Just weeks after its parent company announced global job cuts of 2,700, EDS Canada said it will create 350 local jobs through its “”Best Shore”” strategy.
EDS said help desk services for a pair of global clients has meant the
creation of 60 new jobs in Winnipeg and 160 in Calgary and Port Hawkesbury, Nova Scotia. Another 90 jobs were created at an existing client located in Port Hawkesbury, and 50 more through the expansion of a General Motors Corp. contact centre in Sault Ste. Marie, Ont. EDS Canada communications director James Toccacelli added that only a fraction of the previously announced job cuts will take place in Canada.
Toccacelli.said when the outsourcing firm looks to relocate its client work to offshore or near shore destinations, it considers several factors: the skill level of the workforce, the technology infrastructure, the cost, and the political stability of the region. A country like India or Russia might score well on cost but fare poorer in terms of geopolitical risk, while the United States is more costly but also more stable.
“”Canada is kind of in between those options and why the strategy appears to be resonating is Canada has the same cost advantages and it’s a good way of balancing geopolitical risk,”” Toccacelli said, adding the Best Shore strategy is focused on the areas of application development and customer relationship management. “”Canada has got a number of advantages.””
General Motors thinks the same way, according to spokesperson Richard James. He noted Detroit-based GM produces a higher proportion of vehicles in Canada in relation to market size than in the United States. The new jobs in Sault Ste. Marie are related to GMAcess, a support system for the company’s sales force. Like EDS, GM takes a holistic approach in deciding where to set up shop, with Canada scoring highly by virtue of its publicly-funded health care system, pool of skilled workers and favourable exchange rate.
“”All those benefits are weighed in this business case scenario and they’re all checkmarks,”” James said. “”There’s a great infrastructure in Canada.””
Dan McLean, outsourcing research analyst with IDC Canada Ltd. said offshore/near shore strategies are an increasingly common feature of major outsourcing firms, especially global ones.
“”Near shore and offshore IT services are growing. You’re seeing the emergence of offshore services in Eastern Europe, Asia-Pacific,”” he said. McLean added companies are looking either for expertise in another region of “”it’s leveraging services that are cheaper than they could buy in their own geography.””
As for the effect the strategy will have on EDS’s bottom line, McLean said it could help the struggling company, but only slightly.
“”Is this going to turn the company around? I suspect there will be other things that have to happen as well,”” he said. “”But it’s an area to play in.””
In the United States, the shifting offshore of white collar technology jobs — the application development work rather than the call centres — has caused has caused tech workers to lobby state and federal governments to keep these jobs stateside, whether through tax incentives or prohibiting the offshore outsourcing of government contracts.
Toccacelli said Canada is coming out ahead with regards to outsourcing overall.
“”It’s a big complex global world and jobs and work are flowing in both directions,”” he said.
McLean, who is working on a study of the effect of outsourcing due late summer, agreed losing jobs to outsourcing isn’t a real concern for Canada – at least not at this point.
“”It could conceivably happen, that’s for sure,”” he said. But “”I don’t think we’ve seen any indication that it’s dragging jobs out of the country.””
In fact, McLean sees the outsourcing phenomenon as a net benefit for Canada.
“”Canada is a very attractive near shore destination for a lot of American customers.””
Toccacelli said even the Canadian dollar’s recent rise won’t have much of an effect on EDS job creation here as the company has already made significant infrastructure investments in this country. While he admitted there might be a point where the dollar rose too high, “”given the investment we’ve made, that’s probably way off.””