CGI says AI makes its programmers up to 50% faster. Analysts want to know who keeps the savings

CGI, the Montreal-based IT services firm with about 94,000 staff, gave investors one of the clearest company figures yet on what AI does to paid software work. On Wednesday's earnings call, CEO Tim Hurlebaus said AI can speed up coding by up to 40% to 50%. Design work and tracking client requirements improve by 15% to 20%, he said.

For a company that bills many clients by the hour, that is good news and a threat at once. If a programmer finishes a job in half the time, the bill for that job can shrink by half too. Analysts spent much of the call on that problem.

The numbers show why. CGI's revenue for the year to September 30 rose 4.2% to C$16.57 billion. Strip out currency effects and growth was just 2.2%. Fourth-quarter revenue rose 3.3%, or 2.5% before currency effects, to C$4.15 billion.

The question behind the questions

Jefferies analyst Surinder Thind put it bluntly. He said clients keep spending $100 whatever productivity gains they get, but "the $100 isn't going to 110." He noted that similar consulting and systems-building businesses at rival firms are roughly flat, and shrinking in some cases.

Hurlebaus said he could not speak for the industry but saw a similar trend. He described a worker billing $100 an hour who doubles output with AI and so bills only 30 minutes for the same task. His argument is that clients then ask for more work. Clients are "asking us to stuff the boxes," he said, and CGI is seeing "more faster and not cannibalization."

That is a management claim, and CGI gave no figure to back it. It did not say how much of its revenue or bookings comes from AI work. It did not say how much it spent on AI, beyond noting that C$89 million reinvested in the quarter included AI projects. The 40% to 50% coding figure is a range the CEO said varies by project and client, not an audited result.

Asked by RBC analyst Paul Treiber whether AI lets revenue grow without adding staff, Hurlebaus said headcount "is not a direct corollary" to revenue growth. He called AI tools another way to continue that trend. He gave no hiring forecast.

Where the savings go

The more telling number sits in CGI's results release. Its managed services business, where CGI runs a client's systems and is paid, in Hurlebaus's words, to deliver "a certain level of service and a set of outcomes," signed new contracts worth 122% of that business's revenue in the quarter. CGI now describes this work as AI-embedded. Some recent large deals run 10 or 12 years, Hurlebaus said, others five.

That matters for buyers and investors. In an hourly contract, the client keeps most of the savings when AI speeds up the work. In a contract priced on outcomes, the vendor can keep them as profit, at least until the contract is renegotiated. CGI has not described its pricing this way, but a shift toward outcome-based deals is how an IT services firm protects margins while its hours shrink.

Overall bookings were healthy. CGI signed C$4.53 billion of new business in the quarter, 109% of revenue, and C$17.51 billion for the year. Its order backlog stands at C$32.07 billion, about 1.9 years of revenue. Diluted earnings per share rose 30% in the quarter to C$2.24; on CGI's adjusted measure the gain was 8.5%. CGI bought back C$1.55 billion of its shares during the year and raised its dividend 8.8%.

An industry-wide squeeze

CGI is not alone. Accenture said in October that its prices fell in many parts of its business last quarter, and that it is passing AI productivity gains to clients. More than 65% of its bookings are now fixed-price, including outcome-based deals, according to a newsletter summary of its results. Its forecast of 3% to 6% growth for the coming year includes 2 to 2.5 points from acquisitions.

Cognizant cut the top of its 2026 growth forecast in late October to 4% to 4.4% before currency effects, from as high as 6.5% at the start of the year. Its new bookings fell 7% in the third quarter. Management cited policy uncertainty, oil prices and supply-chain problems delaying client decisions, while its CEO called AI "a tailwind for sure."

Investors are less sure. As of Tuesday's close, Cognizant and EPAM shares were down about 20% this year and Infosys about 31%, while Accenture was roughly flat. There is a counterpoint: US management and technical consulting employment rose by 17,300 jobs in October, preliminary federal data show. LPL Financial linked that to companies hiring help to fit AI into existing work.

For corporate buyers, the lesson is in the contract. When a vendor says AI makes its staff twice as fast, the pricing model decides who benefits. Hourly deals should get cheaper. Long outcome-based deals signed today may lock in yesterday's costs for a decade.

For investors, CGI's quarter is a partial answer. Profits and bookings held up, but revenue growth near 2% leaves little room if AI price cuts spread faster than new work arrives. The next test is whether the managed-services pipeline turns into revenue growth, or only into better margins on a shrinking pool of hours.