Five months after acquiring the remaining 3.3 per cent of Cognicase Inc., CGI Group Inc. received a two-year extension on a ten year IT outsourcing contract with the National Bank of Canada
originally inked with Cognicase.
The contract, which will now extend until June 2012, is valued at approximately $60 million per year.
“”The request was made by CGI. We said yes. It was a fairly easy decision,”” said Rejean Charest, the Montréal-based senior manager responsible for IT outsourcing at the National Bank of Canada.
A meeting with National Bank set the stage for CGI’s $313 million takeover of Cognicase earlier this year. The Bank was Cognicase’s largest shareholder, with a 15 per cent stake in the company.
CGI’s Montréal-based director of investor relations, Ronald White, said that the company asked for the extension because CGI’s average duration of a contract is ten years, and the agreement under Cognicase only took the relationship to June 2010.
“”We like having a contract over a ten-year period. It allows us in the first few years to implement solutions and our ways of doing business. It also gives us real time to build a long term partnership which is what we focus on here at CGI,”” White said.
CGI manages all applications and new project development for the National Bank of Canada.
According to Charest, one of the biggest benefits of continuing the relationship with CGI through the contract extension is that the bank has access to a larger pool of resources from around the world. CGI and its affiliated companies have an employee base of 20,000. Prior to the CGI takeover, Cognicase employed close to 4,000 people.
White sees CGI’s expertise in the financial services sector as the most important element that it brings to the table. In 2001 CGI inked a deal with Laurentian Bank, and last year it signed a contract with Okanagan IT Alliance, a network of seven British Columbia-based credit unions.
“”We’ve been present in the sector for many years and have developed business solutions that meet the needs of our clients in this industry,”” White said.
While the changeover from Cognicase to CGI could have been a headache from the perspective of the National Bank, Charest described the move as transparent.
“”Transition? There was no transition,”” he said.
When Cognicase originally signed the agreement, the company took over the bank’s IT professionals, which helped to ease the transition for CGI.
“”The National Bank had a strong reputation in the industry as being served by a very talented, professional IT team, so we came to this engagement with a solid base already there,”” White said.
Because CGI has a long history of both outsourcing and acquisitions, he explained that change management is one of the company’s strong suits.
“”Transition is always a key phase with a client, whether it’s a transition into outsourcing or through acquisition, but we’ve developed processes to smoothen these transitions, so it’s one of our key strengths. This had to be well handled and I think that it is working well for the client,”” White said.
While National Bank has gotten behind CGI, its wholly-owned brokerage services division, National Bank Financial, turned to IBM Global Services last year, signing a $200 million, nine-year agreement to outsource business process changes.
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