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In the news: |
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| 28/04/2004 |
PwC: Offshore outsourcing in Canada to take off dramatically |
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Offshore outsourcing in Canada has lagged the US but a new report from PricewaterhouseCoopers LLP has found that the industry is about to dramatically take off. A Fine Balance: The Impact of Offshore IT Services on Canada’s IT Landscape addresses the trend of IT work being sent offshore from Canada to low cost centres in emerging economies, as well as Canada’s role as a nearshore provider of IT services for US-based companies.
A Fine Balance found that the rise in the Canadian dollar, increased US media awareness, offshore investment in Canada by Indian and global players and early success with trial programs have all had a profound impact on offshore outsourcing. Canada is experiencing a fundamental shift.
The study found that Canada can retain and build its advantages as a “nearshore” outsourcing provider to US, and even European firms. “Our overall labour costs put Canada midway between the US and India, and we have other advantages like geographic proximity to the US market,” said Robert Scott, PwC partner and leader of the Canadian IT Advisory practice. “But a lot more focus is needed if Canada’s nearshore IT services industry is to keep pace with job losses in other areas. We found that if no action is taken at least 75,000 of Canada’s current 550,000 IT jobs could migrate offshore by 2010, but with right actions, IT jobs could increase by 165,000.”
The core of the opportunity for job creation is for Canada to become a good resource for IT in a global context rather than a North American context. If Canada can win three per cent of the global IT market share by 2010 that would mean an increase of 200,000 jobs.
Another big area of opportunity for Canadians involves the development of specialized technologies like animation, bioinformatics, content management, retail banking, digital media distribution, health informatics and business process outsourcing.
The research found that cost is not the only reason companies send activities offshore, yet respondents acknowledged that without cost savings other factors did not matter. Providers stated that the average cost savings for Canadian firms who sent work to India were in the range of 30 to 50%, whereas buyers reported savings between 20 and 30%.
PwC's study was based on interviews with vendors, service providers of IT services and large Canadian corporate buyers.
Further information can also be found at www.pwc.com/ca/afinebalance. |
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