Deregulation in the financial services sector will open up opportunities to fuel the next quarter-century of CGI’s growth, its chairman says.
The Montreal-based IT outsourcer celebrated its 25 anniversary June 15. The celebrations come at the same time the senior management team begins its strategic planning for the next year.
Serge Godin, who started CGI out of his basement in 1977, said the company’s agenda will be driven by the demand for managed IT services created by the convergence of financial products in banks and insurance companies. Following its US$438 million acquisition of IMRglobal in February, Godin said 35 per cent of CGI’s revenues will come from the financial sector, and another 35 from the telco space.
“Those players invest between seven or eight per cent of their revenue in IT,” he said. “The other sectors are going to invest between 1.5 and three per cent in IT outsourcing. When you look at CGI or any other player in this landscape, you’re going to see the weight coming from there.”
Godin said he’s spent the last five years preparing CGI to become a single window for outsourcing customers. “If you’re a bank and you want to sell life insurance or wealth projects, you’ll be able to come to CGI and in three or four months you’ll be up and running, because we own those solutions,” he said.
CGI has grown from a 492 square foot office with one telephone into a 10,000-strong juggernaut operating in more than 20 countries and 2,500 clients in Canada. Last year, the company made more than $1.4 billion. While its growth was steady from its inception, the real acceleration happened in 1986, when Godin said the company took on the onerous task of defining its best practices and coming up with a consistent set of business processes which has since been nicknamed “The CGI Way.” Through all its mergers and acquisitions — there have been more than 22 since 1986 — Godin said the CGI Way has been the key ingredient to keeping the operation from running off the rails.
“It’s become quite a strong tool for us to integrate the different companies,” he said. “Last Thursday and Friday I had 435 vice-presidents in the company, people coming from all around the world — Japan, Australia, the UK, France, Portugal — and all of the managers and leaders we have work the same way.”
CGI also employs a share purchase plan which offers every consultant shares at 50 cents per dollar, and additional share incentives among individual business units. It’s a program which appears to have worked: Godin said CGI has maintained a two per cent turnover rate in management for the last 10 years. “That’s why we were able to bounce back from the slowdown after the Y2K issue. We have people here who just know the whole company so well inside and out,” Godin said, adding that despite the CGI Way, “We give strong respect to individuals — not only management but “champions” in the company. From a communication point of view, everything is shared in the company when it goes well.”
About 58 per cent of CGI’s customer base is in Canada, while32 per cent is in U.S. and 10 per cent comes from international clients. The company works in 24 other countries on a project basis. Godin said he would like to get at least 25 to 30 per cent of its business internationally, with the rest split equally between U.S. and Canada.