Government investigation launched after RBC outsourcing decision -

Government investigation launched after RBC outsourcing decision


TORONTO – Controversy over the Royal Bank of Canada’s decision to outsource dozens of jobs continued to mount on Monday with the government launching an investigation and observers suggesting the company’s actions are part of an alarming trend facilitated by existing regulations.

At the heart of the controversy is a multinational company called iGate, which was contracted to provide certain technology services to RBC — a situation thought to affect 45 current employees in Toronto.

Government officials are now scrutinizing the application documents submitted by iGate in its case to bring in foreign workers to provide services to Canada’s largest bank.

“HRSDC officials are currently reviewing the labour market opinions submitted by iGate in great detail, based on apparent discrepancies between RBC’s public statement and information which has previously been provided to the government,” said Alyson Queen, a spokeswoman for Human Resources Minister Diane Finley.

To obtain permits for temporary foreign workers, companies need to show a Canadian cannot be found to do the work. iGate did not immediately respond to requests for comment.

RBC has maintained it had not hired temporary foreign workers to take over the duties of current employees, but it also said it was delegating certain services to an external company that brought in its own employees for training at the bank’s offices in Canada.

The bank (TSX:RY) said it recognized the impact such an arrangement has on its employees and added it was working on finding other positions for those whose jobs were being contracted out.

Observers analysing the situation said RBC’s actions were part of a bigger story.

“The Canadian government has been aggressively encouraging employers to use temporary foreign workers,” said University of Toronto professor Audrey Macklin, who specializes in immigration law.

According to Macklin, the government encourages companies to employ temporary foreign workers either directly or indirectly by processing their immigration documents faster and by allowing companies to pay them less than Canadians.

“In effect, the government of Canada subsidizes employers to the tune of five to 15 per cent of labour costs on the backs of temporary foreign workers and at the expense of Canadians,” said Macklin, adding that companies often turn to external suppliers to access a pool of temporary foreign workers.

The government has repeatedly said the Temporary Foreign Worker Program is only to fill “acute labour needs” when Canadians aren’t available for the work required.

But NDP Leader Tom Mulcair says the Conservatives have done nothing to stop a situation like RBC’s.

“We see the banks and other large companies with their lawyers setting up these systems where Canadians can be deprived of their livelihood,” he said Monday.

The rapid expansion of the temporary foreign worker program has raised concerns that Canadian companies are filling job vacancies with cheaper workers from overseas rather than actively finding Canadians to fill the jobs.

In 2012, there were more than 213,000 foreign workers in Canada, compared with over 160,000 immigrants who arrived under the federal skilled worker program.

What’s missing, said one immigration expert, is a breakdown of what jobs those temporary workers are holding, and for how long.

“If in fact one of the contributing factors to the exponential growth of the temporary foreign worker program has been workers who are coming to Canada for very short stage and returning to work for a third party, that, I think, really does undermine the very rationale for having a temporary foreign worker program in the first place,” said Queen’s University professor Sharryn Aiken.

The issue of outsourcing, however, is not a new one.

“Outsourcing is inevitable. The economics are so overwhelming it’s not going to go away,” said Rob Babin, a Ryerson University professor and outsourcing expert. “It’s important to know how to manage it and how to govern it and how to manage the relations with the outsource provider.”

Employers capitalizing on the benefits of global outsourcing need to ensure they take care of their employees at home if the practice is to work well, he said.

“It’s important for any organization that takes on outsourcing to be very sensitive to the needs of workers… That’s why it’s touched a nerve with so many Canadians.”

RBC has faced a firestorm of online reaction, with some Canadians even saying they closed their accounts with the bank on Monday.

One labour economist argued that some of that public anger was rooted in the fact that employers weren’t revising their wages to attract Canadian labour for certain positions.

“When the price of labour looks like it goes up, it looks like Canadian firms are just going offshore to get the labour they want,” said Lars Osber, an economics professor at Dalhousie University in Halifax.

“They’re not bothering to try the alternative of raising wages.”

In late February, RBC reported a first-quarter profit of $2.07 billion, or $1.36 per share, up from $1.86 billion, or $1.23 a share, a year ago. Its revenue grew to $7.91 billion, from $7.57 billion a year earlier.

Filed under:

Government investigation launched after RBC outsourcing decision

  1. Some people think that nothing can be done with outsourcing because it
    is a way to cut expenses to be competitive. But don’t forget that the
    bank industry is protected in Canada from foreign banks. Our big banks
    have to compete only with themselves. So, outsourcing for them is not a
    question of life or death but of bigger bonuses for executives. And it
    is not only RBC – CIBC is doing the same, outsourcing Canadian jobs to
    India. And the results are not only lost jobs in Canada but a bad
    customer service, when you can’t understand a word because of a terrible
    accent…I, personally, in principle do not do any business with
    companies that have customer service in India

    • Exactly. Canadian banks make billions off Canadians every year by way of gouging fees. This nickel and diming of Canadians goes into the pockets of executives. Each saving by shipping jobs to low wage countries means more money in the pocket of executives. Greedy evil scum, each of them. Truth.

