CGI says network of local service centres a plus as U.S. cracks down on visas

CGI optimistic about Trump administration

MONTREAL — IT company CGI Group Inc. says its practice of employing local talent at its network of service centres could drive new government business in the United States as the administration cracks down on foreign worker visas.

“It’s a tailwind for us if the current administration’s policies require more of the work to be done onshore,” CEO George Schindler said in an interview after the Montreal-based company’s annual meeting.

With 11,000 employees in the U.S., which includes six of what it calls “centres of excellence” employing 1,700 mainly American workers, Schindler said the company is less impacted by visa challenges that affect many of its competitors.

More than 97 per cent of its American workforce are local residents with only about 300 employees working on H-1B visas, he noted.

Following President Donald Trump’s temporary U.S. entry ban on nationals from seven Muslim-majority countries, tech companies fear the visa program they’ve long used to bring in programmers and other specialized workers will be next on the chopping block.

Schindler said there’s no impact on current employees and doesn’t believe changes will dramatically affect its operations.

“I’m not worried about continuity of current work and it’s not a big driver of future work.”

The company declined to join other tech firms in criticizing U.S. President Donald Trump’s controversial ban last week, which CGI said could only impact less than 10 of its employees working in the United States.

“We don’t do politics,” chairman and founder Serge Godin said.

In addition to being unconcerned about the visa changes, CGI (TSX:GIB.A) said it’s well-positioned to profit from tax changes and promised spending increases, especially in defence and intelligence agencies.

While there’s uncertainty over spending in U.S. domestic departments such as the Environmental Protection Agency and Energy and Health and Human Services, Schindler said CGI no longer has any significant exposure to Obamacare, which is under threat of repeal.

Of the nearly 14 per cent of its revenues that come from the U.S. federal government, about 60 per cent is in contracts with the departments of defence, intelligence and Homeland Security, while 40 per cent is in domestic programs which would largely be unaffected by budget cuts.

“I believe in general there’s more to gain than there is to lose,” Schindler said.

The company also sees a promised tax cut from its current rate of about 40 per cent to as low as 15 per cent having a big impact on its net profits.

CGI reported Wednesday that its net profit increased 16 per cent in the first quarter to $275.7 million or 89 cents per diluted share on a small slip in revenues to $2.67 billion.

— Follow @RossMarowits on Twitter.

Ross Marowits, The Canadian Press

Note to readers: This is a corrected story to change the wording to service centres instead of call centres.

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