Canadian companies that outsource their services

Which Canadian companies outsource their services?

Many well-known Canadian companies that outsource, such as CIBC, RBC, Slack, Air Canada, and TD Bank, send IT and business tasks to providers at home and abroad.

• Most outsource to cut costs and reach skilled workers.
• Common tasks include IT, call centers, and back-office work.
• Top destinations include India and the Philippines.

Canada is a strong contender and a leader in nearshore outsourcing. It sits close to the US and shares similar laws and business culture. As a result, it fits well with US business needs.

Likewise, companies in Canada outsource their own services too. Many use IT services in the US. However, they also send work to top outsourcing destinations like the Philippines and other parts of Asia Pacific.

We have compiled a list of Canadian companies seen as trendsetters. This is because Canada has strict rules, and the industry often draws backlash.

So read on to find out which Canadian companies outsource jobs, and how this affects the country’s economy.

Why Canadian companies outsource

Canada is a reliable nearshoring hub. Still, it has slowly picked up its own use of outside providers.

Despite the backlash from some outlets and citizens, many firms still outsource. Here are the main reasons why:

• Cost savings and efficiency. Studies show the cost of doing business in Canada is only 5% lower than in the US. So outsourcing can boost savings and help firms run more smoothly.

• Equally talented workers. Canada has a skilled workforce. Even so, it still gains from hiring equally skilled workers abroad at a fraction of the local cost.

How business process outsourcing helps the Canadian economy

Business process outsourcing does not just help businesses. It also helps the Canadian economy, whether through nearshoring or offshoring.

Outsourcing sustains business efficiency

Efficient businesses can still support the economy, even during a crisis. As a result, they create more local jobs and help the country grow.

Outsourcing helps a country to innovate

Offshore BPOs work with the latest technology in many industries. So local companies can tap top BPO firms abroad. Then they can bring that technology home to Canadian operations.

Outsourcing helps grow its network globally

Outsourcing is also about global networks. When a local firm hires a BPO company, it widens its network and market. As a result, both Canada and the foreign economy benefit.

Today, more Canadian companies outsource both nearshore and offshore. What’s more, this works for firms of all sizes, from small businesses to large corporations.

Here are common services that Canadian companies get from global BPO firms:

• Call center services
• Web development
• Software development
• Back office services
• Digital marketing
• Quality assurance
• Data entry
• Lead generation
• Email marketing

So here are some examples of Canadian companies that use outsourcing to their advantage:

List of Canadian companies that outsource

Canadian Imperial Bank of Commerce (CIBC) outsourcing

CIBC is one of the largest banks in the country. Formed in 1961, it came from the merger of the Imperial Bank of Canada and the Canadian Bank of Commerce.

In 2017, CIBC came under fire for laying off some workers and outsourcing IT services to India. However, in a statement by CEO Victor Dodig, he denied that the firm outsourced just to cut costs.

Instead, the plan aimed to manage peak demand and keep work on track. So it helped the bank adapt to the changing needs of its clients.

Still, the case shows the myths that arise when Canadian companies outsource their functions.

Royal Bank of Canada

Founded in 1864, the Royal Bank of Canada serves around 10 million clients in over 1,200 branches. Before CIBC, the bank had already outsourced top IT services to several countries.

It famously outsourced IT work to iGate, a US company with most of its operations in India. However, the move drew an outcry from staff and customers. As a result, the bank later apologized to affected employees and set new rules on outsourcing.

Slack’s outsourcing success

Slack is one of the best-known success stories in outsourcing. The business communication tool started in Vancouver. Today it is based in San Francisco, California.

The company uses both nearshore and offshore outsourcing. For example, it sends some work to firms in Canada and its design and development tasks to the Philippines.

As a result, it could focus on its core product. So it improved its software and boosted customer experience.

Outsourcing also helped Slack establish their brand as a messaging software that feels, looks, and sounds different.

Toronto Star

Toronto Star is Canada’s largest newspaper. Like many outlets, it faced industry-wide change as new technology rose. So it chose to outsource some services to BPO firms in other countries.

