected that the cultural fit would be good. It is excellent. People work in a very integrated and engaged way on the ground. The way we have set up the integration with spokes on both sides talking to each other, ensuring that there's no misalignment, is working very well. The engagement of the leadership on both sides to make the integration successful is extremely good.
We have done surveys, and the enthusiasm of people about the value creation potential, the limited overlap between the capabilities. I can tell you what you call the Sogeti High Tech people, which are basically the engineering part in France, and the Altran people in France work hand in hand in a complementary manner. Of course, the integrated organization takes that into account. The Altran leadership will be represented in the integrated organization with some key role, including in some countries taken by people from Altran. From my perspective, this is probably the smoothest integration I have lived through so far and expected to remain as such. On the resilience. Utilization. On the utilization resilience. I mean, there are a number of aspects that basically impact a bit that utilization.
As you imagine, there were people taking a bit more vacation in Q2, which helped a bit that utilization rate. Overall, I do believe we managed pretty well in terms of the speed at which we slowed down recruitment, and we continue to manage some of the exits in Q2 of people who had resigned in Q1 that basically leave in Q2. Overall, of course, it was very important for us to try to manage the overall utilization because if utilization had significantly degraded, there would be more impact on the margin. A lot of it is linked to how we manage through basically Q2. We expect to continue to manage this way through the rest of the year in terms of utilization.
That's why I continue to say that if we have resisted well, it's thanks to a lot of operational improvements we have done over the last years, the fact that we have a much higher percentage in offshore than we had before, and the fact that we thank the leadership team and the people engagement was extremely high, and that's what helped us basically achieve these numbers.
Just a quick clarification. Just a quick clarification on the Altran for the big accounts like your first and the other. Have you put a sales rep in charge of everything, i.e., engineering and IT, or how does it work, in fact?
Oh, how do we work? I mean, the team work in integrated team. We have still the account managers on both sides, but a lot of the large accounts have an executive sponsor who basically manages that.
The teams are working very well together in a smooth manner. To be frank, we did not have any issue. Just to give you an idea, we targeted 38 accounts globally between Altran and Capgemini when we have done a joint discovery phase on the accounts to understand each other, and then we have done joint account plans. I had nothing coming back as negative or clashes or tension in any of these sessions. Today, we have developed 38 joint account plans. Basically, of course, as you imagine, the most important accounts where we can target together or we had overlaps are part of that list. That process has gone, to be frank, smoother and beyond expectation.
That's okay. Thank you very much, Aiman.
Thank you. Thank you very much for attending the session today.
I look forward to talking and seeing all of you in the coming weeks.
Bye-bye.
Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for your participation. You may now disconnect your line.