Outsourcing: it ain’t as simple as you think

A commonly held view on outsourcing has it that U.S. companies send some call centre work to Canada and Canadian companies ship some software development work overseas.

The reality, finds a soon-to-be-published study, is way more complex.

The study on IT outsourcing in Canada is being conducted by EMERGENCE (Estimation and Mapping of Employment Relocation in a Global Economy in the New Communications Environment) an international project dedicated to measuring the global impact of outsourcing.

“It’s very hard to map out (the outsourcing environment) right now,” said Dr. Penny Gurstein, lead investigator with EMERGENCE and associate professor at the University of British Columbia’s school of community and regional planning. “It’s morphing in very interesting ways.”

The EMERGENCE project is based on two resources: case studies of firms that outsource and those that perform outsourcing services for clients; as well as an online survey sent out to more than 100 of Canada’s top CEOs and CFOs.

The Canadian Advanced Technology Alliance (CATA) helped EMERGENCE create the survey.

The study report will be presented on April 13 at The National Club in Toronto.

While it’s true many U.S. companies outsource call centre work to Canada and Canadian companies send software development offshore, Dr. Gurstein identified quite a few other interesting trends as well.

For instance, she said, some overseas outsourcing companies have begun to move a part of their operations to Canada, so as to be closer to clients.

The EMERGENCE study also found jurisdictional issues are prompting several Canadian firms to move a portion of their operations from one area of the country to another.

While some observers believe the rising Canadian dollar could cause U.S.-based firms to reduce the amount of work they send to Canada, Dr. Gurstein doesn’t share that view. She said U.S.-based firms appreciate Canadian call centres because of their well-educated and multi-lingual staff, and a strong loonie isn’t likely to change that.

She cited an example of a U.S.-based company that set up a call centre in Vancouver because it could get access to 20 different languages. “They said they would never have found that combination in the U.S.”

One oft-ignored aspect of outsourcing that Dr. Gurstein hopes to address in the study has to do with cross-cultural communication. While technology has made outsourcing relationships relatively simple to set up, creating good inter-cultural and interpersonal relationships isn’t as easy. “That’s where the breakdowns occur,” Gurstein said.

At this point it’s too early to tell if Canada will be a net winner or loser when it comes to outsourcing, Dr. Gurstein said. “Hopefully the research will…make the country more aware (of) things we could be doing to be a more significant player,” she said.

She said with its skills and its infrastructure Canada can be very attractive for some industries.

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