Doing More for Less – Consider Canada

By TeamSpace Canada

Given the recent troublesome economic times and universally pessimistic outlook by industry professionals, it is abundantly clear that organizations are going to have to find a way do more with less. ‘Do more with less’, not only an oxymoron, that statement has been the hallmark of IT reform for years and the bane of many CIOs since it is often not as easy as it sounds. Perhaps the most popular approach to tackling the issue is outsourcing. According to NeoIT’s The Global Sourcing Confidence Index (2008) “CIOs and CFOs have shifted from asking if outsourcing is an option to demanding answers as to why outsourcing was not considered.”  If outsourcing is the most obvious cost saving choice, why do many companies resist? 

Is outsourcing the answer?  Is it the most cost effective way to do business when you account for factors beyond hourly rates?  The answers to those questions are different for everyone. Some can make it work; others struggle in managing the associated risks such as language, culture, distant time zones, etc. The alternative for a growing number of American companies is Canada. When we examine the cons associated with outsourcing to popular offshore resources such as India and China, the benefits of nearshoring north of the 49th parallel become obvious.

Why nearshore to Canada?
Wikipedia states that the complexities of offshoring “… stems from different languages and cultures, long distances and different time zones, spending more time and effort on establishing trust and long-term relationships, overriding communication barriers and activities of that kind.”  Canadian companies offer benefits that help overcome many of these complexities, drastically reducing the risk of the traditional outsourcing model.

Lower wages and government support allows Canada to offer a more competitive rate structure than many US based software services companies. While Canadian wages cannot compete with those in many overseas companies, the reduction does translate to a considerable savings. The Government of Canada and many provincial governments offer assistance to local companies to encourage economic growth. This type of support, coupled with lower employee cost of living rates, often reduces the cost of doing business and can translate directly into rate savings for their clients.

A big challenge with outsourcing to offshore resources is physical inaccessibility. The cost of travelling to and from many of these distant countries can have a large impact on the bottom line. While some projects can be done 100% virtually, many require at least one in-person meeting. Canadians are able to travel to any major American city within a few hours at a fraction of the cost of an overseas flight.

In today’s global world, it seems odd to think that time zones can be an obstacle. While technology has helped close the gap of world communication, nothing can replace the ability to talk directly. Canada’s sharing of time zones with the US simplifies direct and daily communication. Many US telephone providers do not even consider Canadian calls international, thus providing more cost savings.

Language, cultural and legal affinity is the factor that often appeals most to the American market after cost savings. Canadians understand how America does business because it is almost identical to the way Canadian business operates. While both countries are culturally diverse, their cultural alignment is obvious. Many statutory holidays and popular vacation periods align. Both common law countries, Canada and the US have many similar legal procedures and standards. The North American Free Trade Agreement (NAFTA) allows for ease of business between the two countries. These similarities help people forget they are outsourcing and foster a trusting team atmosphere.

In addition to meeting the obvious risks, Canada has a highly skilled workforce. They are accustomed to working with American clients. The country boasts an advanced IT infrastructure with extensive broadband capabilities that in some cases is more advanced than the US to overcome isolation from remote northern areas.

American companies, who have utilized offshore resources, both successfully and otherwise, quickly see the benefits of outsourcing to Canada. It is a way to achieve the goal of ‘more for less’ by tapping into a highly skilled workforce while cutting considerable costs.

TeamSpace Canada, A Case Study.
TeamSpace Canada is a Nova Scotia based software solutions company specializing in Lotus Notes and Domino development. As a medium size company, we have worked with a variety of long-term clients, including IBM. Here are some examples of the type of values we have provided to some American clients.

Fred, a program manager in a major Fortune 500 corporation, needed a custom e-learning tool. It needed to support 10,000 users and be built on his existing Domino platform. He had some Notes developers who were skilled enough to maintain existing systems but lacked the experience needed to design and implement this new application. Fred was still working out the specific requirements and needed to work closely with the design team throughout the process.

TeamSpace began working with Fred on an iterative cycle of development. We started with an architecture consultant who met with Fred and his team to understand the current state of his requirements. We developed a project plan that included a phased approach. The basic architecture of the system was quickly built and shared with Fred allowing him to visualize the end product and realize where change was needed. Based on his feedback, we produced another round of the base system while beginning to work on some of the additional features. Our close proximity to his team and our ability to understand his business need allowed us to help him produce a scalable e-learning application under budget and on time.

Sarah inherited several applications in her new role as VP of Operations. The most critical of these was a workflow application that contained significant errors. She needed to get them resolved quickly and came to us for help. TeamSpace systematically reviewed all of the bugs in the context of her business process and determined that they all stemmed from several key issues. We were able to quickly understand the purpose of the system via close communication with Sarah and her team. Regular web conferences and telephone calls allowed us to effectively collaborate and quickly implement a solution. By resolving these key issues and not focusing on the individual bugs, we were able to save Sarah time and cost.

John had recently lost part of his staff and was being asked to take on more development projects to support other departments inside his company. Leading a group of software developers to support a nationwide company, he needed to increase his pool of Lotus Notes developers but worried that he would not have the budget to sustain more full time staff. Outsourcing seemed like the best option. John engaged an offshore resource but quickly realized the situation was not going to work for his team. His ‘clients’, in the form of other internal departments, were accustomed to same day turn around, something that was just not possible with time zone constraints. Effective communication required evening conference calls for him and his US based staff. Soon he began to realize that the cost savings were reduced by the extra effort.

John came to TeamSpace hoping he could reduce some management costs, revive his team morale and get back to delivering same day turn around. We soon established that he needed help supporting, maintaining and building a variety of applications, big and small. Further, we realized that each application was supported by a member of his team, and in most cases each member took care of several. We immediately provided development resources to begin working with each team member to understand the applications and how they needed help. We utilized a task tracking system that further fostered communication and accountability. As everyone worked in similar time zones, late night calls came to an end and problems were again being promptly solved. Within weeks John saw an increase in morale as his staff connected with their Canadian teammates.

Outsourcing IT is not only the future, it is the now. As economic forces result in lower operating budgets, companies will need to find ways to make outsourcing work. The challenges faced by this way of operating are not new. The balance between saving costs and maintaining quality is a fine one, especially in this context. As the US adjusts to these challenging times, doing more for less will be a popular goal. Canada, with its competitive rates, skilled workforce, close proximity, shared times zones and cultural affinity, offers a viable solution.