Vendor Analysis
published on Mar 24, 2014
Report Overview:
CGI was founded in 1976. The company had revenues of CDN $10.1bn in FY 2013, ending September 30, 2013. Adjusted EBIT margin was 10.7% (FY 2012 11.5%). Net debt at the end of FY 2013 was CDN $2.7bn (down from CDN $3.1bn).
Who is this Report for:
NelsonHall's Application Outsourcing Vendor Assessment for CGI is a comprehensive assessment of CGI's application outsourcing offerings and capabilities designed for:
- Sourcing managers monitoring the capabilities of existing suppliers of IT services and identifying vendor suitability for application outsourcing services
- Vendor marketing, sales and business managers looking to benchmark themselves against their peers
- Financial analysts and investors specializing in the application services, application support and maintenance sectors.
Scope of this Report:
The report provides a comprehensive and objective analysis of CGI's application outsourcing offerings, capabilities, and market and financial strength, including:
- Analysis of the company's offerings and key service components
- Revenue estimates
- Identification of the company's strategy, emphasis and new developments
- Analysis of the profile of the company's customer base including the company's targeting strategy and examples of current contracts
- Analysis of the company's strengths, weaknesses and outlook.
Key Findings & Highlights:
CGI has a global headcount of ~68k, of which 18k is in its delivery network.
The September 2012 acquisition of Logica was a major step for CGI; it more than doubled the scale of the company from CDN$4.7bn to ~CDN$10.1bn. It also increased:
- Presence in Europe, mostly through professional services
- More than doubled CGI's application outsourcing business, in terms of revenues and headcount, to a NelsonHall estimated ~CDN$3.2bn in FY 2013. See sub-section on Logica below.
CGI considers IT outsourcing as a means to increase its share of resilient revenues. Within IT outsourcing, CGI looks positively at application outsourcing and to a lesser extent at IT infrastructure management, the latter being described as a "difficult market" by Mr. Roach.
Within application outsourcing, CGI has taken several steps to transform the former Logica's revenue mix (45% from outsourcing, 55% from professional services) to be closer to CGI's mix (66% from outsourcing in Q3 FY 2012, before the acquisition of Logica). There is a clear focus on large contracts and CGI has been looking to proactively develop proposals to drive client discussions and avoid competitive tenders. This is a major change in emphasis from the former Logica.
Steps taken include:
- Identifying opportunities to turn professional services engagements into multi-year contracts. In the short-term, CGI is building a pipeline of short term contracts with the intention of transforming them into multi-year ones
- An emphasis on CGI's proprietary software ("CGI IP") away from license sales to multi-year contracts, whether AM, bundled AM and hosting, or even BPO contracts.
