Canada
Canada is a leading global sourcing nation, and one of the largest providers for sourcing support to the United States; employing an estimated 150,000 for the U.S. alone. Canada provides resources for 30 percent of the United States’ sourcing market and its total outsourcing sector produces $14 billion in annual revenue.
Canada has many skilled IT resources, a stable workforce, similar culture, and coordinating time zones with the U.S. The nation benefits from having high-tech infrastructure, high English language fluency, an educated workforce, and quality voice-based businesses.
Software development is a growing trend in Canada, valued in excess of USD $1 billion. Advanced telecommunications and infrastructure, advantageous regulatory policies, low operating costs and tax credits, and multi-cultural population effectively support the software industry.
Other sectors with high potential are Enterprise Application Software, Web Solutions, E-Solutions, and Green IT. E-security is also a lucrative venture in Canada, which was valued for over USD $300 million in 2006. Technology security -- from mobile authentication, encryption, intrusion detection, and cryptography are some specializations of Canada’s IT sector. These have attracted many reputable companies such as McAfee, Cisco Systems, IBM, CA, Microsoft, Tata Consulting Services, Accenture, Keane, Infosys, Wipro Technologies, Ceridian, Convergys, and EMC.
Canada's market also has disadvantages. High labor costs diminish its ability to compete with other sourcing locations such as India. A declining exchange rate with US currency is also corroding Canada’s cost effectiveness for operating business. During the economic recovery, Canadian companies have had to reduce operating costs, thus reducing staff numbers, reducting their ability to compete with India’s massive workforce.
Country overview
Canada is the second largest nation after Russia. It shares the longest border in the world with the United States, and with that come similar business practices, infrastructure, technology and culture – both social and economic.
Canada is a parliamentary-democracy, and its two official languages are English and French. Canada has a comparatively low cost of living and is deemed one of the best places in the world to live, attracting many people from around the world. Its major urban centers are Vancouver, Toronto and Montreal, with alternative locations including Winnipeg, Moncton, and Calgary.
Canada is an affluent country, with a high per-capita income enjoyed by its citizens and an advanced industrial technology reaching the trillion-dollar level. It is also one of the top ten trading countries. The U.S.-Canada Free Trade Agreement (FTA) and the North American Free Trade Agreement (NAFTA) were a major boost to the economy, increasing its trade and economic merger with the U.S. Canada is also a member of the Organization for Economic Cooperation and Development (OECD) and the G8. Canada’s GDP is estimated at nearly USD $1.6 trillion, and using the purchasing power parity scale the GDP is more than $1.3 trillion.
Canada enjoyed stable economic growth from 1993 to 2007. Despite an economic downturn Canada’s economy was buffered by its conservative lending procedures and strong capitalization, allowing its major banks to rise from the financial crisis.
Source: CIA Factbook, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Cost competitiveness
Employee compensation
Junior resources, particularly Software Engineers or Web Developers are some of the most important factors that determine a country's cost competitiveness. Software Engineers in Canada with one to four years of experience have very high salary structures, ranging from C$46,000 to C$61,000, about 88 percent of comparable resources in the U.S. Similarly, Senior Software Engineers with ten to twenty years experience have an average salary of USD $83,000, or 87 percent of US salaries. It is also important to point out that IT Project Managers with similar experience are comparably compensated, earning 82 percent of the US counterparts’ wages.
BPO salaries for non-voice, junior resources command higher wages at 95 percent of US salaries. Senior BPO wages offer even little savings, just 3 percent below comparable US resources. Operation Managers in Canada earn more that their American counterparts, average salaries reaching 108 percent. Customer Service Representatives command 113 percent of US wages, while Customer Service Managers have around 108 percent.
Real estate
According to data sourced from CB Richard Ellis and Colliers International, Canada has average office occupancy costs in the central business district similar to the U.S. ($42/sf/yr) compared to China ($47.5), India ($61.9), Brazil ($84.6) and Russia ($86.7). Office space in the suburbs is competitive, placing seventh among the top ten countries with the lowest property costs. Vancouver is the most expensive location in the real estate market, with Calgary in second place.