In 2009, the Toronto Star first announced plans to outsource design and layout. However, this drew backlash from workers and others. As a result, it apologized and paused the plan.

Its plans resumed in 2013. That year, it delegated page design and production to the Philippines.

Air Canada

Air Canada is the country’s flag carrier and its largest airline. Despite its size, it still chose to offshore top services in several countries.

The airline lost money in its early decades. So it tried new ways to hire and contract workers, especially in IT.

Since the ‘90s, Air Canada has outsourced to IBM and others for IT and managed services. As a result, its IT team has kept changing to match the company’s goals.

Sun Life Financial Services

Sun Life would not be as successful today without outsourcing.

It began with a deal with IBM in 2002 for its operations. From there, IBM ran its mainframe, email, app support, web hosting, and network support.

In 2007, the company hired Accenture for software development and maintenance.

All these efforts served one goal. As a result, Sun Life gained efficiency, lower costs, and a global workforce.

Scotiabank

Scotiabank is one of the big five banks in Canada. It is also the third largest by deposits and market value. Most of its work stays in-house. Still, it has used outsourcing to its advantage.

The bank began onshore outsourcing to IBM Canada in 2001. So IBM took care of its data centers, desktops, and ATMs.

By 2013, its CEO said the bank did not plan to outsource operations. However, it did plan to use international call centers to improve its contact service.

TD Bank

Outsourcing is popular among large Canadian banks. One example is the Toronto-Dominion Bank, known as TD Bank. It has over 26 million clients and more than 89,000 employees. So outsourcing has helped drive its success.

It started outsourcing to HP Canada in 2004 for its bank machine network and point-of-sale systems. As a result, it improved access, security, and uptime for customers.

However, the bank also faced scrutiny in 2017 over outsourcing fraud claims tied to India. Fortunately, after an investigation by the Canadian government, TD Bank was found compliant with privacy law and cleared of all alleged violations.

Aldo

Lastly, the Canadian footwear company Aldo owes much of its global fame to outsourcing.

Since 2003, Aldo has outsourced to IBM for custom software, business apps, and IT infrastructure. So it could focus on its strength: world-class footwear, bags, and accessories.

Aldo also puts a focus on responsible sourcing. As a result, it monitors its contracted factories often and gives workers fair wages and benefits.

Outsourcing in Canada

There are no federal or regional laws that regulate outsourcing in Canada. Still, companies and their providers must follow certain laws and regulations in some parts of a business.

For example, third-party contracts often need to go through procurement.

Providers must win the bidding process. So they also need to follow data privacy rules and business laws in the country.

Even so, many Canadian companies still outsource to places like India and the Philippines. This is because they trust BPO firms there to deliver quality work and real savings.

Frequently asked questions about Canadian companies that outsource

Why do Canadian companies outsource?

The main reasons are cost and talent. So firms save money and reach skilled workers abroad. In addition, outsourcing helps them focus on their core work.

What services do Canadian companies outsource most?

IT and call center work top the list. However, many also outsource software, back-office tasks, and digital marketing. As a result, they free up in-house teams for key projects.

Where do Canadian companies outsource to?

Common destinations are India and the Philippines. Some firms also nearshore work within Canada and the US. So they can balance cost with time zones.

Is outsourcing legal in Canada?

Yes, outsourcing is legal in Canada. However, there are no single federal laws for it. Because of this, firms must follow privacy and procurement rules instead.

Does outsourcing hurt the Canadian economy?

Outsourcing can spark backlash over local jobs. Still, it also helps firms stay efficient and grow. As a result, it can support new jobs and innovation at home.

Key takeaways

• Many major Canadian companies that outsource include CIBC, RBC, Slack, and TD Bank.
• Most outsource IT, call center, and back-office work.
• Top destinations are India and the Philippines.
• Outsourcing can draw backlash, but it also drives efficiency and growth.
• Canadian firms must follow privacy and procurement rules, not one federal law.