MONTREAL — The head of CGI Inc. says bookings by U.S. government clients dropped sharply in its latest quarter amid economic uncertainty and a spending crackdown by a task force led by billionaire Elon Musk.
Though its overall profits inched up, the information technology consulting firm reported that its book-to-bill ratio — a measure of orders received to sales billed, a key indicator of near-term demand for a company’s services — fell to 40 per cent at its American subsidiary in its second quarter.
Named CGI Federal, the company's U.S. arm provides IT services to government departments and agencies south of the border, generating about $2 billion in annual sales, or 14 per cent of CGI's total revenue last year.
Chief executive François Boulanger said the subsidiary's clients remain wary of big contracts amid a broader climate of "uncertainty," opting instead for short extensions of existing deals.
"Instead of signing a five-year renewal or three-year renewal, what's happening is that they'll sign bridge contracts to continue the work, but not necessarily doing big renewals until they'll have a better understanding of the new processes and the new way that they would procure in the future," he told analysts on a conference call Wednesday.
CGI remains in a precarious position stateside. Earlier this year, it found itself in the crosshairs of budget-slashing efforts by the Department of Government Efficiency (DOGE), which U.S. President Donald Trump tapped Musk to lead.
According to a memo sent to federal officials in February, CGI Federal is one of 10 major consulting companies under scrutiny after the government's procurement arm asked all federal agencies to review and justify contracts with those firms last month, making them prime targets for potential cuts.
DOGE claims to have ended six contracts with CGI Federal in February and March. It says the move yielded US$465,000 in savings for a government whose budget last year hit US$6.75 trillion.
The cost-slashing from the agency hasn't been all bad for CGI.
It said this week that it will work with the Trump administration to prevent government fraud, launching a platform designed to help the government sniff out waste and abuse.
"CGI is committed to supporting the administration’s objective to prevent fraud, waste and abuse across the federal government through our innovative solution,” said Stephanie Mango, president of CGI Federal, in a release Monday.
Boulanger framed CGI's relationship with the Trump team another way, saying he expected to see certain contracts renewed when push comes to shove.
National Bank analyst Richard Tse highlighted concerns about "the DOGE backdrop," but also pointed to a spike in sales with clients based beyond Washington, D.C.
The book-to-bill ratio for commercial and state government clients in America hit 230 per cent, he said in a note to investors.
On Wednesday, CGI reported its second-quarter profit nudged up to $429.7 million compared with $426.9 million in the same period a year earlier.
Revenue for the three months ended March 31 increased nearly eight per cent to $4.02 billion from $3.74 billion the year before.
On an adjusted basis, the Montreal-based company earned $2.12 per diluted share, up from an adjusted profit of $1.97 per diluted share a year earlier and roughly on par with analysts' expectations, according to financial markets firm LSEG Data & Analytics.
Bookings for the quarter totalled $4.48 billion for a healthy book-to-bill ratio of 1.11, while the company's backlog stood at $30.99 billion at the end of the quarter.
This report by The Canadian Press was first published April 30, 2025.
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Christopher Reynolds, The Canadian Press
