The Information Technology Association of Canada (ITAC) has set up a “Wise Persons Committee” to study how many Canadian jobs may be won or lost through offshore outsourcing.
According to a study prepared by consulting firm
PricewaterhouseCoopers earlier this year, Canada could lose as many as 75,000 jobs to offshore outsourcing by 2010. On the other hand, said Robert Scott, co-author of that study and a member of ITAC’s new committee, Canada could also gain up to 165,000 jobs by attracting outsourcing contracts from the U.S. “In that report we forecast that what was really in front of us was really a big opportunity,” Scott said.
Bernard Courtois, president and chief executive of ITAC, said that since his tenure began in January ITAC has been consulting its members to determine what issues concern them most, and “this one emerged from a few angles.”
ITAC sees offshore outsourcing as a fundamental trend, he said, but believes there is a lack of information about it. The committee’s goal will be to gather that information, identify Canada’s strong points and work with governments to promote those advantages, he said.
Ronan McGrath, vice-chair of ITAC and chief information officer at Rogers Communications, will chair the committee, which Courtois said will include representatives of companies such as IBM Canada Ltd., Hewlett-Packard (Canada) Ltd., PricewaterhouseCoopers and International Data Corp. (Canada) Ltd.
Courtois said the committee is not expected to produce a formal report and has no fixed lifespan — it will probably be more or less permanent, he said. Its first task, he added, will be to decide what additional research is needed on the subject.
ITAC co-sponsored a roundtable with the Public Policy Forum on offshore outsourcing earlier this year, and is working with other organizations interested in the issue, such as the Software Human Resource Council.
Paul Swinwood, president of the Software Human Resource Council, said his organization has its own offshore outsourcing committee, which is more concerned with human-resources concerns, while he expects the ITAC committee will be more focused on business issues.
Swinwood said Canada can benefit from offshore outsourcing, but not by trying to compete on labour costs with low-wage countries.
For Canada to reap net gains from offshore outsourcing, Scott said, Canadian businesses will have to recognize that they cannot be good at everything, and focus on their strengths.
Those strengths include both geographic proximity and cultural similarity to the United States, which give Canadians an advantage when competing for work that involves a good deal of interaction with the customer, Scott said. That includes business process outsourcing and iterative development techniques used in areas where precise specifications are hard to define right away and developers tend to build prototypes, discuss them with would-be users and then make modifications until a satisfactory end result emerges.
“Don’t forget we’re in the same time zones, we run under the same cultural approach (as the United States), we have the same privacy issues and the same privacy solutions and of course we have the same security issues,” Swinwood said.
Recently, polling firm Ipsos-Reid surveyed 603 companies across Canada about their outsourcing plans and attitudes. The survey found that the percentage of IT budgets spent on outsourcing is likely to be higher in 2005 than in 2003, but also reported that 88 per cent of companies surveyed would not be willing to send business process outsourcing work offshore.
Lise Dellazizzo, vice-president of information technology at Ipsos-Reid, said this reluctance is probably temporary and motivated to some extent by political considerations, since the loss of jobs due to offshore outsourcing has been a sensitive issue in North America lately. “I don’t think that’s going to persist,” she said.
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