Outsourcing company embroiled in RBC controversy defends business practices


TORONTO – The increasingly widespread use of outsourcing and the way in which Canada’s temporary foreign worker program could be used to facilitate the practice emerged as a key issue Tuesday in the controversy over the Royal Bank of Canada’s decision to outsource dozens of Toronto jobs.

Many Canucks have lambasted RBC after it came to light that Canada’s largest bank contracted an external supplier called iGate to provide certain technology services, a decision which ousts 45 employees from their current roles.

Questions have been raised about how iGate brought its own employees into Canada under the temporary foreign worker program so they could be trained at RBC branches for the services they’ll be providing to the bank. The program itself has been criticized as a tool that allows companies to opt for temporary workers who can be paid up to 15 per cent less than Canadians.

iGate told The Canadian Press on Tuesday that it operates with a “high level of integrity” and will “fully co-operate” with a government investigation into the situation.

“iGATE’s hiring practices are in full compliance with all Canadian laws,” said Jason Trussell, senior vice president and regional head of iGate Canada.

Human Resources Minister Diane Finley has asked officials to review documents submitted by iGate after apparent discrepancies appeared between public statements made by RBC and information previously provided to the government by iGate.

“We are very concerned with recent issues involving the Temporary Foreign Worker program,” Finley’s spokeswoman Alyson Queen said Tuesday.

“Officials are investigating recent reports concerning labour market opinions granted to iGate and will look into any evidence that the program is being misused.”

To obtain permits for temporary foreign workers, companies need to apply for labour market opinions and show that a Canadian cannot be found to do the work.

One immigration expert said iGate may have received a positive labour market opinion by demonstrating that the permits it was seeking were for jobs that were never going to remain in Canada over the long term.

“The work permits haven’t been issued with the intention of them doing work in Canada. These jobs are going to get outsourced to India, which is nothing illegal,” said Toronto immigration lawyer Chantal Desloges.

“I think the public outrage is being directed towards temporary foreign workers but it’s not actually about that. What people are really upset about is jobs going to India, China.”

Desloges added that the labour market opinion system runs on an honour-based system and could benefit from more oversight.

The practice of outsourcing, however, isn’t likely to disappear, said one expert with Western University’s Richard Ivey School of Business.

“Outsourcing is just international trade in the service sector and the rationale to support it is similar to the trade of manufactured goods,” said Shih-Fen Chen.

To explain the positives of the practice, Chen argued that outsourcing a Canadian company’s technical services could result in higher incomes for an overseas worker who might later choose to buy or invest in Canadian products. The tricky issue for corporations is to manage the impact of outsourcing on their existing employees.

“Can the person who works for a bank easily find a job after the bank outsourced the service to another country? That is the problem. But overall it should be good for both countries involved.”

iGate (NASDAQ: iGATE), headquartered in the U.S. with offices around the world, employs more than 28,000 people and counts RBC as one of its larger clients.

The company has run afoul of international laws involving temporary foreign workers in the past.

In 2008, the U.S. Department of Justice ordered iGate to pay US$45,000 in civil penalties to settle allegations that the company had discriminated against American citizens in its employment practices.

The settlement also required iGate to train its recruitment staff and post a non-discrimination statement on its website.

The Justice Department found that between May and June of 2006, iGate placed 30 job announcements for computer programmers that “expressly favoured” people holding a temporary foreign worker visa, consequently discriminating against U.S. citizens, permanent residents and other legal U.S. workers.


Outsourcing company embroiled in RBC controversy defends business practices

  1. “- a decision which affected 45 current RBC workers in Toronto.” Affected in what way? In a radio news report I heard yesterday, they said 45 employees had been laid off due to the outsourcing.
    If the outsourced work freed up the employees to take on new (lateral or higher) roles in the company, that’s one thing. If they were demoted or laid off, that’s entirely different. While it would be better to keep the work in Canada and grow our economy, as long as no one is losing their jobs I can live with it.
    At the company I work for, we outsourced some of our more routine tech work to a company in India, freeing up existing resources to work on more challenging platform development. While I personally would have rathered if that work had stayed here (resulting in new hires), the “affected” staff, once they got used to the idea & were certain they were not being replaced, liked being freed from the grunt work.

    • The articles I read all indicated that the affected employees applied for a number of different positions within RBC and all but 5 came up with nada. I also read that there were 50 affected employees, and the 45 number represents the number that are going to be retired/turfed by RBC. This was a few days ago, so the story may not have been as complete as it is now. The point is that the existing employees were given next to no consideration…this was just a move to save a few bucks by employing people at a fraction of the cost in India. It doesn’t help that the chief executives at RBC got fatter bonuses this year, in the midst of this action.

      It sounds like you work for a better company. :)

    • The 45 at RBC are only getting a chance to find another job in RBC now that this is all over the media.

  2. To explain the positives of the practice, Chen argued that outsourcing a
    Canadian company’s technical services could result in higher incomes
    for an overseas worker who might later choose to buy or invest in
    Canadian products.



    • So this is a long range trade deficit reduction plan?

    • This isn’t about immigration, it’s about outsourcing.

  3. This is brilliant. Outsource Canadian jobs and Canadians can go on welfare.

  4. Where is the long term here? Does RBC want bank accounts in India…like that’s going to happen. Keep our Canadians working so we keep banking and they can keep loonies n toonie us to death. Dah

    • The issue I see here is that RBC gets to make money under the protection of the government, they have very little competition.

      If a Canadian wanted to do banking with international competitors and want to offshore their assets and business elsewhere, this is very hard to do.

  5. Outsourcing helps both the countries, First you need to know that why a company outsources its work, primarily for two reasons, first is to get the quality work back in return. and the second is to save money and time. It benefits the company to grow efficiently and render good services.

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