iGate: the $1-billion-a-year company at the heart of the RBC temporary foreign worker controversy
iGate, the company at the heart of the RBC temporary foreign worker controversy, boasts $1 billion U.S. in revenue and a blue chip board.
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The Globe and Mail
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The outsourcing firm at the heart of the temporary foreign worker controversy at Canada’s largest bank is a $1-billion-a-year business with a blue-chip board of directors.
The Fremont, Calif.-based iGate Corp. among a half-dozen fast-growing firms that have built their business providing Fortune 1000 companies around the world with a lower-cost source of high-tech labour in places like India. Since 2008, the company’s revenues have quintupled, from $218 million to $1 billion last year. Profit more than tripled last year, to $95 million from $30 million in 2008.
But the company is also ensnared in a growing controversy over the use of temporary foreign workers in Canada. iGate says it complied with all applicable Canadian laws. “iGATE brings a high level of integrity to its business practices,” Jason Trussell, senior vice-president and regional head, Canada, said in an email to the Star. “We are in compliance with the local laws of each of the countries where we operate, including Canada. We will fully co-operate with requests from the government for information on this matter.”
While outsourcing has long been blamed for the decline of Canada’s manufacturing sector, reports that the Royal Bank is outsourcing some of its IT work sparked renewed public outrage this week. The reports included allegations that temporary foreign workers were brought in to be trained by the Canadians they will ultimately replace. RBC had contracted iGate to provide the outsourced services.
The story has struck an emotional chord with Canadians, Ron Babin, a professor at Ryerson University’s Ted Rogers School of Management and a former outsourcing consultant.
“In part, it’s because a large profitable Canadian bank is downsizing and very unfortunately some people may lose their jobs. That always hurts,” he said.
Outsourcing, or offshoring, isn’t new, he noted. Companies have been doing it for more than 20 years to take advantage of cost savings elsewhere.
But such contracts usually preserve roughly 20 per cent of the work in Canada to be done by Canadians, Babin said. “In this case, a small percentage of the work is being done by non-Canadians,” he said.
RBC chief executive officer Gord Nixon has denied the bank hires temporary foreign workers and has said that it’s doing all it can to find other work for the 45 IT employees who are being displaced by the decision to move their work offshore.
Nixon later said only one person involved in the project is here on a temporary foreign worker permit.
Federal Human Resource Minister Diane Finley has ordered an investigation into the matter.
Canada has long had a temporary worker program. It was originally designed to bring in migrant workers to help Canadian farmers at harvest time. Later, it was expanded to include caregivers for children and seniors.
But now it’s available to anyone who can prove via a labour market opinion that they can’t find a Canadian qualified to do the job. As well, Ottawa has amended the program to allow employers to pay temporary foreign workers 15 per cent less than the prevailing Canadian wage rate.
Critics allege this has generated an explosion in demand for cheap overseas labour. The program has in fact ballooned under the Harper government, labour critics say, especially in the low-skilled category.
Some 338,000 temporary foreign workers were in Canada at the end of 2012, according to the federal department of citizenship and immigration, exceeding the number allowed in as immigrants.
“Is this program addressing genuine ‘labour shortages’ or undermining job opportunities and wages in Canada?” Erin Weir, economist with the United Steelworkers Union asks.
Toronto is home to one in five temporary foreign workers, yet the city has a higher than average unemployment rate among its citizens, another critic noted.
“There’s no labour shortage in Toronto,” says Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives.
At Scotiabank’s annual general meeting in Halifax Tuesday, chief executive officer Rick Waugh said the bank is not planning to outsource jobs to temporary foreign workers, but will expand the use of international call centres.
iGate is just one of half a dozen companies flourishing in the IT outsourcing business. Its large rivals include Infosys and TCS (Tata Consultancy Services).
Founded by two Indian entrepreneurs, Sunil Wadhwani and Ashok Trivedi, it employs 27,500 people in operations around the globe. It counts 300 companies among its customers, including several Fortune 1000 firms, in a range of industries, from financial services to health care.
iGate describes its business as strategic outsourcing, which it says helps companies maximize their shareholder value.
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