Boasting the title of world’s second largest country (by land mass), home to two official national languages and host of the 2010 Winter Olympics in Vancouver, Canada is adding another notch to its belt by becoming a hot spot for IT outsourcing.

North American and particularly U.S. companies (the latter representing 70 percent of the global demand for outsourcing) are driving the growing appetite for Canadian IT talent and way of doing business.

Some interesting statistics also show that Canada is poised to be a long-term player on the global outsourcing scene:

• According to the McKinsey Global Institute, Canada generated $3.7 billion in offshore outsourcing revenue behind only Ireland’s $8.3 billion and India’s $7.7 billion.
  
• According to A.T. Kearney, Canada is the eighth most attractive offshore location overall and places second of all jurisdictions when it comes to quality of people skills and availability of skilled workers (behind India), and quality of business environment (behind Singapore).
  
• According to Deloitte & Touche, outsourcing within North America is projected to grow at an average of 10-15% annually

The key drivers behind Canada’s growing outsourcing cache are many.

Being fully accustomed to the North American business culture and work style is an attractive feature of Canadian outsourcing, as is speaking English as a first or second language.

Similarities with the United States also extend to strong infrastructures for security and IP protection, akin legal and taxation practices and mutually stable economic and political landscapes.

Further, Canada has six time zones, making it easier to communicate with North American companies throughout the work day.

As we’re seeing with the rapid growth of nearshore relationships between Europe and Russia, North American and Canadian collaboration can bring the benefit of more frequent face-to-face interaction between in-house teams and outsourcing partners.

Nearshore Canadian resources can come on shorter notice, stay for shorter periods of time when and as needed, and generate savings in travel time and costs.

 Top notch global talent is attracted to Canada’s high standard of living, strong business and technical community and less stringent immigration requirements (vs. the United States’ H1B visa caps.)

Additionally Canada is a place where the world’s many cultures come together, giving it an additional draw as a career destination.  For example, Vancouver has nearly as many foreign-born residents as it does Canadian-born residents (250,000 vs. 280,000) according to government immigration statistics.

Finally, this talent pool is not only highly diverse, but also offers a strongly educated, technically astute and experienced group of IT managers, developers and executives.  This quality workforce is also poised for the future with 23 percent of Canada’s 20 – 34 year olds possessing advanced degrees.

Many North American software vendors that are in the business of software themselves are finding Canada to be an interesting proposition.

In fact, results from the “2007 U.S. ISV Market Report” co-sponsored by technology education leader SD Forum and Luxoft showed that U.S. software vendors were more likely to outsource to providers in Vancouver, Toronto and Montreal over other nearshore locations such as Mexico City.

Whether a client is on the same continent, in the same city or halfway around the globe, the most important elements for successful outsourcing engagements are strong, honest and ongoing communications; mutually agreed to goals, work values and metrics; and solid project management on both the client and vendor sides. There are, however, some common relationship attributes that may point towards going with a nearshore destination, either as a sole location or as part of a diverse outsourcing portfolio. 

These include: Face-to-face time is a frequent must-have; uncertainty and risk level at the client’s end is steep and constant; the client is unable to dedicate the proper level of in-house resources; on-continent options are required due to a client’s legal or business restrictions; and the client’s C-level has a low tolerance for long distance business relationships.

There are also certain roles that may lend themselves more naturally to nearshore staffing including systems or solutions architects, business systems analysts and project managers. By being closer to the client, these resources can then serve as even stronger liaisons to offshore teams which are usually comprised of technical leads, developers and testers.

Stephen Michaud is the general manager of the Vancouver office of Luxoft, a global provider of high-end IT outsourcing services to clients such as Boeing, Deutsche Bank, IBM, Dell, UBS, T-Mobile and Alcatel.