A concerted effort should be made to position Canada as an attractive“near-shore” destination for IT-related projects from the U.S. and Europe, industry insiders say.
Canada has certain advantages over today’s popular “offshore” destinations, and these should be actively promoted, according to Yasmin Jivraj, president of Acrodex Inc., an Edmonton-based IT integrator and provider of outsourced tech services.
It’s not about trying to beat or match the service delivery costs in India or China but “developing what we do best,” she said during her presentation at the recently concluded Informatic 2007 conference dubbed “Energizing the IT Professional” in Toronto.
Jivraj rued the lack of awareness of Canada’s many advantages as a nearshore alternative. This, she said, is causing local IT professionals to lose out on a large number of opportunities.
Of the US$50 billion offshore business process market, nearly $25 billion was spent in India, while about $8 billion worth of contracts were allocated to China, according to analyst firm IDC in Framingham, Mass.
The offshore business process market is poised to grow at annual rate of 20 per cent, according to IDC.
Canada’s biggest trading partner – the U.S. – is also the largest source of outsourcing contracts – totaling around $734 million.
And yet Canada has not benefited from any of this, Jivraj observed.
But another Acrodex executive says before being considered a viable alternative destination, Canada will need to counter certain challenges.
It’s for very good reason that India and China are attractive offshore destinations, noted David Walsh, vice-president, marketing, Acrodex.
He said American companies flock to these countries because labour and capital costs in these regions are typically 30 per cent lower than in North America.
“If you can operate a call centre in India for almost half of what it will take to run the same facility in the U.S. why wouldn’t you consider off-shoring?”
Walsh said technological advances have improved the reliability and productivity of offshore operations, while better education has brought down the traditional language barrier.
According to some estimates, India produces more than two million English-speaking college graduates and 300,000 post-graduates every year.
“China produced around two million software developers in 2005,” said Walsh. Notwithstanding all this, Canada has its own unique value proposition – and this should be actively promoted, Jivraj said.
For instance, she noted that IT developers here have advanced skills and exposure in “client facing” tasks that involve “voice services and application support.”
She said similarities in culture, business conventions, and industry regulations, also make Canada an ideal destination for handling and managing projects for U.S. firms.
One Canadian IT industry analyst agrees with Jivraj.
“Proximity, minimal time zone constraints, and parallel cultures, make Canada the ideal IT talent pool for project management and face-to-face operations,” said Nigel Wallis of IDC Canada in Toronto.
He said several global companies – such as IBM, CGI, CSC, EDS and Accenture – have made Canadian cities a base for their IT services facilities.
“While some U.S. companies can save as much as 40 per cent in salaries paid to IT workers abroad, the cost of tailoring operations to fit foreign regulatory practices, and losses due to bad project management can be a big “turn off,” Wallis said.
The IDC analyst said Canadian IT professionals have technical and soft skills that are in demand, but that this is a lead that “will not last forever.”
For one, the country has a rapidly aging IT workforce , and Canadian colleges and universities have been relatively slow in producing fresh tech graduates.
Industry experts also say the IT sector here needs to an image makeover to attract younger blood.
The increasing sophisticated roster of services offered by popular offshore destinations, is another challenge Canada would need to counter.
Consulting, enterprise architecture and .Net related services are now all offered at offshore locations – something that wasn’t the case a few years ago, Wallace noted.
He said other countries – as Ireland and some Eastern European nations – are also seeking a greater share of the lucrative outsourcing market.
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