Calgary, Winnipeg set to become new global outsourcing hubs

Two Canadian cities – Calgary and Winnipeg – feature in global professional services firm KPMG’s list of 31 up-and-coming locations for IT Business Process Outsourcing (IT-BPO).

Other global cities  on the list include Belgrade (Serbia), Belfast (Ireland), Brisbane (Australia), Jaipur (India) and Boise (USA).

These emerging destinations offer advantages – such as “new and improved” incentive packages, and talent better geared to the outsourcing industry – according to the KPMG report titled “Exploring Global Frontiers: The New Emerging Destinations.”

When selecting an outsourcing centre, many firms tend to focus on workforce cost and availability, while neglecting other factors, the report notes.

Yet even a superior workforce can’t compensate for such deficiencies as a poor telecommunications infrastructure, lack of suitable commercial space and inadequate skills, it says.

Given the disparity between different areas within the same nation, the report suggests that studies comparing entire countries may provide skewed results.  

Hence, its decision to examine individual cities.

The KPMG report looked at seven criteria, including cost of doing business, workforce, quality of life, and government support and incentives.

It commented on the relative merits of three geographies for IT-BPO: the Americas, Asia-Pacific and Europe, and the Middle East and Africa.

While each region had its strengths, the Americas were cited for their near-shore advantage and linguistic and cultural affinity with the key North American markets.

In addition, the region has a well-developed infrastructure and good quality of life.

The report also categorizes each city on the list by key services offerings. The U.S. and Canadian cities included are “typically tapped for higher value-adding services.”   

Winnipeg is listed as a home for IT services, call centres and back-office services, and Calgary as a centre for IT and engineering services.

The spade work for Winnipeg’s growth as a business process outsourcing centre was begun more than a decade ago, according to a spokesperson from the city.

It included strong efforts to build the contact centre industry, said Greg Dandewich, vice-president and director of economic development at Destination Winnipeg Inc., the city’s economic development and tourism services agency.

Winnipeg, he said, offers several advantages, including modest operating costs, affordable and accessible skilled labour pools, and low employee turnover rates.

Dandewich said Winnipeg today is focusing on higher-end technical and BPO operations.

The skill level and labour pool meet the needs of these areas, he said, partly because the city is home to one of Canada’s largest financial services sectors.

In Calgary’s case, strong migration to the city and a highly educated workforce has brought tremendous benefits the KPMG report suggests.
(The city’s labour force grew 33.8 per cent over the past decade thanks to the worker influx).

“We have the highest concentration of engineers and engineering technologists in Canada,” said Adam Legge, chief economist and vice-president with Calgary Economic Development.

Established in 2002, Calgary Economic Development’s mandate is to work with stakeholders from business, the community, and government to foster sustainable economic growth in the city.

Calgary’s attraction as an IT-BPO destination has to do with factors other than costs, Legge said.

“We’re not necessarily a low cost location – we have more expensive labour and housing – but we have higher quality labour,” he said.

The city, he noted, isn’t competing on cost so much as quality. “We have a high quality of life for employees, and this contributes to employee retention.”

The KPMG report cites provincial and municipal tax breaks in Calgary as key incentives for IT-BPO.

However, it also remarks that Calgary’s cost of living has grown over the past few year, thanks to rapid expansion.

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