Senior Canadian executives appear reluctant to look outside the country for software development or to outsource business processes such as payroll, employee benefits or inventory management, an Ipsos-Reid study suggests.
The study, co-sponsored by five information technology companies, said 60 per cent of the 603 companies surveyed were unwilling to outsource any software development and 88 per cent said they wouldn’t outsource business processes.
Global outsourcing – often called offshoring – has recently gained media attention as several campaigning U.S. politicians promised to protect American jobs in the face of increased work being done in low-cost countries, particularly India.
A Deloitte & Touche study in March found Canada ranked among the top five places in the world for communications providers, such as phone companies, to offshore call centres and IT operations.
That study noted Canada’s wage levels are much higher than in India, China or other emerging offshoring countries but lower than in the United States.
It also noted that Canada benefited from its proximity to the American market.
However, other studies and anecdotal accounts suggest Canadian companies are also weighing the pros and cons of moving some software development, technical support and customer call centres to lower-cost countries.
The Ipsos-Reid study found pressure to reduce costs remains a key driver for companies considering global outsourcing (36 per cent), but that imperative is balanced against an almost equal number of respondents (32 per cent) who cited retaining jobs in Canada as a crucial inhibitor.
The lack of management and control over the outsourcing process was also cited as a leading deterrent by one-third of companies surveyed (33 per cent), Ipsos-Reid said.
However, the survey – conducted in the first and second quarters of 2004 – also found that IT outsourcing will increase by five per cent over the next 18 to 20 months.
The study is based on the aggregated findings of 305 interviews with senior IT managers and 298 interviews with business executives from companies across Canada.
