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Businesses The Almighty Buck

Why Offshore When Canada's Next Door? 1111

Roblimo writes "A study by accounting and consulting giant PriceWaterhouseCoopers claims Canada could lose up to 75,000 IT jobs by 2010 to offshore outsourcing, but could also *gain* 165,000 jobs through U.S. outsourcing contracts. The trick is, according to this story at IT Manager's Journal, that while Indian, Chinese, and Russian programmers may cost 80% less than U.S. programmers, the time zone, language, legal, and other problems involved with sending work half way around the world can eat up much of the labor savings, while Canadian programmers are nearby, speak English with nearly American accents, have a similar culture and legal system, and get paid 40% less than U.S. programmers. Might be time to think about moving North, eh?"
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Why Offshore When Canada's Next Door?

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  • by FractusMan ( 711004 ) * on Friday July 16, 2004 @11:10AM (#9716355)
    I work for MSN - MSN which is not offered in Canada, but most of the tech support sites (or so it seems) are located here in Canada.
  • by gurps_npc ( 621217 ) on Friday July 16, 2004 @11:10AM (#9716357) Homepage
    I am not willing to move north to get a job that pays 40% less than what is available here. I'd rather work outside my field.
  • 40% Less Pay (Score:2, Interesting)

    by HomerJay ( 557235 ) on Friday July 16, 2004 @11:12AM (#9716378)
    I work in the US about 5 hours from the Canadian border and I get paid about 40% less than the average US programmer.
  • by Anonymous Coward on Friday July 16, 2004 @11:13AM (#9716385)
    canada does not have an outsourcing industry set up let alone the companies to outsoruce to. remember that sales and marketing is required as well as a cheap pool of labour. indian companies agressively market services in the US, while being able to retain a large pool of engineers on the bench (since labour is cheap).
    this alone make the difference. in canada you would have to pay engineers $40 CDN an hour while in india is $4 CDN or equivalent. this allows more engineers to sit on the bench, allowing faster scale up.
  • by Grey Ninja ( 739021 ) on Friday July 16, 2004 @11:13AM (#9716391) Homepage Journal
    As a Canadian, I have to say that I'm not here for the money. Yeah, it's a little disturbing that I get paid much less than an American does, but it doesn't bother me THAT much. What really matters to me is that I get paid to do something that I enjoy. And I happen to really enjoy the practice of programming. I will go to where I can get the job I will enjoy the most, regardless of pay, so long as I have enough to take care of myself.
  • Always a good thing (Score:5, Interesting)

    by dsanfte ( 443781 ) * on Friday July 16, 2004 @11:13AM (#9716396) Journal
    As a Canadian in the IT industry, I'd be glad to see more jobs coming here, definitely. There really is very little difference between Americans and Canadians, besides cultural and political systems. None of that plays into how you sound over the phone, or how well you code.

    Canada really is the ideal place for US companies to outsource. If you have a Roadrunner cable modem and have ever called tech support, chances are you've been talking to someone at a local Ottawa firm called Convergys. I bet you never knew it, either.
  • by luckytroll ( 68214 ) on Friday July 16, 2004 @11:14AM (#9716405) Homepage
    Outsourcing to Canada has been going on for a while, mostly because of Canada's trusted status in matters of security. Even the evil Haliburton corporations big clusters are now living happily in Toronto along with dozens of others. I should know - I installed them - (and my karma aches for it)
  • Comment removed (Score:5, Interesting)

    by account_deleted ( 4530225 ) on Friday July 16, 2004 @11:14AM (#9716409)
    Comment removed based on user account deletion
  • by madprogrammer ( 214633 ) on Friday July 16, 2004 @11:24AM (#9716593)
    Exactly... My guess is that that "40% less" is not 40% less than all states... just the ones that pay a lot, like California.

    But since the cost of living is so high in L.A. and San Fran things start to work out. From what I've seen living in both countries is that dollar for dollar many items are the same price or at least close. An American $499 Dell is Canadian $550. An American $2.00 loaf of bread is $1.00 Canadian.

    My standard of living will not be changing too much when I move from the States to Canada. Even though I'm taking a pay cut.
  • by Anonymous Coward on Friday July 16, 2004 @11:25AM (#9716602)


    Indian programmers cost 1/4th the amount typically paid for an American programmer. A 4:1 bang-per-buck ratio.

