Financial services firm Manulife Financial Corp. on Thursday finalized an agreement with IT outsourcer CGI Group Inc. that will see the creation of a new information technology development centre in Halifax.
According to Michael Roach, Montreal-based CGI’s president and chief operating officer, the centre will provide systems development, maintenance and integration services to Manulife and other CGI clients around the world.
“We’ll go hard on the financial vertical first, because we’ve got some expertise we’ve acquired from Manulife joining us,” Roach told IT World Canada. “But with technology being able to cross industry lines, in the future we are looking both to focus on the financial vertical and on any other verticals we operate in.”
When the deal was originally announced on June 9, it was valued at $120 million and was to be a five-year agreement. However, the deal has now turned into a six-year endeavour worth $125 million, confirmed Tom Nunn, spokesperson for Manulife’s Canadian division in Waterloo, Ont.
The main reason for Manulife outsourcing its IT development work is so it can concentrate on its core competencies, Nunn said. “We’re experts in financial services, life insurance and wealth management — we’re not experts in technology, but they (CGI) are,” he explained. “[This agreement] allows us to stay focused on what feel we do best, and CGI can focus on what they do best.”
As part of the agreement, 300 Halifax-based technology professionals joined CGI on Sept. 1. These workers were formerly employed at insurance firm The Maritime Life Assurance Co. before its parent company John Hancock Financial Services Inc. merged with Manulife on April 28.
John Hancock has a total of just over 1,000 employees in Halifax, Nunn said. “Between CGI and the existing business (in Halifax), there is still around the same number of employees [there],” he explained. “This has allowed us to maintain the employment levels in Halifax close to what they were” before the merger and the opening of the centre, he explained.
This is not the first time Manulife has, in a contract with an outsourcer, handed over a number of its employees to work in a facility that will eventually serve other customers, Nunn said. In 2002, it signed a similar contract with IBM to outsource most of its computer operations and related infrastructure needs. As part of the deal, IBM absorbed 220 Waterloo-based Manulife employees as well as 200 of its Toronto-based workers, he said.
“The facility is now handling work for other insurance companies,” he noted. “We know it has been a tremendous success for those staff in that arrangement … and it has been well-received among the staff.”
The opening of the Halifax centre also means significant growth in personnel numbers and operations in the area for CGI, said Roach. “Twenty-four months ago, we had 12 people” in Halifax, he said. Just before the deal was finalized, the number had grown to 100, and with the addition of 300 IT workers, that brings the total headcount to 400, with expectations to add another 200 positions over the next 24 months, he said.
Roach said the opportunity with Manulife will help boost its overall strategy of setting up centres of excellence across the country. “It was an excellent accelerator of the model that CGI has been developing in other parts of Canada,” such as Regina and Quebec City, he said. “We’ve been in Atlantic Canada since 1991 building the same model, but this contract has given us significant additional scale to the whole concept.”
