Outsourcing IT work struck a sour chord with many Canadians earlier this year when it was learned that the Royal Bank of Canada had hired India-based recruitment firm iGate Corp., to provide workers to replace 45 IT workers the bank had in Toronto.
Sears Canada has been in financial trouble for some time and the company is in the middle of a three year restructuring. For the first half of the year total revenue was $1.8 billion, a drop of 8.2 per cent compared to the same period in 2012. Net loss for the first half of this year – excluding tax gains – was $42 million compared to a net loss in the first half last year of $54.7 million.
IT is not Sear’s “core business” and so the company is “leaving it to people we feel can do it more efficiently,” Powel was quoted in the Toronto Star.
He said the move is meant to improve the efficiency in the company’s IT services and Sear’s suppliers, which include IBM Corp., will move some of the work abroad.
For instance, IT work will be transferred to the Philippines while finance and payroll will be handled in India
“That’s their business model,” Powell said.
Outsourcing is a multi-billion dollar industry and many Canadian companies are taking advantage of the benefits it provides, according to analyst firm IDC.
IDC’s Outsourcing Monitor for June 2012 said outsourcing revenues grew to more than $15 billion last year.
As many as six out of 10 Canadian business resort to outsourcing in order to cut cost, according to IDC. Employers save on average as much as 35 per cent from outsourcing.