OMEN
10-05-2007, 09:13 AM
Stronger 'loonie' also gives Canadian companies a price break on tech purchases
The Canadian dollar is now roughly equal to, or even worth more than, its U.S. counterpart. And the strengthening of Canada's currency is delivering benefits to IT managers such as Janet Topic, CIO at Trimac Transportation Services Inc. in Calgary, Alberta.
"So much of what we purchase in terms of software is in U.S. dollars, so those kinds of purchases are cheaper for us," Topic said. "It's kind of a bonus at the end of the day."
Aside from reducing hardware, software and IT services bills from U.S.-based vendors, the currency parity may also discourage some Canadians from seeking job opportunities in the U.S., improving the worker recruitment and retention prospects of companies in Canada.
A wild card is whether the newfound parity will make Canada attractive enough to convince U.S. tech workers to relocate.
The Information and Communications Technology Council (ICTC), a Canadian IT industry group based in Ottawa, 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, said 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 U.S. to move across the border. "That remains to be seen," he said.
As recently as five years ago, Canada's dollar -- popularly known as the loonie -- was valued at only about 75 cents against the U.S. dollar. The disparity helped lure many Canadian IT workers to the U.S., 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 U.S.," Abramovitch said. Over the past 12 months, "a lot of these workers are wanting to come back," he said, 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. U.S. 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," said Eugene Kublanov, CEO at NeoIT Inc., an outsourcing consulting firm in San Ramon, Calif. "You might as well be leveraging your [data] center in Utah or Missouri, rather than in Canada."
However, Sebastien Ruest, an IDC analyst who is 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 said. He added that IT wages in Canada remain roughly about 25% below those in the U.S., and that the Canadian vendors offer services that are in high demand, such as SAP expertise.
Stan Lepeak, managing director of research at outsourcing advisory firm EquaTerra Inc. in Houston, said 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 said.
The declining U.S. dollar also helps companies in China, which has kept its currency in line with that currency. "If the U.S. has gone down, China compared to the U.S. has also gone down," said Fariborz Ghadar, a professor of global management policies at Pennsylvania State University and founding director of the school's Center for Global Business Studies. "China, in fact, has become more competitive because they are tied with the dollar."
Computerworld
The Canadian dollar is now roughly equal to, or even worth more than, its U.S. counterpart. And the strengthening of Canada's currency is delivering benefits to IT managers such as Janet Topic, CIO at Trimac Transportation Services Inc. in Calgary, Alberta.
"So much of what we purchase in terms of software is in U.S. dollars, so those kinds of purchases are cheaper for us," Topic said. "It's kind of a bonus at the end of the day."
Aside from reducing hardware, software and IT services bills from U.S.-based vendors, the currency parity may also discourage some Canadians from seeking job opportunities in the U.S., improving the worker recruitment and retention prospects of companies in Canada.
A wild card is whether the newfound parity will make Canada attractive enough to convince U.S. tech workers to relocate.
The Information and Communications Technology Council (ICTC), a Canadian IT industry group based in Ottawa, 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, said 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 U.S. to move across the border. "That remains to be seen," he said.
As recently as five years ago, Canada's dollar -- popularly known as the loonie -- was valued at only about 75 cents against the U.S. dollar. The disparity helped lure many Canadian IT workers to the U.S., 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 U.S.," Abramovitch said. Over the past 12 months, "a lot of these workers are wanting to come back," he said, 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. U.S. 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," said Eugene Kublanov, CEO at NeoIT Inc., an outsourcing consulting firm in San Ramon, Calif. "You might as well be leveraging your [data] center in Utah or Missouri, rather than in Canada."
However, Sebastien Ruest, an IDC analyst who is 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 said. He added that IT wages in Canada remain roughly about 25% below those in the U.S., and that the Canadian vendors offer services that are in high demand, such as SAP expertise.
Stan Lepeak, managing director of research at outsourcing advisory firm EquaTerra Inc. in Houston, said 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 said.
The declining U.S. dollar also helps companies in China, which has kept its currency in line with that currency. "If the U.S. has gone down, China compared to the U.S. has also gone down," said Fariborz Ghadar, a professor of global management policies at Pennsylvania State University and founding director of the school's Center for Global Business Studies. "China, in fact, has become more competitive because they are tied with the dollar."
Computerworld