The management of the Montreal-based multinational technology consulting firm CGI believes it is sheltered from the consequences of a possible recession, since companies do not seem to be questioning their technological investments.
That’s what CGI CEO George D. Schindler said when asked about the topic several times on Wednesday during a call about the company’s most recent quarterly results. ‘company. “Information technology is no longer a discretionary expense,” he said.
During previous recessions, the company had done relatively well despite a slowdown in activity, said the leader. But technologies now have greater strategic importance than in the past, he said.
Mr. Schindler cited conversations he had with a client in Europe to illustrate his point. “The discussion went like this: ‘We’re preparing for a recession, but we’re also preparing to spend more on technology than we ever have.’ It is a change. I don’t think we heard that kind of comment in 2008-2009, [pendant la crise financière]. »
In his conversations with customers, Schindler says he’s seen a “commitment” on the part of companies to continue investing in technology to modernize their operations, be more efficient, reduce costs and address a scarcity of labour.
Businesses are said to be well aware of the risks on the horizon, however. Sixty percent of CGI clients said they expect operating expenses to be stable or declining, according to a survey conducted earlier this year. However, the survey shows that 80% of customers plan to maintain or increase the budget they devote to technology investments.
In this favorable environment, CGI continues to hire. By the end of June, the company’s workforce had increased by more than 10,500 advisors and professionals from a year ago, to a total number of approximately 88,500 worldwide.
Mr. Schindler mentioned that the employer must devote more money to the training of new employees in the context of labor scarcity, but that the investments will bear fruit once the recruits are able to work billable hours.
The job market is still “very tight”, despite announcements of layoffs in some Canadian start-ups, such as Goodfood and Wealthsimple, or American companies such as Netflix. The CGI survey mentioned above shows that 88% of its clients have difficulty finding professionals.
CGI management made reassuring comments on demand as the company reported higher results in the third quarter, which ended June 30. The company reported net income of $364.3 million, up 7.6% from the same period last year. Adjusted diluted earnings per share, which excludes certain acquisition-related costs and income taxes, amounted to $1.54, compared to $1.36 for the same period last year.