CGI’s Godin predicts outsourcing panic bubble

TORONTO — The top executive at the CGI Group Inc. Monday advised the Canadian IT industry not to panic about the possibility of losing jobs to offshore outsourcing in a speech at the Canadian Club of Toronto

“”I’m amazed to see

how a natural and gradual evolution could rapidly become a bubble,”” said chairman and CEO Serge Godin. “”I see the exact same phenomenon as the bubbles associated with Y2K and with e-commerce.””

Godin noted that the world’s data didn’t disappear when it awoke Jan. 1, 2000. Nor does everyone conduct all their business transactions and shopping on the Internet.

In the U.S., he said newspapers have been depicting horror stories about “”offshoring,”” and the issue has started to create a stir in Canada.

Godin explained that although some work is gradually being sent to India, China and other overseas locations, work will migrate to Canada as well. Quoting last week’s study by PricewaterhouseCoopers, he noted that while Canada will lose 75,000 IT jobs to offshore outsourcing over the next six years, 240,000 jobs in IT will be created during the same period.

“”We still have a net gain of 165,000 jobs over six years.

“”Talk to the IT project managers, the IT architects and designers who work with the users. Ask the people mastering IT what they think of it . . . then you will see the bubble disappear quickly.””

Godin said this is an opportunity to position Canada as a leading offshore destination by developing many competitive centres of excellence in IT in which companies, universities and government cooperate.

For its part, CGI since 1985 has been offering outsourcing at the request of clients. As competition is globalizing, companies cannot afford to invest alone in IT and business processes and instead need to share services, said Godin. He added nearly two-thirds of Fortune 500 companies in the U.S. have already farmed out at least some of their IT functions.

In addition to nearshore outsourcing, CGI has 650 employees involved in outsourcing in overseas markets. It plans to increase this employee base to 1,000, primarily in Bangalore, India, by the end of this year to meet client demand.

While Godin predicted the gradual growth of foreign outsourcing jobs, he said it’s not feasible to contract out all work because jobs involved in systems architecture and design, for example, are better suited to remain here, Godin said.

CGI, which has purchased about 60 companies, is on the verge of acquiring American Management Systems, a union that will increase its critical mass and stature as an outsourcer of large projects, Godin explained. He said the purchase will increase CGI’s number of employees to 25,000 worldwide, double its size in the U.S. and Europe and make it one of the 10 largest independent IT and business process services firms in the world.

Size is important to CGI. Ten years ago, Air Canada told the company it was too small to be included in an outsourcing competition for the airline’s IT functions.

“”We lost all the business we had with them three months after the contract was awarded,”” Godin explained. “”The contract was valued at $150 million per year, and our annual sales totalled no more than $100 million.””

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