    What outsourcing firms wont tell you is that you're also buying into an average 6:1 loss in productivity [allianceibm.org]. American coders are better educated, and have more experience -- This results in _better_ quality code that's produced _faster_ than their Indian counterparts.

    Sure, you're saving your company money, but you're also taking an enormous hit in productivity. Your offshore project is putt-putting along at 15 MPH when the rest of the industry is doing the equivalent of 10 over in a 65 MPH highway. By the time your product hits the street, your competitors are already dominating the market AND working on their next release.

    Something to think about.

  • by Dr Caleb ( 121505 ) on Friday July 16, 2004 @11:25AM (#9716607) Homepage Journal
    KPMG (the accounting firm) rated Edmonton as the #1 place to live in the western hemisphere as far as quality of living, tax levels, housing prices and job market.

    It's no wonder why we're home to Bioware, Quicken, and large support centers for General Electric and Hewlett Packard.

  • Personal experience. (Score:3, Interesting)

    by Anonymous Coward on Friday July 16, 2004 @11:26AM (#9716627)
    I'm an american who HAS moved north up to Montreal to program (games for that matter), and cost of living in the city here are less than where I was in NY (Poughkeepsie), and if I were to move just 30 min outside of Montreal, cost of living would drop more than 40% less than where I was in NY, probably in the order of 60-80% less.

    For example, a typical, 2500-3000 sq ft house around Poughkeepsie (Hopewell Jct to be specific) went for about 300-800k USD. A friend of mine bought a 2500 sq ft (ranch) house 15 min drive from down town Montreal for 140k CAD, with a pool and a very nice neighbourhood.

    140k CAD is aprox 100k USD(at about 70 cents to the canadian dollar). So by this rough (I am sure prices in Hopewell have soared even higher), at worst the price is 66% less, and at best upwards of 88% less than the US counter part in that area.

    Is it worth it? Thats for you to decide. I know I have more disposable income, even when converted to USD.

    I do have the added benefit of being a dual citizen, but that is a minor issue. As long as you have a degree and a letter from a company stating you have a standing job offer in Canada, it's a matter of going to the border patrol office and they will do a little paper work (from what I have been told, less than a hour) and you are all set.
  • by addie ( 470476 ) on Friday July 16, 2004 @11:27AM (#9716650)
    speak English with nearly American accents

    This quip really made my day. Now I know that accents vary over North America, but the idea that the "Canadian" accent is distinctly different from an "American" accent is really laughable.

    Compare a New England accent to a Southern accent to a Maritime, to an Ottawa valley, to who knows what other region. Accents vary by much greater degrees within the two countries than they do between them. Or do most Americans feel like Canadians all talk the same, and that is somehow different from all Americans? I'd love to hear opinions on this... Cue South Park quotes now...
  • Too Bad (Score:3, Interesting)

    by N8F8 ( 4562 ) on Friday July 16, 2004 @11:28AM (#9716663)
    Half of them think we are Evil [torontofreepress.com]
  • by cavemanf16 ( 303184 ) on Friday July 16, 2004 @11:30AM (#9716683) Homepage Journal
    Listen, I understand that being forced to train your outsourced replacement or you get fired anyways is completely unfair and cruel behavior by the big corp's. But outsourcing isn't entirely evil. For one thing, it means that there is *much* cheaper labor out there ready and willing to be the "code monkey's" who can slop together some PeopleSoft, C/C++, and SQL code to keep the big business CRM tool running. And if companies in the US are so willing to look half-way round the world to get such jobs done, it means there's more relevant, interesting work to go around for those in the US.

    Not to mention the fact that freeing up millions of dollars the company is currently spending to invest elsewhere can only be good in the long run. Yes, I know your job might be eliminated in the short term, but that doesn't mean you can't get back out there and learn new skills or take on a completely different job. No one ever said that living in America was a free ride. We've all gotta work hard to make our living here. More money being pumped back into our economy due to outsourcing will, IMO, continue to raise stock prices, make the rich richer who will in turn spend their money on more frivolous products, which drives business further ahead. Besides, when the mega-rich have more 'stuff' they need more people to upkeep it, which is a good place for the poor and unemployed to get themselves back on their feet in the short-term so that they aren't wasting their earning potential in the long-term.
  • by ViolentGreen ( 704134 ) on Friday July 16, 2004 @11:32AM (#9716722)
    What really matters to me is that I get paid to do something that I enjoy.

