IT services firm CGI Group Inc. is strengthening its foothold in Nova Scotia by hiring 300 IT professionals to staff an international systems development centre in Halifax being built with the help of Manulife Financial Corp.
The centre is being funded by a six-year outsourcing contract with Manulife that’s valued at $125 million and comes on the heels of its merger with John Hancock Financial Services Inc. and its Halifax-based subsidiary, Maritime Life. The contract’s renewal will be negotiated in 2010.
The mandate of the new CGI centre is to provide systems development, maintenance and integration services to Manulife and other international CGI clients. Montreal-based CGI said 300 former Maritime Life staffers joined the centre at the beginning of the month, and expected to boost the centre’s employment to 500 over the next two years.
“”What’s important to us in this deal is we have a global delivery model, which means that in order to provide the best value to our clients, we have to be able to do work in locations where that work is economically beneficial so, in other words, better price points,”” said Alistair MacDonald, Fredericton-based senior vice-president of CGI, who’s responsible for Altantic Canada operations.
CGI has built other centres of excellence in Toronto, Montreal, Québec City, Jonquière, Que., Regina and Fredericton.
The centre in Halifax will initially support contracts for Manulife, but CGI is also working on “”three opportunities at various levels of negotiation,”” MacDonald said. He said the first of the North American deals will be completed shortly, but he cannot divulge the identity of the companies.
Atlantic Canada, boasting efficient living costs, office space and salaries, can undertake nearshore work for clients anywhere in North America, he explained. Moreover, he said, Halifax has an appealing quality of life, making it easy to retain staff.
“”If you take a look at what it would cost to do a piece of work in Halifax…let’s say it’s to build some software. And if you compare it to the price of building that same piece of software in, say, Detroit or Dallas or Montreal, Halifax is much more attractive.””
Canada ranks high on the list of countries in the outsourcing business. In its annual report on world investment released yesterday, the UN Conference on Trade and Development found that Ireland, India, Canada, and Israel accounted for more than 70 percent of overall outsourced service, mainly in software development and other information technology-related services. The sector is predicted to grow to US$24 billion by 2007, an increase from US$1.3 billion in 2002.
For Nova Scotia itself, it stands to gain considerably from CGI’s arrangement with Manulife, according to MacDonald. Not only will the centre translate to huge job creation, but it will be sustained –– “”not just a one hit,”” he said. “”This centre is being launched at a time when nearshore is starting to become recognized as a very viable proposition within North America.””
Stephen Lund, president and CEO of Halifax-based Nova Scotia Business Inc., a privately owned organization that drives economic development in the province, believes “”Halifax is going to be a world-class centre for IT application development work.””
Nova Scotia has a pool of 13,000 IT workers, 8,000 of who work in software and services, and the balance in the hardware and telecom sector, according to last year’s Nova Scotia Business Registry which surveys provincial employment.
It has one of the most educated workforces in the country, said Lund. Figures in the Labour Force Survey published by Statistics Canada show that more than 50 per cent of the employed have a secondary education. Only Quebec ranks slightly higher.
Nova Scotia Business Inc. added that, with 320 graduates, Nova Scotia’s Dalhousie University last year had the largest graduate class in computer science in Canada. (This ranking, however, fluctuates annually.)
“”When Manulife took over Maritime Life, there was a lot of concern here about what’s the future going to look like,”” said Lund. “”And now the future looks great. We’re capitalizing on a significant opportunity here to use expertise that’s already in the province.””