Goldman Sachs: India IT:CGI (GIB, Not Covered, $16.12)

Visit http://indiaer.blogspot.com/ for complete details �� ��


CGI (GIB, Not Covered, $16.12) 
 End-to-end IT and business process solutions provider – CGI has 31,000
professionals across the globe providing IT and business process solutions focused on
five industry verticals – financial services and insurance, government and healthcare,
telecom and utilities, retail and distribution, and manufacturing.

 Focus on mature markets leveraging global delivery – From a geographic
standpoint, the company focuses largely on mature markets (North America and
Europe) leveraging a combination of onsite/offshore delivery model with 15 global
delivery centers. CGI believe that two of the company’s most important competitive
advantages are being a Canadian-based company and having near-shore presence
next to the US, and its flexibility in delivery model. Over the past year, the company
has added two delivery centers in India and three delivery centers in the near-shore
and onshore locations.
 Higher government revenue mix from both federal and state and local work –
CGI’s overall government revenue mix is about 40% of revenues, and about 7,000 of its
headcount is focused exclusively on the US federal government that’s not offshorable.
That said, CGI does a significant amount of work for state and local governments
leveraging its global delivery centers. On the commercial side, about half of CGI’s total
headcount is focused on commercial clients, with about 8,000 global delivery
resources spread across three continents.
 India resources have grown and are expected to continue growing rapidly – In
India, CGI currently has 3,500 resources that have grown 38% on a CAGR basis over
the last several years. Given its size, the company intends to grow its Indian headcount
about 40% per year over the next 3-5 years. The company’s employee attrition rate in
India is lower than industry average at less than 15% on a LTM basis, which the
company attributes to (1) its focus on career development and welfare programs,
(2) high employee stock ownership – 97% of its Indian employees are shareholders of
CGI, 87% of its global employees are shareholders of CGI (representing about 50 mn
shares out of 271 mn shares outstanding), and (3) higher mix of lateral hires (85%) and
experienced employees (5.6 years of average experience).