    Yes. That truely is what matters. Am I correct in supposing the cost of living in Canada is similar to that of the Northern US? I'm sure it is significantly less then tech-heavy places like California.

    If US companies are considering outsourcing to Canada, it seems like they could try other places in the US where they could hire people for less then in California or NY.

    I live in Lexington, Ky which, despite being in a state with an agriculture based economy, has a fairly large tech community. Some big name companies here are IBM and Lexmark (LEXmark LEXington.) I read somewhere where Lexington is ranked 9th in US cities in percentages of persons with at least a Bachelors degree. It's a city where you can live lavishly or have a quiet and comfortable life. Hey, I've even seen Shatner in a coffee shop here.

    I think there are still lots of opportunities in the US before the Canada route is taken. There are places other then the West Coast available for programming/tech jobs.
  • by Qamelian ( 714680 ) on Friday July 16, 2004 @11:34AM (#9716763)
    The cost of living varies from one part of the country to another, but in general it's not bad. For consumer goods, most prices are reasonable when compared to the US. Same for housing. Strangely, when I was in New England last year, I was surpised to find that it was almost 35% cheaper to buy audio CDs at home in Nova Scotia than to buy them in the US where I would have thought the larger population would have caued the CDs to be at least a bit cheaper. Instead I found discs that were priced around $18.99US (about $26CDN) the same CDs at home were selling for $15-$18CDN.
  • Health Care Costs (Score:3, Interesting)

    by rumblin'rabbit ( 711865 ) on Friday July 16, 2004 @11:42AM (#9716891) Journal
    I work in an internatinoal company. We have made a conscious decision to keep our software development in Canada because it's cheaper. Salaries are about the same in Canada, but in Canadian, not U.S., dollars. And health care costs are much less for Canadian companies because most of it is paid for by the government.

    The down side, of course, is more tax. And the CBC.

  • by gosand ( 234100 ) on Friday July 16, 2004 @11:44AM (#9716924)
    a health care system available to all its citizens?

    My wife has family all over Canada, and I can tell you that from their experiences, the healthcare system isn't all that great. While everyone has coverage, it can be pretty tough to get in to see a doctor. Things take longer because their system is swamped. And I remember something about how the banking industry isn't that good up there, so you don't get decent interest rates. Or something like that, I can't remember. I just meant to say that it is no "wonderland", they do have their own issues.

    But damn, are they polite up there. We went there on our honeymoon, took a 2 day tour on the Rocky Mountaineer [rockymountaineer.com]. When we were pulling out of the station in Vancouver, there was graffiti sprayed on a nearby overpass. What did it say?
    "Welcome to Vancouver".
    Cracked my ass UP. Victoria was absolutely beautiful, I would move there in a second if I thought I could find a job.

  • Re:sorry (Score:1, Interesting)

    by Anonymous Coward on Friday July 16, 2004 @11:53AM (#9717045)
    I think that is somewhat of an exageration. Having worked for the mexican government and lived in texas. I find the canadian levels of corruption and waste quite low.

    I find that people often lack context when they make these accusations. 100% honesty and integrity does not exist anywhere. its a human failing and realistically any government, regardless of its checks and balances, is prone to it by virtue of the humans that comprise it.
  • by gurps_npc ( 621217 ) on Friday July 16, 2004 @11:57AM (#9717096) Homepage
    You misunderstand. 40% less for a pension plan is BAD, not good.

    I take 20% of my salary now and save it away. It has grown to about $100,000. If I had a job in Canada, that would mean I would only have $60,000 saved up isntead of $100,000.

    YEs, moving to Canada after you retire makes a lot of sense, but to anyone that is currently saving to retire, it makes FAR more sense to get the higher paying job.

    If I lived in Toronto I could only go tango dancing 5 days a week, not 7. And I would not have choice of Milongas. I would HAVE to own a car, and have to worry about how I am getting home when I am drunk because your public transportation system is not as good as NYC's, especially late at night. You do have some nice plays and museums, but NYC has a slight edge there.

