Pros & Cons of Outsourcing to Canada

Once again an interesting question asked on LinkedIn IT, this time by Vladimir Kondratenko – Pros and Cons of Outsourcing to Canada.  My recent experience with that region is rather limited so I decided to make a few calls / send a few emails and connect with my colleagues who have first hand experience in doing that.  It was a bit of challenge but I managed to find a senior technology exec who outsourced a small portion of his portfolio to an outsourcing company based in Ottawa, the information he shared with me very much confirmed my somewhat knowledge and expectations. Outsourcing to Canada is an interesting phenomena indeed and it offers its own Pros and Cons, very few Cons I have to say:

  • Political atmosphere and legal system makes working with Canada outsourcing extremely easy and far less risky than probably any other country in the world. Recently with Canadian dollar shooting 25% above average made it the least likely place for outsourcing as well. Now when the exchange rate is back inline with what it used to be Canada can offer great options to some offshore buyers in IT space.
  • Language, cultural closeness and no time zone difference with the USA are huge pros of Canada making it a superb location for outsourcing. Generally as long as you are fine with telecommuting you can’t tell the difference between working with developers in Detroit or Toronto. There are of course some cultural differences steamed mainly from significantly different social support structure. Also appreciation of life values versus business success appears stronger in Canada than in the USA. I would say that these differences are not likely to affect outsourcing engagement a great deal.
  • Taxes and other elements that constitute government support for outsourcing are mediocre at best, on the other hand employee lifestyle issues are well taken care of; think free education / healthcare / etc.
  • Education system in IT space is decent with very few top-notch schools but no match to the USA or India. Also many It professionals receive a great deal of professional education from the same sources than people in the USA.
  • IT and telecom infrastructure across the country is excellent, with prices close to those in the states.
  • Data and IP security is non issue. Well, as non issue as it is in the USA. A few Data Centers that I saw in Canada were in shipshape, SAS70 compliant, etc. Power and other infrastructure dimensions related to climate, etc. are more reliable than in many places in the USA.
  • Personnel turnover is medium to low, and if you exclude a couple cities like Toronto is actually very low. Key personnel turnover is very low.
  • Labor pool / access to engineering talent is decent, but no match to China or India by any stretch of imagination. Interesting dynamic worth mentioning for this case. General size of the pool is somewhat small however it’s much less polluted and quality / quantity balance makes it possible to staff projects in relatively short time frame.
  • Quality of the talent pool is well above average; as I mentioned above the talent pool is less polluted, more so, advanced educations system and easy access to multiple means of professional education caters to generally higher quality.
  • Of course there is price to be paid for all those great things and that is a high rate. It’s still much lower than the rate you’d pay for local resources in San Francisco or Manhattan, but is very close to what you can find some rural areas of this country. The cost are so high that exchange rate can practically kill any cost advantage and with overhead of offshore engagement make the total cost of outsourcing above cost of sourcing it locally.

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