CGI, the secret multinational

Transcription

1 CGI, the secret multinational Its client portfolio includes the biggest companies in the world Rio Tinto, Michelin, Air France, and 25 of the 30 largest banks on the planet. But what is it that CGI actually does? Serge Godin, head of the organization, is here to tell us. April 23, 2014 by Pierre Duhamel It has taken Serge Godin almost 40 years to achieve a turnover of $10 billion. He now wants to double that amount in the next five to seven years. Photo: Christian Blais As owners of multinational, multibillion dollar companies go, Serge Godin is probably one of the most reserved. However, CGI, which was founded by Godin in Quebec in 1976, is Canada's biggest technology company, employing more than 68,000 employees around the world and achieving revenues of over $10 billion. In a way, CGI is Quebec's own success story, on a par with Facebook or Google, although it is less widely known. If CGI and its founder are not well known, it is probably because the general public does not know what the company does and what it sells. Everyone is aware that Bombardier manufactures planes, Couche-Tard sells milk and gas, and that Power Corporation is a financial empire. But what about CGI? The term "information technology," used to describe jobs in this sector, provides very few clues to go on. Curious to hear his answer, I asked Serge Godin how he would explain his company to the average person.

2 The Executive Chair of the Board and cofounder of CGI leaves the conference room next to his office at the headquarters in the heart of Montreal for a few moments. When he returns, he brings with him a box around 40 cm high, full to the brim with sheets of computer programming code. The demonstration begins. "Seventy boxes like this are needed to create the code for a system that is capable of managing the affairs of a commercial bank. A system used by a bank or telephone company requires millions of lines of computer code, and if one line is in the wrong place, the network could crash," he explains. It is so complex that it takes 400 people one full year to define the rules and specifications for such a system, and a further 300 person-years to write the code for it.

3 CGI's money laundering prevention software handles 94% of the total value of currency processed worldwide and secures the transfer of $5,000 billion a day. Photo: istockphoto CGI works in the background, creating computer systems used by companies to manage their affairs or to communicate with their clients. The company also serves as a consultant, developer and subcontractor for complicated systems, all of which command large fees. One client, approached by Serge Godin himself, signed a deal for $4.5 billion. This 10-year contract, worth $450 million per year, has even been renewed. CGI's client portfolio is made up of the biggest companies in the world, including Rio Tinto, Michelin, Air France-KLM, and Heathrow Airport in London. Other clients include 25 of the 30 largest banks on the planet, along with 7 of the 10 largest insurance companies. In the financial sector alone, 16,000 people work for CGI, and the company also has 2,000 clients in government. While Apple was born in a garage, the story of CGI began in Serge Godin's basement in Quebec. He was the sole employee of Conseillers en gestion et informatique (Consultants to Government and Industry, where the acronym CGI originates) when he landed his first contract in June "I carried out computer simulations to measure the effect of government tenders and union demands on the budget of Quebec in public sector negotiations," explains Godin. He soon hired a second employee, André Imbeau, cofounder and current Vice-Chair of the Board. The company reached new heights in 1986 after its flotation, which gave it the financial resources to buy out some of its competitors. "We had no choice but to expand if we wanted to win the most lucrative subcontracting deals, as

4 subcontracting was becoming more and more common in our sector," he recalls. The company also had to grow to meet the needs of its clients by establishing multiple branches and facilities. CGI started by opening an office in Ottawa, then another in Toronto. It now has offices all over the world. "We had to follow our clients," Godin underlines. "Businesses want to have the same computer system throughout their organization." Similarly, the first clients with international operations, such as Alcan, also led the company to establish its presence in other countries. Do you have a credit card from an oil company? There is a good chance that CGI manages it. In fact, CGI handles $90 billion worth of fuel card transactions each year. Photo: 123RF With 75 acquisitions since 1986, CGI now has 400 offices in 40 countries. "We have a presence in countries making up 85% of spending on IT worldwide,"

5 Godin points out. This is the criterion that he uses when weighing up the possibility of establishing a new office or making an acquisition. In 2012, the acquisition of the Anglo Dutch company Logica alone doubled the size of CGI, making it the fifth largest independent company in the world in this sector. The word "independent" is used to distinguish CGI from its competitors, such as IBM and HP, who act both as IT consultants and vendors. Serge Godin talked me through how decisions about investments are made. "Are we large enough to meet the needs of the American market, which represents 40% of global demand? The answer is yes. Do we have a large enough presence in the Australian mining sector? No, we need to invest in it. Are we strong enough in Germany, where we have 2,500 employees? Again, no..." Other factors also influence investment decisions. "We will not work in countries with unethical business practices," he emphasizes. For example, CGI has not invested in Russia. In China, its only presence is as an intermediary with the US State Department, providing the computer infrastructure used to issue visas and immigration documents. CGI also created the platform for the online registration Web site for the American medical insurance scheme the flagship element of Obamacare, the healthcare reforms introduced by President Barack Obama. The widely publicized technical problems were a source of embarrassment for the Obama administration and provided Republicans who opposed the Patient Protection and Affordable Care Act with ammunition. CGI's contract was not renewed in February. Some thought that the company s reputation was tarnished. However, Serge Godin swears it is not,

6 and he is reassured by the opinions of financial analysts who monitor the company's performance on the stock exchange and by an order book that has seen an increase of $2.8 billion in the first quarter of the year within the midst of this controversy. Serge Godin remains optimistic. He has promised his shareholders that he will increase turnover from $10 billion to $20 billion in the next five to seven years. Now that he has established branches on every continent, Godin wants to increase revenue from CGI's main markets. "We went broad, let s now go deeper," he says, illustrating the company's strategy. The first time I interviewed Serge Godin over 25 years ago, he told me that in businesses such as his, true assets "take the elevator, morning and night." Clearly, he has to make the staff who take care of his clients happy and it would be tempting to say "mission accomplished", as the vast majority of CGI employees are also shareholders who have benefited from the stock s growth, which has increased an average of 25% per year over the last 25 years. The rise in 2013 was 34%. CGI is proof that being well known by the general public is not always essential to success.