    While in New York City, I have NEVER, NOT ONCE, seen a gun in the hands of anyone except a NYC cop. NYC is currently one of the safest cities in North America, and like you said , you we have to compare Toronto to NYC, not general Canada to general USA.

    Canada is a nice place to retire too, but I wouldn't want to work there.

  • by Anonymous Coward on Friday July 16, 2004 @12:04PM (#9717180)
    As a developer who's been in IT since the early 90's, I've noticed that as the number of Indian and Chinese managers grew, so did the outsourcing of work to these countries. In my opinion, these managers sold the idea of outsourcing to these countries to the upper management and have a lot of input on where the outsourcing will go. There are not as many Canadians, Mexicans, Central Americans, etc in management, so there's not so much outsourcing to these countries.
  • Outsource to the US (Score:5, Interesting)

    by pchasco ( 651819 ) on Friday July 16, 2004 @12:09PM (#9717249)

    Where I live in Illinois, the cost of living is:

    55% less than New York, NY
    43% less than San Francisco
    21.5% less than San Diego
    18.8% less than Los Angeles

    And my city is slightly above the national average for cost of living.

  • by dswartze ( 737703 ) on Friday July 16, 2004 @12:11PM (#9717284) Homepage
    After things like your pay that you take home, the cost may be lower, there's far more stuff that the government pays for up here. Which seems like something else, with the government providing more services than in the States, does that mean these companies would have to pay less for benefits? Problem is you get taxed quite a bit more than you guys do down there. All in all, I welcome these american jobs, I'm 3 years from graduating, and would like to be able to find a job when I'm done school.
  • by Sharkford ( 664647 ) on Friday July 16, 2004 @12:11PM (#9717288)
    You needn't really bother going through the immigration processes on the CIC website; as Merkin Citizens you are eligible for the Free Trade work permit. Google for the details (and misc.immigration.canada is good), but basically you:

    (a) finangle a job offer from a Canadian company, which of course will be conditional on you getting the permit

    (b) show up at the border with the offer letter, your resume showing a couple years' experience, and proof of your education, and

    (c) convince the border worker that these docs are legit and, very important, that they are consistent in their content (trying to take a sysadmin job with an English BA will be problematic). Then

    (d) start work, find the beer store and buy suitable seasonal clothing, in whatever order suits you.

    The hardest part is (a). But keep an eye on workopolis.ca, and be prepared to cover your own travel for interviewing and relocation.

    S.

  • by hey ( 83763 ) on Friday July 16, 2004 @12:20PM (#9717438) Journal
    According to a recent U.N. report [thestar.com] Canada is the 4th best place to live, above the USA.
  • Pay Scales in Canada (Score:3, Interesting)

    by Serapth ( 643581 ) on Friday July 16, 2004 @12:22PM (#9717484)
    To say you would make 40% less is a gross exagoration. From what ive seen, the payscale is pretty much inline to what most of the states is. The amount of money that you take home at the end of the month means squat. Its all about standard of living.

    As an example, im in London, Ontario, which has a population of about 350K. Im a fairly high level developer, basically one step below IT manager. I pull in about 60K a year. From my understanding, I could go to New York city and basically double my salary, and have a 10% less tax to pay. Ditto, I could go to Toronto, and make about the same almost double what I make now ( more like 40% more ), but really what does that money buy me.

    I am in the process of buying a luxury loft, 1,700 square feet in size, for about 150K. From what I understand, the same would cost me about about 400K in Toronto, and probrably well over 1/2 million in either NY or Cali. After, expenses, taxes and all that crap, im probrably left with about 1,500 a month of disposable income. That includes my mortgage, car payment, getting reamed for taxes ( that part aint a myth :) ).