  2. Don’t leave the discussion just to banks because this is a more of an epidemic within the Canadian job market, especially in IT. How many times have you called a Canadian company’s support line and gotten someone fluent in English? Telus, for one, outsources their service support to companies in India and the Philippines. I was told that over 300 jobs were cut in Calgary alone and off shored this month. They get around this by buying companies in these countries so that these types of moves word spin into “internal staff restructuring”.

    Back to the banks, my only suggestion is for anyone and everyone to take a good hard look at local credit unions as viable alternatives to big banks. They are usually managed by people/groups within the local community and, in my opinion, provide as good if not better services than big banks.

  3. UNFORTUNATE MISUNDERSTANDING is now what RBC is spinning ? Well, let’s look at this on both sides:

    1) RBC misunderstood (?) the breakpoint of Canadians , after years of never-ending fees for sub-par services, when they thumb their noses and deliverately ‘stick’ it to Canadians (yes the same populace that put/deposit their hard-earned monies to RBC). RBC misunderstood their social obligations to Canadians when they choose to ignore the fact that Canadians must come first – they bread and butter!!!. RBC misundestood it is unconscionable the way they treated the soon unemployed Canadian – it is slap on the face that one has to train the same people that will take your job away! Vicious!

    2) Canadians misunderstood that RBC will not sacrifice Canada for profits. Canadians misunderstood that RBC will give them the same loyalty as they have shown RBC for generations. Canadians misunderstood that RBC has its social conscience centred in Canada first and foremost!.

    Well, I too, misunderstood but no more – I’ve taken out my banking and investments out of RBC and Royal Dominion Securities so there should be no more misunderstanding here. I am sure I will not be the last Canadian to take out their monies of RBC – well, who knows, with less piles of money in-front of tthem, RBC may be able to see things clearly; and that may not be a bad silver lining for those will soon lose their jobs.

  4. at a time when job are scarce and plenty of educated youth with no jobs, RBC decides to ship off work. disrespect to Canada’s largest bank. I for one will certainly will close of my accounts at Royal Bank of Canada.

    • at a time when jobs are scarce and plenty of educated youth go on with no jobs, RBC decides to ship off work. Disrespectful, considering its Canada’s largest bank. I for one will certainly close of my accounts at Royal Bank of Canada.

  5. I am disgusted about rbc outsourcing jobs. they have become very greedy. We are thinking
    of taking all the money out of rbc and moving it to different bank. some of the bank don’t have dress code and tellers cant even speak english. very bad bank.

  6. Mortgage is up for renewal. Not enough time to switch lenders, so advised RBC to do a 1 yr term in which time I will find another lender, probably credit union and close my accounts with RBC of which I have been with for over 25 years. Disgusted with them and Telus and Bell and …. record billion dollar profits, yet poor schmuck costs too much, so outsource for cheap foreign labour. (equal to using a sweat shop). Shame

  7. This outsourcing started many years ago which is a disgrace considering our economy and so many people still out of work. I will be closing my accout with RBC

  8. My job at RBC as
    a Technical Support Analyst was outsourced to Igate over 4 yrs ago. All
    three IT call centres were closed down: Vancouver, Montreal, and
    Toronto. After learning our outsourced fates, we too all stayed at our
    jobs for over a month to train the folks who were replacing us. I’m
    still sad & disappointed that the Royal Bank of CANADA would
    sacrifice highly trained, quality people here in order to save a few
    more dollars for their bottom line and investors. It was a wonderful job
    with decent salary and a great bunch of workmates. I worked there 5 yrs
    and received 4 months salary in severance. RBC also offered an
    employment training course but, honestly, did very little in trying to
    find me another job. I have a physical disability (Cerebral Palsy) and
    with the Canadian economy struggling, it is highly unfortunate that the
    bank would choose to favor foreign workers when we already have an eager
    and under-utilized workforce right here in Canada. Again, I was
    outsourced 4 years ago. Nice to see this finally getting the media
    attention it deserves :)

  9. So, Professor Babin, a Ryerson University professor and
    outsourcing expert, says: “Outsourcing is inevitable. The economics are so overwhelming it’s not
    going to go away.”

    Sounds almost like an endorsement to me. Sorry, my own view is that outsourcing is NOT inevitable. But that view relies on common folk rising up and saying, “Sorry, your [insert company name] outsourcing has just cost me my job, and I don’t like it”.

    So… Canadians are out of jobs while we perpetuate the misery of foreign workers who are paid next to nothing for working 14 hour shifts in deplorable conditions.

    Thank you Brian Mulroney. Your Free Trade Agreement stinks. Everyone knows that wages (or anything else) always sinks to the lowest common denominator. It’s sad beyond words, (thinking of the over 350 workers in the garment industry who died in the collapse of their factory building).

    So Free Trade means giving low-paying Canadian jobs to even lower paying jobs outside of C

  10. Thanks for this one.