Serge Godin steps down as CGI CEO

CGI’s Serge Godin Tuesday said he has stepped down as the CEO of the company he founded almost 30 years ago.

Montreal-based CGI Group Inc. has named Michael Roach as Godin’s successor. Roach, who joined the company in 1998, was previously the company’s chief operating officer.

Godin will continue to be a force at the company and will retain the title of chairman. The executive reshuffle is designed to give Godin more freedom to look after existing clients and pursue new outsourcing opportunities, he said during the company’s annual general meeting.

“As the company is much more visible than it has been in the past, as the footprint in both the U.S. and Europe is much bigger, we are invited (to participate in) much larger opportunities. It is much more demanding from a business involvement point of view,” he said. “This is why we proceeded with this adjustment.

“Mike (Roach) and I will continue to share responsibilities . . . however Mike will interact more closely with shareholders.”

The outsourcing market is changing, requiring more personal attention for clients and longer lead times for new deals, said Roach.

“Some of this I’m convinced is not only the size but the complexity (of deals),” he said. “We’re dealing with more multi-national firms now that have other checkpoints that need to be made before we can get them signed and closed off.”

CGI has spent the last few years expanding its customer base outside of Canada, pushing into U.S. and European markets. In October 2003, it bought Boston-based Apex Consulting Group, a services company that specializes in order entry optimization, CRM and Web services.

In May 2004, CGI completed its acquisition of American Management Systems Inc., an IT consulting firm that deals with government, financial and telecommunications clients globally. AMS was subsequently integrated into CGI’s U.S. subsidiary CGI Virginia Corp.

Roach said that outsourcing accounts for a higher percentage of revenue at CGI than it would at most other services companies. He added that he expects CGI to outpace analysts’ expectations for the outsourcing market in general. The biggest growth opportunities will come from financial institutions, which are “very robust . . . we have a good calling card,” said Roach.

Another growth area is government, he said. Public sector organizations may look for outsourcers as their average employee age continues to rise and they look for more ways to cut costs.

The change in leadership at CGI may not have a direct impact on many of the company’s customers, said IDC Canada Ltd. analyst Jason Bremner, but the firm has earned a good reputation by steadily accruing outsourcing clients.

“I think clients like working with CGI, certainly here in Canada. Sentiment is the same elsewhere. CGI is known amongst its clients as flexible and a good provider of services. It’s ability to sign long-term agreements is reflective of that sentiment,” he said.

He added that the corporate reorganization in light of CGI’s growth targets makes sense.

“Focusing on growth opportunities is always a very good thing for a company to do. It’s been growing very well, but as you get larger, it gets more challenging to grow.”

Godin said that CGI aims to double the size of its business over the next three to five years. “I have been leading CGI for the past 30 years and I have never seen such a vibrant market as I’m seeing today,” he said.

CGI currently employs about 25,000 people. It’s revenue rate rate for fiscal 2005 was $3.7 billion.

CGI also announced Tuesday that it will sign a seven-year, $90-million IT services contract with Royal and Sun Alliance Insurance Company of Canada. CGI will be responsible for infrastructure management services such as mainframe and mid-range equipment, and data storage and recovery.

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