    As to currency differences, to be honest, I dont really see any. When I go visit our Lansing site in Michigan, I pay basically the same as I would in canada when I eat out, get a hotel, order a beer. It used to be we could cross the border and save a ton of cash on things like gas, smokes, groceries, etc... but now, thats no longer true. Actually, I have a friend whos business consists of buying vehicles in Canada, and driving them up to the States for resale. Gives you a hit at how the exchange rates work :)

    There are plenty of reasons to chose one country over the other... but wage sure isnt one of them. Cost of living/standard of living is the most important thing... wage is... when comparing one location to another... just a useless number.
  • by Anonymous Coward on Friday July 16, 2004 @12:23PM (#9717487)
    Sadly, you are correct. It is a real problem here. The city is swiftly becoming divided over it - there is a lot of anti-Chinese resentment in Vancouver, and not without reason. They often seem to think our laws do not apply to them, and apply the same sorts of corrupt methods they used in China here. We are sort of a naive country, and tend to be overly trusting. The Chinese have taken massive advantage of that. I really wish they would leave.
  • by pszuch ( 797528 ) on Friday July 16, 2004 @12:30PM (#9717610)
    I had to register just to rebutt the safety comment here. While NYC has done a remarkable job in lowering its crime rate (down 80% in a few years), it is still nowhere near Toronto. The five boroughs murder rate of 70/million is still 3x higher than torontos 24/million. The same holds true for the national averages. http://www.primetimecrime.com/Recent/Sun%20BC%20ra nks.htm
  • Comment removed (Score:3, Interesting)

    by account_deleted ( 4530225 ) on Friday July 16, 2004 @12:34PM (#9717667)
    Comment removed based on user account deletion
  • by nfotxn ( 519715 ) on Friday July 16, 2004 @12:38PM (#9717728) Journal
    For the sake of accuracy I'll clarify the problems with medicare here. It is not difficult to see a doctor or get emergency treatment in the least. There are waiting times for patients who are not critical at emergency rooms but I don't think that is any different than in the USA.

    One of the biggest problems we have here is with medical imaging. The cost of MRI equipement and technicians is absolutely astronomical which makes funding these clinics publically much more difficult than normal clinical staff in a hospital. Imaging is a pre-operative necessity in and this respect the entire system is gummed up at one point. Of course to the ignorant it looks as if the whole system doesn't work. That's not the case at all.

    Upon inspection of most public healthcare programs here the major stumbling points usually have nothing to do with the talent of the staff or funding as such but more so to do with economic pressure from the south. Millions of Canadian tax dollars are used to train RN's and MD's who take work south of the border every year. Canadian healthcare workers are a rare breed who get paid peanuts compared to their US counterparts because they believe in equal access for all. The idea of uncomprimised equality for all is a very much a part of our culture in Canada. It is indeed no wonderland however our detractors from south of the border usually don't know all the details.

  • by Mr. Ghost ( 674666 ) on Friday July 16, 2004 @12:59PM (#9718071)
    I know that a company can save ~40% in salary just by moving there operations from either of the coasts to the Midwest or South. I can speak specifically about South-West Ohio where wages are at least 35% lower that the NE or the West. Plus you get the advantage of no language barriers or import/export costs.
  • by phoenix_rizzen ( 256998 ) on Friday July 16, 2004 @01:02PM (#9718114)
    RoadRunner and HP tech support is done out of a small town in British Columbia known as Kamloops. They also handle US accounts for American Express (damn, you guys get a hell of a lot more bonuses, perks, and extras than the Canadian side of American Express).

    Horrible place to work for, though. $11 / hr for phone support, $9 / hr for customer sales support. Great benefits, but doesn't make up for it at all. All trainees spend 3 months doing the 5am - 1:30pm shift. After that, they change your shift based on your test / training scores. They're the biggest employer in the city, yet have the highest turn over rate of any business in the city (gee, I wonder why?).
  • by Anonymous Coward on Friday July 16, 2004 @01:29PM (#9718562)
    Well, yes, let's see...

    Our police doesn't do shit. They way that they operate is wait until something happens then go after the guy. Legal system is very skewed to "be fair" on the side of criminals. They spend great money on education, result? greater output of stupid people.

    How about: (this was in my high school) "If you are stupid that you cannot spell, TDSB (Toronto District School Board) will buy them a laptop with M$ software and will pay for all additional software they want to install, while sometimes we didn't have toilet paper in toilets.

    Also a big mafia regarding textbooks. Schools can only use "certified" textbooks (I don't mind that part in theory, but read on) which cost $120+. There is no way that a picture book can cost>$100. What is happening is that folks in government make deals with publishing companies and sort of split the profit while taxpayers tout their public education.

