May has been a great month for Lafayette’s digital economy. On the heels of Waitr’s acquisition for $308 million, CGI announced its intent to open a second fulfillment center here.
While headlines have focused on the creation of 400 jobs, there’s a lot more to unpack about the benefits to Lafayette’s digital economy.
For starters, these aren’t just any jobs; they’re the kind we need to give more UL Lafayette and South Louisiana Community College graduates in computer science and software development the opportunity to stay in Lafayette.
And these aren’t all just entry-level jobs. Some of the most talented, experienced software/technology minds in Lafayette are already working for CGI. Plus, management jobs will undoubtedly need to be created to support an influx of so many new employees.
That means more immigration of knowledge workers into Lafayette. Many of CGI’s first 400 employees were folks who moved here from other parts of the country. Hopefully, those yet to be hired will be people who fall in love with Lafayette and decide to put roots down here, buy homes, grow families and start companies.
One of the best ways to increase your GDP is to get more people to move into your community, especially those who have jobs that pull in money from outside your area, like CGI. Few, if any, of the company’s clients are located in Lafayette.
A dirty secret of our digital economy is that many of the technology jobs in our area don’t pay well.
Another downstream impact of this announcement is that CGI will continue to increase competition for a wide variety of positions, which will force existing companies to raise pay and improve benefits if they want to retain and attract talent. A more competitive market for these kinds of jobs increases Lafayette’s capacity to attract new talent, retain existing talent, and even help convince some of the talent we’ve lost to return home.
A dirty secret of our digital economy is that many of the technology jobs in our area don’t pay well, in part because we’ve had more supply of software talent than demand. Only a handful of local companies are doing any serious amount of software development at any given time. But that equation’s changing, and that change will accelerate from CGI’s and Waitr’s announcements.
Reportedly, the tools and environments used to do software development at CGI are more modern than much of what’s found elsewhere in Lafayette. That means these jobs are helping train up our workforce to be more competitive nationally.
Something to keep an eye on with this deal is where CGI decides to locate its second facility. While its first site is a great new building that was the first development in UL’s research park in years, what I’m hoping is that they decide to locate their next site Downtown.
Tech companies like CGI and Waitr tend to place a premium on quality of life for their employees. And Downtown offers some of the best in Lafayette, especially for CGI, as some of its employees don’t have cars and therefore would benefit from being walking distance from a wide variety of options for lunch, drinks and after work entertainment. Ideally what happens is both CGI and Waitr open up offices Downtown, which catalyzes the development of more housing options there. Currently there just aren’t many places available to buy or rent, which is holding back development as a whole in the Downtown district.
CGI has proven to be a great corporate citizen in its short time here already. Whether it’s organizing STEM activities for students or air quality sensors with the city (both of which are incredibly cool projects we’ll get into more at a later date), CGI’s shown not just a willingness but an eagerness to find opportunities to better our community while developing its workforce. Having twice as many employees should only increase those opportunities moving forward.
But arguably the best thing about this announcement is the significance of having a major corporation not just come to Lafayette but have a good enough experience that it decided to double down on its investment. CGI doesn’t typically add new facilities in its operating markets. The company tends to grow by adding new centers in new cities. For CGI to expand here suggests both that it believes in the strength of the talent in our community’s workforce and that the people it has been moving here are really enjoying living here. It tells other major companies that Lafayette’s open for business when it comes to supporting the establishment of significant successful operations here.
Many larger tech companies like Google, Oracle, Amazon, Microsoft and beyond already have Lafayette-born, bred and trained talent walking their halls, some of whom would jump at the opportunity to move back home while keeping their jobs.
And I think there’s a real opportunity for Lafayette to attract satellite development offices from other major tech companies. Competition has gotten fierce for talent where they’re headquartered, and the cost of living can be incredibly high. By opening development offices in Lafayette, they have the potential to mitigate some of those issues.
Many larger tech companies like Google, Oracle, Amazon, Microsoft and beyond already have Lafayette-born, bred and trained talent walking their halls, some of whom would jump at the opportunity to move back home while keeping their jobs. And there are likely some number of other employees who would be intrigued by the idea of relocating to a smaller city that’s less expensive and less busy while still offering a very rich quality of life.
With this all being said, I do want to take a step back and put this news within the context of the $10 billion hole we’re in. In its announcement, CGI touted that it’d be spending $480 million on salaries in Lafayette over the next 10 years. When you add the indirect jobs these salaries will be supporting, that could be getting close to $1 billion added to our GDP, which is a significant contribution to our bottom line.
Still, our economy is currently missing $10 billion in annual GDP. CGI will only contribute $100 million annually to our GDP in a best-case scenario once the second fulfillment center is fully staffed in a few years.
That doesn’t diminish CGI’s announcement. This is exactly the kind of win we need to have any hope of regaining the ground our economy’s lost. But it’s important to realize that we need 10 more announcements like this to really close the gap.
News + Notes
Lafayette is running out of shelter space
Housing support agencies moved people into hotels around Lafayette using emergency federal and state government funds. Those funds have long since dried up.