Tuesday, April 19, 2005

Canadian Firms Cool On Offshore

The majority of Canadian businesses most likely to send work offshore to low-cost countries have no plans to do so, the Conference Board of Canada says, but adds that they appear to have an inadequate understanding of the phenomenon.
The board said 58 per cent of companies responding to a survey indicated that "they were not offshoring any businesses or functions."
The report, titled Will Canadian Businesses Sink or Swim? was based on responses from 132 businesses. The board sent its survey last summer to companies that were considered most likely to engage in business process outsourcing by virtue of their size and the nature of their business. It released its report on Friday.
The board said inconsistencies in the responses suggest that decision makers have not invested adequately in understanding offshoring and its implications."Given the current prominence of offshoring in foreign media and business . . . it's surprising that little debate -- or even discussion -- has taken place in Canada," it said.
Companies most likely to go offshore were manufacturers (26 per cent), followed by high-technology firms, including software development (16 per cent), maintenance (15 per cent) and user support (13 per cent).
The size of offshore investments was small, the survey found, usually less than $100,000 a contract, and future investments were also projected to be low. Thirty-nine per cent of the respondents said their planned investment in offshoring was less than $100,000 and 31 per cent planned investment levels of between $100,000 and $1-million.
"The results indicate that there will be a low-level impact on Canadian employment during the next three years," the survey said.
The respondents most frequently cited in-house barriers, such as bad publicity, as being responsible for a decision regarding offshoring. The survey also found that cost savings were the most frequently cited driver for offshoring.