Declining US dollar raises recruitment issues

The cost advantages aren't so great now

The Canadian dollar is now roughly equal to, or even worth more than, its US counterpart. And the strengthening of Canada's currency is delivering benefits to IT managers such as Janet Topic, CIO at Trimac Transportation Services in Calgary. "So much of what we purchase in terms of software is in US dollars, so those kinds of purchases are cheaper for us," Topic says. "It's kind of a bonus at the end of the day." Aside from reducing hardware, software and IT services bills from US-based vendors, the currency parity may also discourage some Canadians from seeking job opportunities in the US, improving the worker recruitment and retention prospects of companies in Canada. The Information and Communications Technology Council (ICTC), a Canadian IT industry group, estimates that Canadian businesses will need to hire about 89,000 new IT workers over the next three to five years because of retirements and business growth. Currently, the total Canadian IT workforce is in the 500,000 range, says Greg Lane, an ICTC board member who also is a past president of the Canadian Information Processing Society. Although Lane thinks that employers in Canada will now find it easier to retain workers, he isn't certain whether the strengthening of the Canadian dollar is enough to entice workers in the US to move across the border. "That remains to be seen," he says. As recently as five years ago, Canada's dollar was valued at only about 75 cents against the US dollar. The disparity helped lure many Canadian IT workers to the US, but some of those expatriates are starting to return to their home country, according to Igor Abramovitch, division director at IT recruiter Robert Half Technology's Toronto-area operations. "We have definitely seen a trend where a lot of IT workers have gone to the US," Abramovitch says. Over the past 12 months, "a lot of these workers are wanting to come back," he says, adding that he believes the hike in the value of the Canadian dollar has played a role. But there's also a downside to the parity between the two dollars for the Canadian IT industry. US companies that in the past have sent IT work to Canada, via so-called near-shoring deals, may have less reason to do so now. The advantage of shifting work to Canada "is sort of diminishing", says Eugene Kublanov, CEO at NeoIT, an outsourcing consulting firm in San Ramon, California. "You might as well be leveraging your [data] center in Utah or Missouri, rather than in Canada." However, Sebastien Ruest, an IDC analyst based in Toronto, believes that the exchange rate will have only a minimal impact on Canada's near-shore industry. Many of the outsourcing providers have been working to improve their efficiency, Ruest says. He says IT wages in Canada remain roughly about 25% below those in the US, and that the Canadian vendors offer services that are in high demand, such as SAP expertise. Stan Lepeak, managing director of research at US outsourcing advisory firm EquaTerra, says companies that send work to Canada are seeking access to particular skills, as well as geographic proximity and cultural and legal similarities. "In general, we don't see buyers looking at Canada as a cost-savings option," Lepeak says. The declining US dollar also helps companies in China, which has kept its currency in line with the US dollar. "If the US has gone down, China compared to the US has also gone down," says Fariborz Ghadar, a professor of global management policies at Pennsylvania State University and founding director of the school's Centreor Global Business Studies. "China, in fact, has become more competitive because they are tied with the dollar."

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags outsourcingcareersUS dollar

Show Comments