Taxes
Canada’s corporate tax is 31 percent, four percent lower than the US, placing it seventh highest globally. Canada also maintains a 5 percent indirect tax rate, with an SMB effective tax rate of 29.2 percent.
Source: PayScale, SourcingLine, February 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: CB Richard Ellis, Colliers International, SourcingLine, March 2010
Source: Colliers International, SourcingLine, March 2010
Source: KPMG, October 2009
Source: KPMG, October 2009
Source: Doing Business (World Bank), 2010
Real Estate : Occupancy costs are averages across Toronto, Vancouver, and Montreal.
Resources and skills
Outsourcing sector
A nation’s export volume of IT services is a strong indicator of its market size and maturity. According to the International Monetary Fund (IMF), Canada is among the top exporters of computer and information services, estimated at USD $4 billion, while its miscellaneous services exports near $15 billion.
Education
Canada’s government prioritizes education, spending 5.2 percent of its GDP on education annually. Canada has the highest percentage of college and university graduates; one third of the population has a secondary education.
Canada’s quality of education is high, with cities like Winnipeg, Montreal, and Moncton providing intensive French education. Canada currently leads the ranks for reading, mathematics and science aptitude, displacing the highly educated Czech Republic to second place.
Language
Canada has of the largest English-speaking populations in the world, ranking second to the U.S.
Technological readiness
Canada is the global leader for Internet access with 75.5 users for every 100 inhabitants, followed by the U.S. (74.4), Malaysia (62.6), Czech Republic (58.4), and Hungary (54.9). Similarly, Canada dominates the rest of the world in broadband internet access, with 29 subscribers for every 100 inhabitants.
Source: CIA Factbook, 2009
Source: IMF, 2008
Source: IMF, 2008
Source: UNESCO, 2009
Source: UNESCO, 2009
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: UNESCO, 2009
Source: UNESCO, NASSCOM, SourcingLine, 2009
Source: International Telecommunications Union, 2009
Source: International Telecommunications Union, 2009
Business and economic environment
Canada has a flexible business environment that allows companies to invest and develop their assets. Some strengths are strong protection of intellectual property rights, support from local government and other development agencies, research and development incentives, and competitive corporate tax rates.
Canada is the leader in GDP growth among the G7 nations during the past decade, with the most stable banking system according to the World Economic Forum, the Economist Intelligence Unit, and the IMD.
Economic competitiveness and stability
Canada’s economic competitiveness - based on labor market efficiency, macroeconomic stability, market size, business sophistication, and innovation - is excellent, ranking second after the U.S. Its inflation, national savings rate, government surplus/deficit, and government debt is stable, ranking fifth and following China, Chile, Thailand, and Mexico.
Infrastructure
Canada has good broadband and telecommunications infrastructure, with excellent connectivity and low-cost business telephone rates. Calgary and Winnipeg offer the best regional connections in the Americas, while Toronto and Vancouver have established connections to major hubs in Asia-Pacific and Europe.
The quality of its roads is well-developed, ranking third in the World Economic Forum's annual Global Competitiveness Report. It also has the highest quality of electric supply in the world.
Labor market efficiency
Canada is second to the U.S. for the most flexible employment market, costing on average 28 weeks' salary to terminate an employee. Unlike the U.S., terminating employees unilaterally without notice and legal consequences is not allowed in Canada.
Each province in Canada regulates their own employment laws. There are exceptions however, such as when an employee works for federally-controlled sectors (transportation, telecommunications, and banking).
Corruption
Corruption can be a major factor driving up the cost of services, especially when a company needs to pay a unforeseen costs to hasten the approval of business licenses. For Canada, corruption is relatively minimal. According to Transparency International, Canada has the best corruption index, followed by the U.S., Chile, Israel, Hungary, and Jordan.
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: International Telecommunications Union, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Transparency International, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: The Global Competitiveness Report, 2009
Source: BSE-IDC Global Software Piracy Study, 2009