    Similar things happen in various other government "funded" tax-funded branches. The result is that they are getting the same product but paying four times more for it.

    For fellow Americans this is also similar to 'defence' contracts where money is often split between companies of relatives and friends.

    So no, Canada is not much different, they just find more creative ways to hide connections and brush off trails.

    ~omi
  • by TheSync ( 5291 ) on Friday July 16, 2004 @01:30PM (#9718573) Journal
    Here are three Canadian tech companies that produce products I use at work everyday: Miranda [miranda.com], International Datacasting [intldata.ca], Broadview Software [broadviewsoftware.com]. Nice to have NAFTA and not have to pay tarrifs!
  • by westendgirl ( 680185 ) on Friday July 16, 2004 @01:37PM (#9718668) Homepage
    My sister-in-law works for a company that contracts to MSN and MCI. The average hourly wage is $9 (CDN). She lives in a small town in Canada, but $9 an hour is still hard to live on. Her employer was recently quoted in the paper as saying that they view these jobs as secondary incomes and that people should therefore be happy to be making any extra money, or, in many cases, to have their first Canadian job (if they are a foreign-trained engineer, for example). In other words, the employer feels that white men have "real" jobs and that these C$9 an hour jobs bring luxury to the lives of women and immigrants. Ouch. This so-called "secondary income" employer is the main employer in several small towns in Canada. The jobs aren't secondary -- they're the only game in town.
  • by God! Awful 2 ( 631283 ) on Friday July 16, 2004 @01:49PM (#9718819) Journal
    Of course, I went and believed a person from B.C. who told me this and now I look it up and much to my chagrin....... It ain't so.

    That study is probably misleading in this case because it doesn't take into account the local pay scale. Vancouver is still damned expensive. The houses cost a fortune, gas costs 10% more than Eastern Canada due to taxes & transportation, groceries cost more due to transportation and because the union at Safeway has such a sweet deal, and golf costs 20% more. Internet costs the same though.

    -a
  • by Anonymous Coward on Friday July 16, 2004 @02:47PM (#9719588)
    Just to add another data point:

    I'm a software engineer living in Vancouver, making $50k Canadian a year. That works out to about $33k Cdn after taxes.

    Rent for a 1 bedroom basement suite in a nice area (Kerrisdale) is $825/month, includes basic utilities, but phone ($40/month) and ADSL ($25/month) is extra.

    Car insurance is about $1400/year, I get a 40% safe driver discount, and I'm a 20-something male that drives a Firebird. :)

    Food costs me about $200/month although that isn't very accurate since that includes making dinner for the girlfriend, etc.

    Gas is fairly expensive, it's been hovering around 92c/L.

    CD's are cheap in Vancouver because of A&B Sound. Top 40ish artist picked at random:

    http://www.absound.ca/ProductDetailMusic.aspx?Pr od Type=Music&SKU=7559628922

    $18.00 CDN for a new, popular CD.

    The best thing about living in Vancouver is the range of outdoor activities available to everyone, hiking, fishing, hunting, climbing, sailing, etc.. I'm not into the bar scene so I have no idea what that is like.
  • Re:French-Canadians? (Score:2, Interesting)

    by ghislain_leblanc ( 450723 ) <<moc.em> <ta> <belsihg>> on Friday July 16, 2004 @04:43PM (#9721297)
    You talk of speaking french as some sort of disease...

    It's not the plague you know; as a french speaking IT worker I can say that most of us speak at least enough english to be functionnal in the workplace. As for non-IT workers in Quebec it's another story. The thing is, english is basicaly a necesity in computers since most litterature and jargon associated with CS is english. We do have some lousy translations for things like E-Mail (Courriel), Software (Logiciel), Freeware (Gratuitciel) but they never really got momentum as far as common use goes.
  • You don't lose 40% (Score:3, Interesting)

    by Easy2RememberNick ( 179395 ) on Friday July 16, 2004 @06:11PM (#9722189)
    You may lose 40% compared to US dollars but you don't lose anything when comparing quality of life.

    You gain free universal health care, safer streets, lots of water, better beer and you get to live in the homeland of the most famous TV and music stars ;)

People will buy anything that's one to a customer.

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