Taking the Temperature of Canada’s Outsourcing Climate

Canada poses a somewhat different challenge in terms of encouraging companies to outsource or nearshore in comparison with the United States. A strong Canadian dollar, a difference in the mentality of decision-makers and highly-concentrated population clusters along the US border all make the Great White North a substantially different market.

With 13 years experience in outsourcing working for Tier 1 Indian and North American firms, Sanjoy Gupta is now a year into his post as Vice President of Softtek Canada. In the interview that follows, Gupta gives us a unique insight into his task of promoting Softtek in Canada and what his perception of the current Canadian climate is for outsourcing and nearsourcing. 

What are your day-to-day responsibilities?

My primary responsibility is new business development to establish Softtek´s operations in Canada. The company is fairly new in Canada, there is no brand awareness and so it´s a challenging market for me to introduce Softtek as a service provider in a Canadian context.

Have you had much success in introducing Softtek into Canada?

There is interest, for sure. The Canadian market is one-tenth of the size of the US market so companies here are mid-size organizations, which are actually a very good fit for Softtek.

What are some of the factors driving outsourcing from Canada?

One factor driving outsourcing from Canada is the strong Canadian dollar, which is driving cost pressure on the economy. Second is that Canada, being a large country, has concentrated pockets of population where there is a lot of business, so there is a fight for resources.

Any developed economy would like to improve its bottom line and the Canadian economy realizes it has to be improving its bottom line because Canada, being a socialist country, has not been very open to outsourcing in the early days. Now things are changing very fast and a lot of organizations are looking at reducing their costs and are finding various ways to do so.

The general signs are positive for outsourcing (in Canada) but the market is small.

What are some of the main differences between US and Canadian companies in terms of outsourcing?

First, you need to understand that Canadian decision-makers are different from those in the US, so the markets are totally different. The decision-making process in Canada is a blend of what you get in the United Kingdom and the United States. So here the sales cycles are longer, the decision-making process is very risk averse so they would look at starting small and eventually developing into something big. So the buying decisions are different and the parameters are different.

What is your major challenge as VP of Softtek Canada?

The major challenge which I face selling Softtek is the fact that we are new to the market. CIOs in the target market here understand outsourcing, they understand why they need it, but the fact of the matter is that they go the full nine yards and engage advisory firms and that´s where we lose out because we don´t have much of a presence in Canada.

On the other hand, where the companies are midsize and want to dibble and dabble with outsourcing that´s where we have a little bit of a better chance because we can get into small projects and be flexible and try to build a relationship. So the biggest challenges are the brand awareness and selling Softtek because no-one knows them here.

How does the Canadian government´s increasingly willingness to promote bilateral trade with Latin American countries help you?

The Canadian government has realized that Latin America is an emerging top market, rich in certain aspects of resources and they see there is a lot of bilateral trade and that a lot of Canadian companies are opening offices in Latin America. We have received many positive responses from Canada-based companies which have operations in Latin America to support them locally.

If Canadian companies invest in Latin America it will be good for us because they will need IT support locally and we could provide that.

Do you think outsourcing, and particularly nearshoring, has a bright future in Canada?

Definitely, because the Canadian economy is very strong, Canadian businesses like to take less risks so our nearshore model is a good fit, especially for medium-sized businesses.
There are definitely positive aspects but let´s see how it goes.