He’s a stealth giant. She is worth more than $20,000 million on the stock exchange and has 5,500 clients worldwide, including some of the main groups of the Ibex 35. Her strength is advising on the technological development of companies, in particular on all issues related to digitization. Founded 46 years ago, Canadian consulting firm CGI has throughout its history specialized in growing through acquisitions, having bought more than 70 competitors. Its founder – he was also CEO until 2006 – is Serge Godin (Saguenay, Quebec, 1949), one of the richest men in the North American country with a fortune of $2.7 billion according to Forbes.
Godin is the epitome of a self-made businessman. He was born into a family of nine siblings. As a child he began to work in his father’s mill. The business was damaged beyond repair by a fire and he had to learn to make a living. “The four oldest children had to contribute to the family household. I worked in a supermarket in the evenings and in a dry cleaner on the weekends. It was a very formative experience,” he said in an interview with Radio-Canada. He studied computer science and business administration. After completing his studies, he began working as a consultant. He saved $5,000 CAD, which he used to create CGI in the basement of his Quebec home. I was 26 years old. It received its first contract from the Department of Social Welfare of the French-speaking Canadian province to develop information systems. In those first moments he had the support of André Imbeau, a childhood friend who soon joined the project. A turning point for the consulting firm came when it was tasked with implementing a plan to computerize the local university. From that point on, Godin and Imbeau began winning contracts for the next decade.
Jean-Luc Geha, a professor at the Montreal School of Graduate Studies in Business, believes that CGI has started its journey at the right time. “It seems odd to say today, but computers were seen as mysterious and complicated in the 1970s. The managers of the companies didn’t know how to proceed and the competition in this area was very little,” he argues. The next step in CGI’s growth story was based on a voracious acquisition run. The first notch on the turret was the purchase of BST; The transaction was financed by the capital increase with which it went public in Canada. This purchase allowed Godin to expand its services to businesses such as systems integration and IT outsourcing. In 1998, CGI took another big step by merging with Bell Sygma (a subsidiary of Bell Canada). It was also traded on the New York Stock Exchange that same year. In 2004, the company acquired American Management Systems, doubling its size in the US market, tripling it in Europe and reaching Australia. Eight years later it did the same with the British Logica and catapulted the company further into the European market.
The company has not put the brakes on acquisitions. In 2022, it carried out five transactions of this type (with an investment of almost 459 million euros). Managers note that prior to moving to other countries, the priority will be to increase depth in each market they already have a presence in. Among the operations signed by the consultant is one in Spain. “Our desire to continue expanding in Southern Europe, specifically Spain, as well as Latin America, has been reinforced with the acquisition of Cognicase Management,” said Laurent Gerin, the company’s President of Southern Europe.
Presence in Spain
Almost half of CGI’s customers in Spain belong to the Ibex 35. In addition, the company’s center in Bogotá plays a leading role in its global strategy. The Canadian company currently has more than 2,000 consultants in eight Spanish cities and in Latin America. Professor Geha points out that the company’s business model, based on international expansion, has been very effective: “It has taken its know-how to other places, but it has done so by buying local companies that have the specifics know each country well.” .
CGI generated revenues of CA$12,870 million (approximately EUR 9,200 million) in fiscal 2022; a growth of 6.1% compared to the previous year. Net income was 1,470 million Canadian currency, up 7.1% year-on-year. The prospects for 2023 are just as good. The company presented results for the first quarter of fiscal 2023 on Feb. 1: It posted sales of CA$3,450 million (up 11.6%) and earned CA$382 million, a 4.1% improvement over the same period last year .
“Our ongoing investments have continued to create value for all of our stakeholders. One aspect I would like to emphasize is our strong position as a trusted partner for our customers’ digitization priorities,” said George D. Schindler, President and CEO of CGI, during the presentation of the quarterly results. The appetite for inorganic growth has not yet been satisfied. “The fragmentation of the IT services market remains high, giving us many opportunities for growth through mergers or acquisitions,” added Schindler. In fact, the company has close to CA$1,000 million in liquidity for this type of transaction in 2023.
Jean-Michel Baicle, CGI’s Director of Operations, emphasizes that the company has “more than 46 years of best practices and proven frameworks to ensure the delivery of high quality and safe projects”. This strategy, he says, allows his consultants to “maximize the time that clients spend supporting and innovating.” According to Baticle, it’s about “prioritizing operational efficiencies and driving cost savings to fund and accelerate investments in digitalization, including critical modernization initiatives.”
The Canadian company employs around 90,000 people in around 40 countries. The head office is in Montreal. Godin no longer holds executive roles, although he remains responsible for coordinating the board of directors, a body co-chaired by his daughter, Julie Godin, as of 2020. Divya Goyal, an analyst at Scotiabank, highlighted another element that sets CGI apart in a recent report on the company: “It is a company that is run by its founders and all the officers have been with the company for more than a decade companies, either as consultants or through acquisitions.” Goyal emphasizes that these people move through different departments before assuming greater responsibility, forming a team that understands the business model and customer needs in depth.
If the technology gains paramount importance in companies, the threats are also associated with digitization. Criminal practices like phishing are some of the dangers. CGI is in constant communication with customers in this regard. In a survey conducted last year, executives at companies using their services named cybersecurity as a second priority; In 2021 it had ranked fifth. “We are committed to helping organizations plan, protect, educate and respond quickly to potential cyber threats,” says Laurent Gerin. “We also have security operations centers around the world that provide detection and prevention services 24 hours a day,” he adds.
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