According to a recent survey by International Data Corporation (IDC), a global provider in market intelligence for the technology sector, outsourcing is on the rise in Canada. A large chunk of Canadian companies are outsourcing at  least a tenth of their IT service provision to offshore outsourcing providers. And this is not some small volume of work we are talking about.

Canada's IT outsourcing market is valued at an estimated $5.5 billion as of now, and is expected to reach a whopping $15 billion this year alone – a phenomenal growth prediction of 3.8 per cent from 2009 by the IDC.

So, how have the equations suddenly changed? What ruffled the complacent feathers of Canada's business community? Two factors – there maybe more – have emerged as the driving force behind this growing trend.  The first is driven by finance. Offshore outsourcing presents an attractive opportunity for considerable cost reductions and increased efficiency and output. The second factor is driven by demographical changes. Canada's population is an aging one and the country therefore faces an alarming shortage of skilled and affordable local talent today.

Apart from these internal issues, external factors like advanced technologies (cloud computing) and the recent global recession have also been instrumental in sounding the alarm bells for scores of Canadian companies. Offshore  outsourcing is now being viewed as a necessity to stay afloat in an increasingly turbulent economic climate.

There's yet another interesting paradigm shift in perceptions. While location was a big issue with Canadian companies earlier who showed a marked preference for near shoring, that no longer is the scenario today. In fact, location doesn't even figure in the choice of a good outsourcing service provider any more. The criteria have changed  Companies are not concerned as much with the vendor's location as they are about the pricing and relationship model. And India is one of the premier outsourcing destinations for Canada.

While Canada is obviously nowhere near the big player that the US is when it comes to offshore outsourcing, it is nevertheless going to go the whole nine yards. CIOs are under increasing pressure to adopt innovative business practices that would spur the Canadian economy to further growth. And, for them, outsourcing is now high on the to-do list.

According to Sebastian Ruest, vice-president, services and technology research at IDC Canada, “With the chipping away of the traditional outsourcing business model, alternative outsourcing models such as remote infrastructure management, cloud and utility computing are expected to grow by 5.4 per cent by 2010.”

Ruest believes that as much as 35 per cent of Canadian companies have opted for offshore outsourcing services.

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