Canada 2008 – Poised and Prepared

2008, the inaugural year of the Directory of Outsourcing Companies and Capabilities in Canada is shaping up to be a milepost year for Canadian outsourcing, with the directory serving as a lightning rod for attention regarding the Canadian Outsourcing Industry.

Just prior to 2007, Branham surveyed the Fortune 1000 buyers for their outsourcing inventories and intentions for 2007, 2008 and beyond, and all indications were positive. They indicated the market was worth close to $700B USD. 63% of the companies polled indicated they would be increasing their spending in 2007, and as well 67% for 2008. Results have shown that companies kept their word in 2007, with India recording a 45% increase in outsourcing business.

Respondents to the same study also indicated there would be a shift in their chosen outsourcing destinations within the 2007 to 2009 period. Their four most attractive targets included India, followed by onshore in the US, third China, and fourth Canada. Attractiveness ratings dropped to a fraction for a plethora of other locations, beyond the aforementioned.

The good news has to be tempered with the bad. It is no surprise that the weakened US currency is affecting the attractiveness of all but the US onshore industry. Many outsourcing nations are seeing their currencies surge in value against the US dollar. Long term, we believe the strong showing of foreign currencies will be short-lived; however, it will make 2008 a good year for those countries with temporarily stronger currencies to look at US acquisitions to round out their global portfolios.

Companies operating in Canada are determined to move to higher value outsourcing, a competitive strategy that makes sense in the competitive global outsourcing economy. Canadian locations and services are becoming an increasingly important node on the global hub and spoke model of global outsourcing delivery. Canadians should be confident in their attractiveness from a foreign perspective, and need to adopt a more aggressive global attitude to continue to prosper in the global outsourcing arena.

That said, most enterprise companies now have 3 to 5 or more years of outsourcing experience under their belts this century - some good, some bad. Most are adopting a more sophisticated hybrid model of captive and third-party, multinational onshore, nearshore and offshore mixtures. Albeit more complex to manage, the model offsets the temporary advantages against the disadvantages, so when one cost factor becomes less desirable in a global location they can adjust quickly with their other global options.

There is also an influx of net new outsourcing business, as tier two and tier three enterprises aggressively enter the outsourcing arena, and with recent growth in the European corporate sector that is setting new levels of outsourcing industry activity.

Canada stands to benefit from both growth markets, as an onshore delivery candidate for tier two and three companies. Eastern Canada will benefit from the EU surge, as they share half or more of the working day with western EU countries.

As one with any demographic experience of Canada might suspect, Ontario accounts for 69% of company locations for the directory, followed by Atlantic Canada with 14%, Quebec with 11%, and Western Canada for 6%. Global offices of the Canadian players show a more worldly perspective, with diverse locations from Sydney, Australia to Cluj-Napoca, Romania; with just about every conceivable alternative in between, from San Jose to Manila, Shenzhen to Bratislava and Bangalore to Singapore.

Canada as an outsourcing market is a dichotomy. While it is a key node in most multinational vendor offerings, whether they are headquartered in the US, France, Germany or India, the domestic Canadian market of buyers is not yet significant enough for some of the companies to break out their Canadian revenue separately from North American.

A recent study indicated a shifting focus in outsourcing from "cheaper and faster performance to a focus on client satisfaction, with managers of client companies favoring outsourcing suppliers that provide better and more supportive innovations, such as responding quickly to help clients manage a crisis."¹ Canadian companies are determined to move to higher value outsourcing, a competitive strategy that makes sense in the competitive global outsourcing economy.

Canadian IT outsourcers are recognized for their experience in the application of advanced technologies and methodologies in software development. Many specialize in tackling complex, time-sensitive projects and inaugural software products. They're completely compatible with American or European colleagues, and have proven to be agile and able to jump in at any point of the development cycle, or as a crisis relief team.

In BPO, the Financial Services community in Canada is considered world class, with all the major Financial Services providers having facilities in Canada and serving customers in Canada, the US and worldwide.

Canadian call centres are leveraging their lower churn rates and superior language, call quality, and customer handling skills to lure customer service for high value customers from HR outsourcers stateside who are unhappy with overseas operations.

Canadian manufacturers are proving adept at design and test engineering expertise. Skilled at global advanced supply chain management, they can provide customers with a strategic advantage in product development, time-to-market and are fair competition for Chinese suppliers in terms of total cost.

Professional Services companies have deep familiarity, bred of many years of trade experience. The NAFTA Agreement, signed in 1992, has improved the experience of Canadian professional services companies; ensuring the experience is seamless, secure and pain-free. They help identify the economic development opportunities that help to offset the impact of a high dollar or slimmer wage arbitrage.

The Canadian Outsourcing Industry is poised and prepared for the challenges of 2008 and beyond. Government agencies have a sympathetic ear to the community, with a tested and reasoned approach to outsourcing issues like immigration and work visas, economic development and tax and development incentives.

Canada continues to make sense as a strong part of the global equation for outsourcing buyers in North America and Europe.

Through the collective determination of private sector companies, public sector economic development authorities, and the credibility of the overview and active participation of Canada's most respected Analysts, the Directory will serve to spotlight the credibility of all parties involved in Canadian-based outsourcing, and to pool their resources to build a voice for the Canadian industry throughout North America and the rest of the world.

1 Becky Bright, Wall Street Journal Online, June 5, 2007 "Survey indicates 'Faster, Cheaper' Outsourcing Model is Out of Favor".

 

 

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NetPulse Services delivers high-value Business Process and Information Technology Outsourcing services. ITIL and ISO 9001-2000 based quality management systems are the cornerstone of NetPulse’s ability to guarantee successful execution of every service consistent with our SLAs. The extensive prior experience of the management and operations teams with Fortune 500 companies enables us to quickly deal with operational and tactical challenges faced by our clients. Our quality and training teams are dedicated to providing complete performance and operational transparency via regular and meaningful reports. Altogether, we have consistently exceeded every client’s requirements in terms of service delivery, consistency, pricing and change flexibility.