TORONTO, November 14, 2005 — Canada needs to become more productive and focused to protect and enhance 2.4 million knowledge services jobs potentially affected by global competition, while, at the same time, seize the opportunities offshoring, in some circumstances, presents. According to A Fine Balance: The Buying and Selling of Canada, a report released today by PricewaterhouseCoopers (PwC) in association with independent analyst David Ticoll, Canada trails its competitors in the offshoring of knowledge work. Canada needs to identify the occupations where we can compete and win — and support these jobs with technology investments and business innovations. At the same time, we need to be open to the movement of other knowledge jobs to lower cost geographies.
The report projects that in addition to 2.4 million knowledge workers, 3.3 million manufacturing production employees are affected by global competition and job mobility — meaning that overall, 37% of Canada’s workforce will be buffeted by the global economy in the coming decade.
“Globalization is besieging high value knowledge-based occupations — from HR to purchasing to investment management and more,” says Robert Scott, Leader of the PwC Canada IT Effectiveness practice. “To protect and improve our standard of living, Canadian business and government leaders must embrace the global division of knowledge work while ensuring that our Canadian businesses and workforce have the strategies and capabilities they need to compete on the global stage.”
The vast majority (>70%) of respondents to the PwC survey behind the latest Fine Balance report are taking action to lower costs and improve productivity in response to the offshoring trend. However, Canadian companies are behind in making the investments they need to respond effectively. Canadian organizations lag the U.S. and other global competitors in the use of offshoring, and this is related to the low adoption of certain information technologies and innovative business practices in Canada.
“The steps that companies take to ensure effective return on information and communications technology (ICT) investments are activities that also enable companies to capture the productivity benefits of outsourcing and offshoring,” says Ticoll. “Modularization, networked collaboration, and focusing on what you do best—these are the preconditions to the outsourcing of global knowledge work. Canadian companies fall behind in the ability to capitalize on new low cost sources of ICT-related global knowledge work.”
Meanwhile, U.S. firms in every industry — whether financial services, telecommunications, health care, retail or manufacturing — are in the midst of an aggressive series of projects to make the organizational changes that capitalize on ICTs.
Respondents to the PwC study are divided as to whether the globalization of knowledge work is an opportunity or a threat to their companies and to Canada as a whole. Findings differ substantially depending on whether or not the respondent was in the ICT industry. The PwC study found that 39% of information and communications technology (ICT) respondents think the impact of the globalization of knowledge work on the Canadian labour force will be bad in the short-and the long-term — though 29% expect the complete opposite, seeing both short-and long-term benefits. Non-ICT respondents are a bit more optimistic: 57% think offshoring will hurt Canadian workers in the short term, but benefit them over the long run. However 29% agree with the ICT people who think that short and long term, offshoring is bad for Canadian workers.
Respondents to the PwC study were also unsure about the implications of offshoring for the Canadian economy. Nearly 40% of ICT industry respondents see both short- and long-term benefits to Canada, but only 11% of non-ICT respondents agree. 61% of non-ICT respondents predict short-term pain and long-term gain. But a surprising 26% of ICT respondents expect the opposite: they think the economy will benefit over the short term, but negative impact over the long term.
The study released today builds on previous groundbreaking research released in 2004 by PwC and Ticoll. In 2004, in a study titled, A Fine Balance: The Impact of Offshore IT Services on Canada's IT Landscape, PwC and Ticoll predicted the migration of 75,000 IT jobs as well as an equal number of non-IT jobs by 2010. The report also said that this migration could be offset by growth of Canada’s global knowledge exports, leading to a potential net gain of 165,000 jobs.
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