Thursday, September 23, 2004
“Offshoring of Jobs Big Benefit for Canada”
An interesting article in the Globe and Mail, Link, that says that the current trend of jobs moving out of the US is actually having a positive effect for the Canadian job market. Especially for things like call centres, but also for other businesses, for whom Canada is a known quantity as opposed to justhanding your company's future to a software house in India that you might never have even visited.
G&M is being gay and making you register, so I'll post the story as a comment. And they can all go to hell.
By al -
10:53 a.m. |
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Offshoring of jobs big benefit for Canada
By BARRIE McKENNA
From Thursday's Globe and Mail
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Washington — High-technology jobs are as likely to be contracted out to Brandon or Barrie, Ont., as they are to Bangalore, a new United Nations report has found.
Canada is among a clutch of developed countries that is attracting the bulk of “offshored” service work, including call centres, information technology projects and regional headquarters, according to a 436-page report released yesterday by the UN Conference on Trade and Development (UNCTAD).
Canada ranked a close second to India, attracting 56 new call centres in 2002 and 2003, the report found. India had 60 and Britain was third with 43. Indeed, more than half of all new call centres went to developed countries.
The UN also reported that Canada was among a group of just four countries that controlled 70 per cent of the estimated $32-billion (U.S.) yearly market for offshored services in 2001. The others were Ireland, India and Israel.
The report's author said the findings debunk the myth that offshoring — the contracting out of work to other nations — is merely shifting work from high-cost industrialized countries to the low-wage developing world.
“This is not a North-South issue, in spite of all the attention given to India,” Karl Sauvant, chief economist and director of UNCTAD's investment division, said. “Offshoring is an issue that affects all countries.”
For instance, EDS Canada Ltd., a unit of computer services giant Electronic Data Systems Corp., says it runs a trade surplus, bringing more work to Canada from the United States than it sends from Canada to places such as India.
EDS Canada communications director James Toccacelli said part of the work is done at call centres in Nova Scotia, where 1,700 workers field calls for U.S. customers.
Another part is done by computer-software writers in offices across the country. The software work is chiefly application development and maintenance, which means creating, repairing and updating customized programs, he said.In another example, Indian tech outsourcing company Tata Consultancy Services recently opened an office in Toronto to seek new business in the United States. The company plans to hire up to 40 consultants, taking advantage of the city's educated work force and proximity to the U.S.
Likewise, U.S. outsourcing giant Keane Inc. of Melville, N.Y., now has 350 programmers at its Halifax office, busily creating and maintaining computer systems for blue-chip corporate clients around the world. Keane has added 125 of those workers since last summer, each earning up to $70,000 a year.
Call-centre employees typically make $9 to $14 an hour (Canadian).
UNCTAD's Mr. Sauvant said cost isn't the only driver of a “tradability revolution” sweeping through the global services industry.
He suggested that language, the availability of skilled labour and proximity to markets are important to multinational companies when they opt to move work overseas.
And that's one of the reasons that Canada has become a major player at both ends of the offshored services trade, he said.
The report pointed out, for example, that Toronto-based Nortel began to shift key software operations to India in the late 1980s because of a dearth of science and technology graduates in North America.
The UN also highlighted New Brunswick as a pioneer in luring call centres by investing heavily in its telecommunications infrastructure. The report said the province now has 100 call centres, employing 18,000 people, or nearly 5 per cent of its labour force. “Offshoring is at the tipping point of a global shift,” Mr. Sauvant remarked. “And it's leading to a new division of labour in the services industry.”
He said countries are offshoring relatively low-skilled work, enabling them to move up the “value-added chain” in their home markets.
Offshoring has become the focus of a heated debate, particularly in the United States, where Democratic presidential candidate John Kerry has vowed to use the U.S. tax system to punish companies found to be shipping jobs overseas.
Mr. Kerry and other Democrats lashed out at Gregory Mankiw, chairman of the White House Council of Economic Advisers, when he suggested earlier this year that offshoring might be good for the U.S. economy.
The report, endorsed by UN Secretary-General Kofi Annan, concludes that Mr. Mankiw was probably right, and it warns that countries would be wrong to slap controls on this burgeoning trade in services.
Mr. Sauvant said offshoring creates far more jobs around the world than may be lost in some home markets. But he conceded that governments have a crucial role to play in helping displaced workers adjust in the short term.
UNCTAD pointed to outside research that suggests that up to 5 per cent of the work force among Group of Seven industrialized countries may be affected by the gain or loss of jobs due to offshoring. The G7 is made up of Canada, the United States, Japan, Britain, Germany, France and Italy.
