By Leo Marchandon Feb 2 (Reuters) - Capgemini shares rose as much as 2% early on Monday, paring losses from the previous week, after the French IT company announced it would sell its U.S. subsidiary
Capgemini Moves to Sever Ties with ICE Amid Growing Backlash
Capgemini's Decision to Cut Ties with ICE
By Leo Marchandon and Avinash P
Background of the ICE Contract
Feb 2 (Reuters) - French IT company Capgemini has moved to cut ties to the U.S. Immigration and Customs Enforcement after a backlash from workers, lawmakers and investors over a $4.8 million contract a U.S. subsidiary signed with ICE late last year.
Reactions from Stakeholders
Capgemini said on Sunday it would sell the U.S. business in a move highlighting a growing reputational risk for U.S. and overseas firms after two fatal shootings of U.S. citizens by ICE agents sparked public outrage and protests across the country.
Market Impact and Future Outlook
"You don't need to have that kind of spotlight on you right now," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Conn, who does not own Capgemini stock.
There is no suggestion of wrongdoing by Capgemini, which said the U.S. subsidiary with the ICE contract, Capgemini Government Solutions (CGS), represented 0.4% of 2025 revenue.
Capgemini shares, which have been under pressure since the ICE contract came to public attention, rose more than 2% on Monday after the company's announcement that it would sell CGS.
It cited U.S. legal constraints on classified federal contracts meaning it could not exercise "appropriate control" over its operation. The company did not comment further.
However, Capgemini CEO Aiman Ezzat said in a LinkedIn post last week that he had only been recently made aware of the nature of the contract, which "raised questions" for the firm.
The White House is reconsidering some of its aggressive and increasingly unpopular immigration enforcement efforts.
OTHER FIRMS WORKING WITH ICE
Many global firms have contracts with ICE, including Denver-based Palantir Technologies, which has touted its work with the U.S. government in the past.
Shares in Palantir, which reports results after Monday's close, are down 15% this year, but that is after nearly tripling in price since Donald Trump's November 2024 re-election.
Prison operators that work with ICE, Geo Group and CoreCivic, have seen their share prices fall by 9% and 6% respectively in the last 10 days of trading, although that may also be related to threats to government funding.
Democratic lawmakers have held up a bill authorizing spending on the U.S. Department of Homeland Security as they try to rein in ICE. Geo and CoreCivic shares have gained 6% and 37%, respectively, since Trump's re-election in November 2024.
Palantir, CoreCivic and Geo Group did not immediately respond to Reuters requests for comment.
Last month, Hilton removed a Minneapolis hotel that refused to accept bookings by ICE agents from its system.
GETTING AHEAD OF THE BACKLASH
CGS was awarded a contract by ICE in December 2025 for skip tracing operations, which use data analysis to locate people through financial records, phone data and digital footprints.
French finance minister Roland Lescure had urged Capgemini to be transparent about its ICE ties when an opposition lawmaker raised the subject in parliament late last month.
French union CGT called for Capgemini to cease work with U.S. federal institutions and audit all contracts since 2007 in a letter to Ezzat seen by Reuters.
The union told Reuters on Monday that the sale was "a small victory", but did not satisfy its demands as Capgemini's broader North American workforce of 6,000 may still be providing services to federal clients.
However, France's CFDT union welcomed the sale.
Michael Field, chief European equity strategist at Morningstar, said he was "surprised and impressed" by how fast Capgemini had moved to address the backlash.
"It seems like a wise move by the company to get ahead of it and separate the business before the backlash grows," he said.
(Reporting by Leo Marchandon in Gdansk and Avinash P in Bengaluru; Additional reporting by Jaspreet Singh and Utkarsh Hathi in Bengaluru; Editing by David Gaffen, Adam Jourdan, Kirsten Donovan and Alexander Smith)
