Recently, the Royal Bank of Canada (RBC) made a decision to terminate the jobs of approximately 50 IT support system employees. This has shed an unfavorable light on the world of virtual work, outsourcing and off shoring. The decision included a discussion on how RBC would begin having their current IT employees train overseas replacements for their jobs before either losing their positions or being transferred to a different part of the company. The replacement employees were provided through a California based outsourcing company named iGate that has connections and employees in India.
Customers of RBC and Canadian citizens responded to the knowledge with outrage, stating they would boycott the company if the allegations turned out to be true. The decision by RBC to begin outsourcing a particular sector of their business proves to be an interesting one, based on the requirements of the Canadian government to employ Canadians and to utilize the resources provided within the country first.
The question seems to be if RBC made the wrong decision, and whether or not they will be able to correct it. The future of virtual work is difficult to ignore, and outsourcing is slowly gaining popularity among small businesses and major corporations.
The important thing here is to distinguish the difference between outsourcing and off shoring. Outsourcing small sections of companies to businesses that deal particularly in that sector can be extremely beneficial. Outsourcing companies tend to have employees with specific skill sets, resulting in quality work by employees that are trained specifically for certain tasks. Off shoring work means to delegate some of the business’s tasks to a company overseas, or to a foreign country. In some situations, like that of RBC, the employees will need to be trained to properly complete the tasks delegated to them before they can begin.
The difference between outsourcing and off shoring is pivotal to understand, because companies that provide outsourcing options exist in North America, including those that employ Canadian citizens and continuously contribute to the Canadian economy. The term outsourcing should not become synonymous with off shoring. If a company is looking to outsource specific work, deciding to off shore their work does not need to be the first option. Outsourcing companies can produce quality work by employees trained in many different areas, which helps build strong networking connections between outsourcing companies and the economy.
Overall, there is no definitive right or wrong answer when it comes to a company’s decision to outsource or off shore. Both provide pros and cons that need to be assessed before the decision can be made, but it is important to remember that certain resources can be found within the country instead of solely outside of it.
© Zoe Begopoulos, DemGen Inc 2013
