More Canadian employers are turning to offshore staffing to fulfil their human resources needs, according to a study commissioned by Randstad Technologies and IBM Canada.
The study, which focused on IT staffing trends, shows that close to half of survey respondents say they are currently using offshoring, while only one-third provided the same response in 2009 and 2010.
Global resourcing is most prevalent among large organizations and those with multinational operations, according to the survey. These companies cite cost reductions as their number one reason for using offshoring, followed by access to skill bases and 24/7 services.
The most common IT jobs for which companies use offshore resources include application development, help desk, data and database management, and server systems.
Companies Not Sure if Trend Maintained
Stacy Parker, Randstad executive vice president of marketing & communications, says the issue of global resourcing became a high priority topic among chief information officers of Canadian companies a few years ago, prompting more investment in offshore staffing.
Parker notes that although some companies have turned to global resourcing to find talent not available locally, the most commonly outsourced types of jobs are the lower-skilled ones.
“Call centre, help desk, tech support—those are really the primary jobs that we saw offshored, and that talent is available here in Canada,” Parker says.
That might be part of the reason why many companies surveyed indicated less certainty as to whether they will continue to use global resourcing compared to the past.
“There’s a realization that more important than ever is the talent that an organization can attract, and if the outside world sees you investing in your own people … you’re building a stronger, more attractive company,” Parker says.
She says many Canadian companies are now “near-shoring”—setting up call centres in places like Nova Scotia, New Brunswick, and even Calgary.
“It’s a strong sign that we want to invest more in the future in Canadian positions, so I’m very optimistic about what this is telling us.”
Jeremy Leonard, research director for the Montreal-based think-tank Institute for Research and Public Policy, says offshoring out of Canada “is actually a two-way street.”
Referring to the industry as a whole, Leonard says companies are offshoring certain activities, but also bringing in some others.
“What seems to be happening in the world is this kind of realignment of activities in the production process that are moving around geographically to places where they can be done most cost effectively or most conveniently. That doesn’t always mean that things are leaving Canada,” he says.
He cautions that companies should consider total cost rather than just labour cost when thinking about offshoring, as there are issues of capital equipment as well as protection of intellectual property, among others.
Companies should also judge whether offshoring is suitable for their market, as sometimes being far away from the customer can actually be a cost itself.
Rising labour costs in countries considered to have low labour rates is also a concern.
“In China, I know the wages are typically rising at 25, 30, 40 percent per year,” he notes.
“That’s on a low base, but those growth rates add up over time, so 10 years from now I wouldn’t predict that the cost of labour in China would be equal to Canada, but the gap is going to be a lot smaller than it is today.”
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