Outsourcing and CanadaA Good Place to Outsource to!

"Offshore outsourcing" is the practice of hiring an external organization to perform business functions in another country. This can be contrasted with "offshoring," in which the functions are typically performed by a foreign division or subsidiary of the parent company.

"Nearshore outsourcing" is a form of outsourcing in which functions are relocated to cheaper yet geographically close locations. In the case of the United States, the most obvious nearshore jurisdictions are Canada and Mexico.

Canada: A Unique Outsourcing Jurisdiction

Canada is uniquely situated in the world of offshore outsourcing of information technology and business process functions. It is a significant importer and exporter of outsourcing activities, is a primary nearshore outsourcing destination for US business, and is emerging as a broker jurisdiction in global outsourcing arrangements.

The statistics are impressive:

• According to the McKinsey Global Institute, in 2002, Canada generated US$3.7 billion in offshore BTO revenue, behind only Ireland (US$8.3 billion) and India (US$7.7 billion) (Farrell et al., 2003).
• Canada is the eighth most attractive offshore location overall and places second of all jurisdictions when it comes to quality of people skills and availability of skilled workers (behind India), and quality of business environment (behind Singapore) (Kearney, 2004).
• Canada ranks among the top five places in the world for communications providers to offshore call centre and IT operations (Deloitte, 2004).
• Canada is a main beneficiary of outsourcing from the United States, which represents approximately 70 percent of the total global outsourcing market (Farrell et al., 2003).
• Outsourcing within North America is projected to grow at an average of 10-15 percent annually (Price Waterhouse Coopers, 2004).

Source: Theodore Ling, "Outsourcing to Canada: Legal and Tax Considerations," Technology Executives Club website. Used with permission of the author. http://www.technologyexecutivesclub.com/Articles/ outsourcing/artGlobalOutsourcing.php.

Answer the Following Question:

1. Using the information provided in this article, a short essay on the scope, limitations (if any), and benefits of outsourcing?. (One Page Essay)