CATA: Canada can succeed in global outsourcing field

A Canadian information technology group says it’s taking steps to make sure IT service providers in this country are not left behind in the global movement towards outsourcing.

The Canadian Advanced Technology Alliance (CATA) in July announced its “long-range action plan to ensure that Canada benefits from the global trend to business outsourcing,” according to a statement. CATA is an IT advocacy group focused on helping high-tech firms.

According to Barry Gander, CATA’s executive director, the group devised a three-pronged approach to boost Canada’s profile in the global outsourcing field: partner with federal and provincial governments so legislators understand what IT services Canada has to offer other countries; encourage the federal government to champion Canada’s IT expertise in talks with other nations; and engender an understanding in the United States that Canadian firms represent a “neighbour-shoring” option to offshoring, an alternative outsourcing location that bolsters the North American economy.

Gander said the action plan stems in part from reports that there have been attempts south of the border to enact laws that restrict U.S. companies from sourcing services from foreign firms.

Gander said such laws are difficult for U.S. authorities to enforce; nonetheless, “we cannot wait for the winds of fate… We have to actively do some advocacy work” to convince U.S. enterprise and government leaders that Canada offers a friendly outsourcing option beside offshore prospects.

Gander also said CATA’s action plan stems from reports like PricewaterhouseCoopers’ (PwC) publication, A Fine Balance, which said Canada could either step up to the global outsourcing plate and be a player in the space, or resign itself to losing thousands of jobs as other nations pick up the outsourcing bat.

“It is possible that by taking the appropriate, proactive action Canada could see an increase of 165,000 skilled IT jobs by 2010,” PwC says in an executive summary of A Fine Balance. “The alternative is that we stand by and watch a potential 75,000 IT jobs migrate offshore or be retrenched back into the U.S.”

PwC is not the only consulting firm that suggests Canada is in an outsourcing position that, at once, provides threats and opportunities for firms in this country.

Deloitte, a global business consultancy, recently pointed out that Canada is something of an “offshore haven,” particularly for telecommunications service providers in other countries. Canada’s well-educated workforce and its research and development tax credits for firms engaged in such activity make Canada an up-and-coming destination for foreign work.

But as Deloitte suggests foreign telcos should consider Canada for offshoring, the firm also advises this country’s telcos to send some work overseas, so they can reap the cost savings associated with employing less expensive workers, particularly in the application development and database management arenas. “Our telecommunication companies are going to be more efficient if they can offshore some of the low-expertise areas,” said Andre Vincent, a Deloitte analyst in Montreal.

According to neoIT, a San Ramon, Calif.-based offshore advisory and management firm, Canada remains a popular outsourcing destination for software architecture development and business process design, but enterprises around the world “will be sourcing globally more and more of their IT and business processes,” said Eugene Kublanov, neoIT’s vice-president of corporate development. With that trend, Canada could see some competition from emerging markets.

Leslie Rosenblood, senior analyst, outsourcing services at IDC Canada Ltd., an IT market research firm in Toronto, said the U.S. dollar’s decline could make Canadian IT services less attractive to U.S. firms from a price perspective, but thanks in part to Canada’s well-educated workforce, Canada is a net beneficiary of outsourcing. “More jobs have come to Canada…than have gone to other countries.”

CATA points out that Canada’s well-educated workforce means it’s adept at managing business processes, new technologies and complex high-tech projects.

Gander said Canadian service providers could make a name for themselves as IT support groups for global commerce and health care initiatives. “We’re not trying to boil the world here,” he said, meaning Canadian firms would find market niches in which to thrive.

Gander added that CATA’s action plan is necessary in an increasingly global economy. “If we don’t pay attention to the benefits of this outsourcing movement…we will be behind by several thousand jobs.”

— With files from Patricia Pickett

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