Vladimir K
Business Process Analyst at Intetics Co. - Where Your Software Concepts Come Alive
What are the outsourcing market climate and capabilities in Canada?
"Companies operating in Canada are determined to move to higher value outsourcing, a competitive strategy that makes sense in the competitive global outsourcing economy. Canadian locations and services are becoming an increasingly important node on the global hub and spoke model of global outsourcing delivery. Canadians should be confident in their attractiveness from a foreign perspective, and need to adopt a more aggressive global attitude to continue to prosper in the global outsourcing arena.
A recent study indicated a shifting focus in outsourcing from "cheaper and faster performance to a focus on client satisfaction, with managers of client companies favoring outsourcing suppliers that provide better and more supportive innovations, such as responding quickly to help clients manage a crisis."1 Canadian companies are determined to move to higher value outsourcing, a competitive strategy that makes sense in the competitive global outsourcing economy."
Source: http://www.branhamgroup.com/outsourcing/directory/article.php
Please feel free to write any opinion.
Good Answers (6)
FRANK F
●Ex-Banker / Futurist ●30-yr Track Record ●Keynote Speaker ●Interim-contract CEO ●120-day Refocus / Re-invent/
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Canada has now become an attractive business environment for US and other companies (and also for tourists) because the Canadian dollar has dropped back to about 80-cents per US$1, whereas it was around parity in the last few years.
So there is now the traditional cost advantage of about 20% over US based operations. This is why several US industries operate in Canada, which is extremely close geographically to all northern US markets/industries.
Hello Vlad,
Frank has a valid point in terms of straight dollar cost considerations in terms of IT vendors offering services.
On the flip side, potential Canadian clients also have to improve their perspective to embrace outsourcing/nearshoring and not remain entrenched in old and trusted opinions ....
Francis
Connie T
PMP, VP Business Development, Unified Interactive Solutions, Innovatia Inc.
Innovatia has been the Business Process Outsource supplier of choice for a major OEM telecom for several years. At one point the exchange rate was definately the most attractive factor at approximately double even what it is today. In recent years however when the rate has become more on par we continued to demonstrate our value through quality and innovative processes that improved productivity and effectiveness. Our customers enjoy a "best of both worlds" model where we combine the value of an "always on" workforce, through a blended Canadian and offshore team, fronted with a Canadian based response and management team.
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Nick K
Experienced Technology Executive
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IT Outsourcing to Canada is an interesting phenomena and offers its own set of Pros and Cons, very few Cons I have to say:
o Language, cultural closeness and no time zone difference to the USA are huge pros of Canada making it a superb location for outsourcing. Generally as long as you are fine with telecommuting you can’t tell the difference between working with developers in Detroit or Toronto.
o Taxes and other elements that constitute government support for outsourcing are mediocre at best, on the other hand employee lifestyle issues are well taken care of; think free education / healthcare / etc.
o Education system in IT space is decent with very few top-notch schools but no match to the USA or India.
o Political atmosphere and legal system makes working with Canada outsourcing extremely easy and far less risky than probably any other country in the world.
o IT and telecom infrastructure across the country is excellent.
o Data and IP security is non issue. A few Data Centers that I saw in Canada were in shipshape, SAS70 compliant, etc.
o Turnover is medium to low, and if you exclude a couple cities like Toronto is actually very low.
o Labor pool / access to engineering talent is decent, but no match to China or India by any stretch of imagination.
o Quality of the talent pool is well above average.
o Of course there is price to be paid for all those great things and that is a high rate. It’s still much lower than the rate you’d pay for local resources in San Francisco or Manhattan, but is very close to what you can find some rural areas of this country.
I will put more thoughts on it in my blog later next week…
Nick
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Marc-Alexandre V
► Producer at Artifex Animation Studios ► Designer ► MyLink500.com
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Canada is fast becoming a privileged destination for outsourcing. We're a computer animation studio located in Montreal, Canada. Nearly 90% of our clients (film, TV, Web, corporate videos) are located in the United States.
They come to us because, as others have pointed out in this discussion, we offer a similar environment (language, culture, education) to the United States, but with costs that are 20% lower on average for the same (or better!) quality. Sure, you can get it cheaper by going to Asia, but you generally get what you pay for.
Frits B
Owner, Pm4hire.com Ltd. and Software Project Management Consultant
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The outsourcing capabilities of Canada are not focused on lowest-cost but on adding value through creativity. This is, after all, the original intent of an outsourcing decision to allow a company to focus on core strengths. The example of movie animation is one where Canada developed special competency and continues to provide that competency to many clients, a capability where lowest-cost is not what attracts prospective customers.
Canada also uses outsourcing to India and other offshore locations where price has a greater advantage and the product/service is easy to develop, or for more advanced products/services where offshore companies provide local support (and price competition is not a determining factor). Indian companies invest in Canadian companies to establish that kind of base, which is not much different from what happens in other countries. Even India is outsourcing to China now: that is where they look for lowest cost manufacturing opportunities - a short term strategy that is damaging in the long term because it drives everything to the lowest common demoninator.
The focus on client satisfaction has always been the driving force: there has been a short-term cost-cutting strategy by some offshore companies to attract business, but nobody can survive that strategy for long. Wipro and other major companies understand that very well. It is one thing for such companies to cheaply serve the Y2K needs, it is quite different for such companies to develop strategic applications and not compensate their staff to retain their skills for the long haul (there are plenty examples of high turnover of low paid staff, because the corollary is that it does not take much to entice a person to move to another company).
