The RBC Outsourcing Scandal
I’m not so sure how bad the news of Royal Bank of Canada (RBC) outsourcing is, in the sense of degree of “bad”. First, many Canadians work abroad on visas offered by foreign countries. I think there are up to 3 million Canadians living in the US alone, working, studying or simply living in a warmer clime for their retirement. On RBC in particular, the call center for US clients is in New Brunswick. That’s “on-shoring” for an RBC foreign subsidiary and it provides Canadian jobs.
I don’t pretend to have all the facts about today’s news but from what I understand, RBC is bringing in a new platform which comes from a California-based IT outsourcing company called iGate Corp. A number of the Indian employees had to come to Canada to learn the platform already in use by RBC – that’s part of a transition. RBC says most of the 21 people involved in the transition were hired locally or only came into Canada for this transition. RBC says only one came in on a temporary workers visa. Apparently 45 Canadian workers will be displaced by this new platform. We’ll have to wait for the government investigation to learn the full truth of the RBC – iGate Corp. scandal.
Canadian companies bid on business all around the world. When Canadian companies win contracts, surely they bring in their Canadian experts. In other words, Canadians too are benefiting in other countries.
People complained about robotization in manufacturing. People complained about companies sourcing raw material from other countries. People complained about companies moving to cheaper labour economies, textiles, cars, electronics, and so on. In the meantime, our economies have transitioned to other jobs – we do more knowledge-based stuff here in North America as a result. But the cheaper labour economies are educating their people and their people are becoming entrepreneurial at the same time. And their labour costs are increasing big time.
My wife’s father worked for an aluminum smelter in Northern Québec. They mined it and made it into ingots. Pepsi Cola wanted to make aluminum pop cans up there but Pennsylvania bid higher and the Quebec government didn’t think it was a good idea to go the extra mile to attract Pepsi to build in Quebec. I wonder how many jobs ended up in Pennsylvania. That was about 40 years ago.
My view is that the world is a global place. We want better cheese and we want cheaper cheese. We’re not getting that here. We want to eat foreign food and then we bitch about dark-skinned people on the bus. We want iPhones but not Chinese clothes at Walmart. Medical tourism is about to propel Canadians to Costa Rica, Thailand, India etc., to obtain excellent treatment because it’s cheaper, just as good and there are no wait times. Canadian police forces are in foreign countries (not just Afghanistan) training foreign police on rights, use of force, investigative techniques. Canadian nurses can qualify in Texas or Saudi Arabia and earn good money.
In many cases, Canada is not getting its share of the globalization pie, but that’s because we are not risk-takers, entrepreneurs, or we don’t produce good stuff. Nobody wants to buy inukshuks and you can’t sell “we have the best country/healthcare system/peacekeepers/Justin Biebers/Mounties in red serge”. Hell, Canadian maple syrup is cheaper in California than it is here. So is our (so-called) famous cheddar cheese. To get ahead, we have to do better.
So, while I feel for my father-in-law not reaping the profits from the Pepsi can revolution and the 45 people who may have to do other jobs at RBC, the real culprit here is that no Canadian company outbid and outperformed the Indian company iGate Corp. which won the contract. And iGate Corp. is very likely charging RBC a price tailored for the North American market – why would they charge any less? Canadian companies abroad do the exact same thing when they win contracts.