CGI Group Inc. says its acquisition of the Underwriters Adjustment Bureau Ltd. Tuesday will broaden the range of outsourcing services it can offer.
Montreal-based CGI will pay $53 million for UAB, which provides claims management,
underwriting and actuarial services for the property and casualty insurance industry. The deal is expected to close Jan. 1, 2003.
“”This is a very natural fit for us because it’s in a vertical where we have a lot of relationships,”” says CGI president and CEO Michael Roach.
Last month, for example, CGI extended a 20-year relationship with Montreal-based Industrial Alliance.
Businesses, Roach says, are rethinking what constitutes their core business and are subsequently dropping non-essentials to let others take care of them.
While integration of UAB’s 1,300 employees is expected to start in January, Roach says a market strategy is being devised today. “”We’ll use the time between now and January to look at our post-integration strategy and that will centre on increasing market share, but also, very importantly, share of customer.””
And there’s a lot of market to grab, according to Roach, despite layoffs at EDS and other outsourcing firms. He estimates the market is worth billions and the business process services market is growing at a much faster rate than its IT counterpart. About 16 per cent of CGI’s revenue is made from business process consulting.
By joining forces, Roach says three new revenue streams open. These include IT services to UAB customers, business process services to CGI customers, companies that find their collective offering more attractive than the split version.
“”Our strategic plan has always called for providing end-to-end services to our clients that include both IT and business process services, and as we continue to grow in this area I suspect over time people will see that balance,”” Roach says.
What is unlikely to change is the competitive balance in Canada, according to IDC Canada analyst Jason Bremner. “”It’s not like it’s IBM acquiring PwC. It’s not even, quite frankly, Hewlett-Packard acquiring Intria-HP.””
Bremner, however, agrees with Roach that the move increases what CGI can offer. “”They say they want to expand in business process outsourcing, so this will help them.””