Offshoring: A Possible Business Strategy For Canadian Companies
Updated: Feb 27
Canadian companies are certainly no stranger to the idea of outsourcing/offshoring part of their business processes. And over the years an increased number of Canadian companies have leaned towards offshoring as a possible business strategy to increase their growth and profit. In enlightenment of this, let us see how offshoring has been help Canadian businesses grow.
Statistics on offshoring show that outsourcing has positively affected Canadian businesses with multi-factor productivity and performance growth, through the disintegration of inputs, product specialisation and the exploitation of-scale economies. There has been significant cost savings for Canadian businesses as well, IT Outsourcing alone has saved about CAD $36 billion in costs from 2001 to till now for the Canadian economy . Contrary to what critics say, the statistics also found that neither offshoring nor outsourcing had any net effect on employment in Canadian industries. However, demand of jobs have shifted from low skill to high skill labour.
To understand the reason why outsourcing had no effect on employment, one must first realise that business are meant to grow. For which, they must work hard to maximise their efficiency through decreasing their cost to as less as possible while maximising the profit from their product. An increased profit means that the business now has more funds to invest in creating new or better product - which inevitably creates a new cycle of more job opportunities. Also, when Canadian companies outsource to another country such as Bangladesh, the job is not being replaced by cheap and inferior workers but rather better ones. Because the firms to whom the jobs are being outsourced to are specialised in providing excellence in services rendered.
Outsourcing also has been helping many Canadian startups get off the ground their run the business. CBC news on an article on outsourcing reported that many startup business owners had only be able to start and run their business successfully due to being able to outsource part of their operational work. This later enabled them to hire employees in Canada once the business started successfully running. This can be easily explained by the fact the startups have limited capital on their initial stages of the business, outsourcing helps to save costs, specially when the startup cannot afford to hire locally for certain job positions due to limited capital. However, once the business starts running it will create job opportunities for the local market.
Ultimately, outsourcing will help Canadian businesses not only save costs and be able to invest more, but also to thrive in the competitive market and help startups to grow.
Zayed Ahmed is the founder and CEO of ASL BPO, a startup BPO firm that provides back office support to businesses world wide.