The operating margin was 225 million euros ($268 million), or 3.2% of revenue — up 3.6% from a year earlier. The company stated that the operating margin was hurt by a strong growth in outsourcing, with its attendant initial costs, but this was counterbalanced by a significant improvement in the utilization of consulting and technology services businesses and a reduction in sales and support costs.

Capgemini cited several areas of success during 2005. Its local professional-services business was up 8% from 2004, and posted an operating margin of 9.1%, aided by an improvement in the utilization rate and pricing improvements in Europe and the United States. In Europe, consulting and technology services grew in excess of 9%, and profitability evened out at 7%. In the United States, all businesses reported positive operating margins, aided by hikes in consulting and technology-services business.

The company benefited from three mega-outsourcing deals: HM’s Revenue and Customs, TXU and Schneider Electric. Outsourcing revenue was 2.6 million euros — up 33% from the previous year.

The company said that the momentum in the second half of 2005 should enable it to achieve growth in revenue and a significantly higher operating margin. Its major priorities for 2006 are to increase business in Europe through offering higher value-added services, such as service-oriented architecture, consolidating profitability in North America and improving the profitability in outsourcing.