Offshoring is the new norm for Canada: IDC

With the Canadian offshoring market now at $2.4 billion, according to research firm IDC Canada, offshoring is no longer a trend. It’s mainstream.

In a recent report analyzing the expanding Canadian offshoring market “Canadian IT Services Landscape,” IDC takes a deep dive into the competitive dynamics of the market and provides snapshots of key vendors including Cognizant, HCL Technologies, iGATE, Infosys, TCS, Tech Mahindra and Wipro

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It defines offshore service providers as companies headquartered, or with primary operations, in regions with historically low labor costs and that offer IT services from their home regions to customers in the previously outlined onshore regions.

The report found that the combined revenue generated in Canada by offshore IT providers has risen from $450 million in 2008 with 20 per cent of companies doing some form of offshoring to 40 per cent of companies today and a $2.4 billion market.

According to the report, Indian-based service providers are viewed as key business partners, and their cumulative revenue is expected to surpass C$1B this year. However, IDC said there exists a significant perception gap between buyers that use offshore resources and those that do not.

“There continues to be a perception of poor quality and security risk with respect to the Indian-based players, but IDC research found that once buyers go to India and other locations they come away with a newfound appreciation for the skills and capabilities that Indian-heritage firms have,” said Julie Ross, director of IDC Canada’s competitive intelligent practice, in a statement.

For those companies that do offshore, there is general agreement that offshoring has improved the responsiveness and overall delivery of IT to their organizations.

“Offshoring is not an ‘all or nothing’ proposition – rather, companies should take a portfolio approach,” said Mark Schrutt, director, services and enterprise applications with IDC Canada, in a statement. “Using a portfolio approach to the delivery of insourcing, onshore and nearshore outsourcing as well as offshoring, enables buyers to leverage best practices, realize significant cost savings and reduce the potential risks.”

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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