Canadian IT workers may face competition

Despite recent reports about the growing trend for U.S. companies to outsource their IT jobs offshore, one programmer says Canada will probably not feel much of the impact – as long as developers keep upgrading their skills.

Stamford, Conn.-based Gartner Inc. recently released a report which stated that by year-end 2004, one out of every 10 jobs within U.S.-based IT vendors and IT service providers would move to emerging markets – such as India – as would one of every 20 IT jobs within user enterprises.

Independent consultant Shaun St. Louis, who is also manager and treasurer of the board for the Ottawa ColdFusion User Group, said he foresees the offshore outsourcing trend affecting U.S. jobs more than Canadian ones, because of the difference between programmer work habits and training in Canada versus those of developers south of the border.

“I find that individual programmers…or IT specialists in the U.S. are very specialized in one category,” St. Louis explained. “If someone says, ‘We want you to do following five things,’ they’ll be able to do the one job they have specialized skills for, but they won’t be able to do the others.”

Canadian programmers and developers, on the other hand, are a “hardy bunch”; they learn a broad range of skill sets and are quicker to adapt to change, according to St. Louis.

Programmers overseas are “sort of a mix between Canada and the U.S.” They may have a broad range of skills, but they’re “probably zoned in on maybe two of them – they have many qualifications but they’re not highly advanced in all of them.” The broader range of skills, combined with the ability to abide by a “good set of developing rules,” – combined with salary savings – are likely what would make Indian offshore outsourced workers an attractive option for U.S. companies, St. Louis added.

Programmer education is also different overseas, where students learn older languages such as COBOL, Pascal, and even binary coding. “College or university grads in Canada or the U.S. don’t get that – they learn C and C++, they’re usually taught in a more visual environment, and they get a taste of the prettiness of application development, not the hands-down-let’s-get-dirty, meat-and-potatoes aspects of development.”

Those legacy skills could trigger some competition for Canada, which has been reaping the benefits of “nearshoring” – U.S. companies moving some of their IT operations to Canada, said John McCarthy, group director of research with analyst firm Forrester in Cambridge, Mass.

“People like IBM and EDS that used to offshore to Canada now send their stuff to India,” partially because offshore workers have partially made up for the distance by improving product quality by following methodologies like Six Sigma, he said.

But Jim Westcott, services analyst at IDC Canada in Toronto, said Canada will still provide a viable nearshoring alternative for U.S. companies that are not comfortable with sending their programming work overseas. “Canada…is more familiar, closer, the culture is similar, and [U.S. companies] still get a price break” – although it won’t be as significant as what they’d get in India, he said. Some firms, however, will be willing to make that sacrifice in order to keep their programmers closer to home, he said.

According to Westcott, programmers who don’t want their jobs outsourced should develop higher-value skills such as application or project management, and some sales/marketing savvy. These types of IT-related jobs will be more “insulated” from the offshore outsourcing trend because of their face-to-face customer interaction requirements.

Acquiring specific vertical industry expertise is also key, he said. “People can add value by understanding the vertical challenges companies face – that’ll become more important as more IT services firms take on a vertical market approach to sales.”

McCarthy still thinks Gartner might have “overreacted a little bit” with its estimates of how many jobs will move overseas in the next few years. He said Forrester estimates that by 2005, 108,000 out of 2.9 million jobs will be outsourced overseas – a “pretty conservative” number, he said.

“Only about of 30 per cent of Fortune 1000 companies are doing anything

today, and only probably 20 per cent are doing anything meaningful; most are in the experimentation stage, with 20- to 30-person projects scattered around” in other countries, he said.

Some of the hesitation might have to do with issues revolving around security and loss of intellectual property. “If you can’t manage those things downstairs, how the world are you going to manage it half a world away?” he said. “If you jump into [offshore outsourcing] thinking it’s a silver bullet, or the panacea to all your problems, you’re going to get in trouble.”