The Missed Lesson Of Outsourcing to India, and Ireland

One more company, this time Primus Telecommunications Canada is repatriating its customer care from an unnamed outsourcer in India back home.

The company announced Tuesday that it will no longer have any of their customer service or technical support calls handled by offshore agents. This is in addition to the exclusive Canadian-based customer care that Primus' Wireless and TalkBroadband VoIP customers have received for some time.

In turn and to handle these calls Primus is expanding its Edmundston, New Brunswick contact center creating 113 new jobs, adding to over 200 employees currently in place. The provincial government will provide Primus Telecommunications Canada with a forgivable loan of $7,500 for each of the new positions.

"Every company with customer service operations that are partly outsourced, has heard some complaints from customers, for a variety of reasons, with respect to dealing with customer service representatives located overseas," says Rob Warden, VP Residential Marketing for Primus Canada. "Our customers have told us they prefer to deal with Canadian representatives and we're responding to their feedback.  While we hold all our representatives - wherever they are located - to a high standard, we have also come to believe that the best way to serve our customers is to locate as much of our customer service operation as possible in this country.

"We are also delighted to be able to play a part in local job creation during these challenging economic times."

There is irony in this news. New Brunswick, and Ireland, helped begin the move to nearshore/offshore contact center operations from the U.S. and other countries like the U.K. by offering their communities as berths with plenty of willing, able, educated, and low-cost labor. Both Ireland and New Brunswick are essentially rural, have many workers but too few opportunities; their best and brightest were being lured elsewhere to Britain and to Ontario respectively.

Former provincial premier (and later ambassador to the U.S.) Frank McKenna had seen what Ireland had done in attracting contact centers and followed suit, attracting outsourcers but also in-house customer service and sales. Other provinces saw what New Brunswick had accomplished and began seeking contact centers as well.

Unfortunately, New Brunswick, and by extension much of Canada (and other countries) that sought out contact centers had missed the lesson of Ireland, and that is to aggressively capitalize on contact centers as gateways to higher-value/higher-paid IT jobs. This is a lesson that India, despite being suffocated by decades of stifling neosocialist rule coupled with a notoriously slow bureaucracy has learned well.

Ireland and India, despite being battered by the downturn, have therefore moved on to become tech hubs in their own right. That is why there has been no major hand-wringing in India and in Ireland at the loss of contact center jobs as they have moved on.

Unfortunately, Canadian provinces like New Brunswick, and Canada has a whole have not taken advantage of the unique opening that nearshore contact centers had given them to make their economies more higher-valued through a stronger IT focus.

Canada failed to move on the very low Canadian dollar relative to the U.S. currency 7-8 years ago (it was at one time 1/3rd less than the American dollar) to draw and lock in higher-valued, more stable, and less easily moved IT investments. It did not strongly promote the country in coordination with other provinces especially in comparison to other nations including Australia, France, and the U.K. There have been no coordinated educational/economic strategies.

As a result New Brunswick, rural/northern Ontario, Newfoundland and Labrador, and interior/mid-north coastal British Columbia especially have remained mired as technology backwaters at a time when the forestry and mining industries that they have depended on have taken a beating and may never come back.

And unfortunately that is typical of Canada, a nation that despite the prowess if mixed of companies like Bell, Corel, Mitel, Nortel, RIM, Rogers, and Telus, can never seem to get beyond being a branch plant 'hewers of wood and drawers of water', with a cautious, decidedly unentrepreneurial culture. One that prefers that others take the risks and live on the residuals, seeking instead the safer investments of finance, real estate, resources (other than oil/gas--too risky), transportation, and utilities.

Ireland and India have taken in contrast the nothing-to-lose mentality. Irish and Indian entrepreneurs are hungry and will do what it takes. I've lost count how many offers I've had for trips to India; I could have ended up living there (if I had been covering this field earlier I would have been in Ireland--I have a maroon EU passport via my British citizenship and my roots are in Eire with a name to match).

Canada's culture won't change. The country, even in the current downturn, is still too comfortable. The one upside of its cautious approach is that its domestic markets haven't tanked to the same extreme as that in the U.S., leaving it with a still troubling but more secure financial and real estate sectors.

There is a tide against nearshoring and offshoring, but there are shoals for nations that offer strong and unique contact center value propositions: in education, skillsets, and languages, such as Egypt, Guatemala, Honduras, and, if/when there is lasting stability, Sri Lanka. Other countries with smart, educated workforces such as Kenya and South Africa are posed to jump more into the IT/higher end BPO space directly.

These nations should look at Ireland and India, and at Canada when formulating their economic development strategies, adopting and adapting from the first group and avoiding the errors of the latter.

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While there is some truth to your thesis, you might want to have a little look at the data before you push it too hard.

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