Stimulating the economy, keeping jobs in the U.S. rather than abroad and managing security risks are three of the biggest issues facing America today. Two studies released today by the CGI Coalition for Mission Results, a public policy initiative formed earlier this year between CGI (NYSE: GIB; TSX: GIB.A), and major academic institutions, outline a multi-faceted strategic plan devised to address job creation and the IT workforce in the U.S.
With the economy in flux and the current unemployment rate at 6.1 %, new high-quality U.S. jobs are needed in rural communities as Americans struggle with continuing job loss. The studies suggest that the onshoring business model, through public-private partnerships, can provide significant economic stimulus in rural communities through the creation of lasting, high quality jobs in America's rural hometowns and give young people the opportunity to work and stay in the communities where they grew up.
CGI, one of the largest independent information technology and business process services firms in the world, has used technology, and onshoring in particular, to help clients address today's business challenges. At the Democratic National Convention, former Gov. Mark Warner referenced CGI's Southwest Virginia Center of Excellence in Lebanon (Russell County) as a model for onshoring where 300 high-tech jobs were created that paid twice the county average.
?To better serve our clients, CGI sought to create cost-effective, high quality alternatives to offshoring,? said Donna Morea, President, CGI, U.S. ?Information technology is our newest national resource. High quality jobs with proximity to clients create enhanced productivity and value for all of our stakeholders while supporting our rural communities across the country,? said Morea.
Onshoring helps manage security risks in the world of global IT services delivery. When sensitive IT solutions and infrastructure are kept in the U.S, there is less risk of overseas exposure to national security issues. Additionally, while offshore outsourcing can generate cost savings of 20-40% for applications projects compared to major U.S. cities, domestic onshoring in mid-sized cities and rural areas can generate 30% savings, according a July 2007 report published by the Information Technology Association of America.
The first study, Securing America's Future: Tools for Achieving U.S. Technology Independence and Job Growth, authors Dr. Lester Salamon Founding Director and Principal Research Scientist, Institute for Policy Studies, at Johns Hopkins University, and George Schindler, President of CGI Federal, outline the challenges facing the U.S. in achieving technology independence and job growth and recommend ways in which the government can respond to those challenges.
?The past two decades have witnessed a significant outsourcing of not only low-skill production jobs,but more importantly the outsourcing of high-quality, skilled jobs in IT,? said Salamon. ?This is not only an economic concern, but it has become a matter of special urgency in light of the security issues posed by having critical national intelligence and business information handled overseas.?
According to the studies, U.S. IT companies average an ongoing inventory of 470 job openings for skilled positions, while technology companies focused on defense specifically average more than 1,200, according to the National Foundation for American Policy's March 2008 report ?Talent Search: Job Openings and the Need for Skilled Labor in the U.S. By actively growing domestic IT capacity, the U.S. can stimulate rural growth and help to keep these jobs at home, and possibly even bring jobs back that had been sent overseas.
The second study, Creating Jobs in America: Case Studies and Recommendations for Local Job Development, authored by Dr. Darrene Hackler, Associate Professor, Department of Public and International Affairs at George Mason University, examines case studies of how U.S. private sector companies are using onshoring as an effective economic development tool in local communities.
Hackler addresses how localities can experience economic growth in terms of jobs and tax revenues with private sector investments from companies located in traditional urban centers that are considering low-cost domestic locations instead of global offshoring.
Additionally, the study examines economic development potential and impact of onshoring in order for communities to experience sustainable development that leads to competitiveness and further upgrading of the local economy. It presents four case studies of how communities throughout the U.S. are making this happen. One case study describes how CGI invested in a U.S.-based technology center to foster a rural economic transformation. CGI's Southwest Virginia Center of Excellence in Lebanon is a model of how a public-private effort can help revitalize an economically depressed community while protecting sensitive data and technology. Opened in 2007, this facility is projected to generate in excess of $65 million in economic activity in the region by 2010.Hackler also makes recommendations to public officials at the local, state, and federal levels by detailing factors and policies that support the development of onshoring opportunities.
About the CGI Coalition for Mission Results
Launched in 2008, the mission of the CGI Coalition for Mission Results is to analyze the top challenges facing government and industry, and to develop new ideas regarding how technology can be applied to create solutions that optimize business results. CGI has partnered with leading academic institutions and subject matter experts to conduct research targeted at specific challenges. Example partnerships include the CGI-GMU Initiative for Collaborative Government (www.collaborativegov.org), a joint public policy initiative with George Mason University, and research commissioned to Dr. Lester Salamon, director of the Center for Civil Society Studies of Johns Hopkins University.
About CGI Federal
CGI Federal (www.cgi.com/usfederal) is a wholly-owned U.S. operating subsidiary of CGI Group Inc., dedicated to providing effective IT solutions for federal government agencies by combining over 30 years of government experience and technology skills. Founded in 1976, CGI Group Inc. is one of the largest independent information technology and business process services firms in the world. CGI and its affiliated companies employ approximately 27,000 professionals in over 100 offices across 16 countries. CGI provides end-to-end IT and business process services to clients worldwide from offices in Canada, the United States, Europe, Asia Pacific as well as from centers of excellence in North America, Europe and India. CGI's annual revenue run rate stands at $3.8 billion and at June 30th, 2008, CGI's order backlog was $12.03 billion. CGI shares are listed on the TSX (GIB.A) and the NYSE (GIB) and are included in the S&P/TSX Composite Index as well as the S&P/TSX Capped Information Technology and MidCap Indices. Website: www.cgi.com.
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For more information:
Peter Cutler
Director, Communications
peter.cutler@cgifederal.com
703-227-6933
