J-R, here's some more information to support the wisdom of CGI's focus on outsourcing.
Role Of IT Organizations Is Shifting
(09/25/98 2:59 p.m. ET)
By Bruce Caldwell, InformationWeek
IT organizations are doing less development and
maintenance and more integration,
implementation, and sourcing management,
according to the 1998 Rubin Systems/Meta
Group Industry Watch Survey released
Wednesday.
The survey of 426 corporations and government
organizations in 14 countries found development
and maintenance work is down 33 percent since
last year's survey, outsourcing is up 42 percent,
and activity involving packaged systems is up
300 percent.
Note also the tremedous growth in packaged solutions (e.g CGI partnership with SAP)
As for CGI's margins, Godin identified that as a specific area targeted for improvement at the AGM - and we have see significant progress in that area in the quarterly reports since then.
Indeed, outsourcing margins may tend to be lower for the processing services component - as you know in most areas of financial activity, the margins are usually highest where the risks are highest. Since outsourcing of processing services is a repetitive and low risk business (5 to 10 year contracts), lower margins may be the norm. But keep in mind that once you have the processing business, it becomes infinitely easier to cross-sell other products and services. |