The offshoring study is contained in UNCTAD's annual world investment report, which tracks global investment flows.
The report found that foreign direct investment (FDI) plummeted for the third year in a row in 2003 as weak stock markets dried up merger and acquisition activity. With a report from John Saunders
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By BARRIE McKENNA
From Thursday's Globe and Mail
E-mail this Article E-mail this Article
Print this Article Print this Article
Advertisement
Washington — High-technology jobs are as likely to be contracted out to Brandon or Barrie, Ont., as they are to Bangalore, a new United Nations report has found.
Canada is among a clutch of developed countries that is attracting the bulk of “offshored” service work, including call centres, information technology projects and regional headquarters, according to a 436-page report released yesterday by the UN Conference on Trade and Development (UNCTAD).
Canada ranked a close second to India, attracting 56 new call centres in 2002 and 2003, the report found. India had 60 and Britain was third with 43. Indeed, more than half of all new call centres went to developed countries.
The UN also reported that Canada was among a group of just four countries that controlled 70 per cent of the estimated $32-billion (U.S.) yearly market for offshored services in 2001. The others were Ireland, India and Israel.
The report's author said the findings debunk the myth that offshoring — the contracting out of work to other nations — is merely shifting work from high-cost industrialized countries to the low-wage developing world.
“This is not a North-South issue, in spite of all the attention given to India,” Karl Sauvant, chief economist and director of UNCTAD's investment division, said. “Offshoring is an issue that affects all countries.”
For instance, EDS Canada Ltd., a unit of computer services giant Electronic Data Systems Corp., says it runs a trade surplus, bringing more work to Canada from the United States than it sends from Canada to places such as India.
EDS Canada communications director James Toccacelli said part of the work is done at call centres in Nova Scotia, where 1,700 workers field calls for U.S. customers.
Another part is done by computer-software writers in offices across the country. The software work is chiefly application development and maintenance, which means creating, repairing and updating customized programs, he said.In another example, Indian tech outsourcing company Tata Consultancy Services recently opened an office in Toronto to seek new business in the United States. The company plans to hire up to 40 consultants, taking advantage of the city's educated work force and proximity to the U.S.
Likewise, U.S. outsourcing giant Keane Inc. of Melville, N.Y., now has 350 programmers at its Halifax office, busily creating and maintaining computer systems for blue-chip corporate clients around the world. Keane has added 125 of those workers since last summer, each earning up to $70,000 a year.
Call-centre employees typically make $9 to $14 an hour (Canadian).
UNCTAD's Mr. Sauvant said cost isn't the only driver of a “tradability revolution” sweeping through the global services industry.
He suggested that language, the availability of skilled labour and proximity to markets are important to multinational companies when they opt to move work overseas.
And that's one of the reasons that Canada has become a major player at both ends of the offshored services trade, he said.
The report pointed out, for example, that Toronto-based Nortel began to shift key software operations to India in the late 1980s because of a dearth of science and technology graduates in North America.
The UN also highlighted New Brunswick as a pioneer in luring call centres by investing heavily in its telecommunications infrastructure. The report said the province now has 100 call centres, employing 18,000 people, or nearly 5 per cent of its labour force. “Offshoring is at the tipping point of a global shift,” Mr. Sauvant remarked. “And it's leading to a new division of labour in the services industry.”
He said countries are offshoring relatively low-skilled work, enabling them to move up the “value-added chain” in their home markets.
Offshoring has become the focus of a heated debate, particularly in the United States, where Democratic presidential candidate John Kerry has vowed to use the U.S. tax system to punish companies found to be shipping jobs overseas.
Mr. Kerry and other Democrats lashed out at Gregory Mankiw, chairman of the White House Council of Economic Advisers, when he suggested earlier this year that offshoring might be good for the U.S. economy.
The report, endorsed by UN Secretary-General Kofi Annan, concludes that Mr. Mankiw was probably right, and it warns that countries would be wrong to slap controls on this burgeoning trade in services.
Mr. Sauvant said offshoring creates far more jobs around the world than may be lost in some home markets. But he conceded that governments have a crucial role to play in helping displaced workers adjust in the short term.
UNCTAD pointed to outside research that suggests that up to 5 per cent of the work force among Group of Seven industrialized countries may be affected by the gain or loss of jobs due to offshoring. The G7 is made up of Canada, the United States, Japan, Britain, Germany, France and Italy.
The offshoring study is contained in UNCTAD's annual world investment report, which tracks global investment flows.
The report found that foreign direct investment (FDI) plummeted for the third year in a row in 2003 as weak stock markets dried up merger and acquisition activity. With a report from John Saunders
