iGate Corp., the outsourcing firm at the centre of a controversy over the use of temporary foreign workers, has grown dramatically in recent years, in part because of a deep business relationship with the country’s biggest bank: Royal Bank of Canada.
A review of the Freemont, Calif., firm’s financial statements shows that RBC is one of the firm’s biggest clients, providing about $118-million or 11 per cent of its $1.1-billion in revenue last year.
The federal government is looking into an outsourcing arrangement between RBC and iGate, after allegations surfaced that the bank was replacing Toronto employees with foreign workers, partly via an immigration program. The outsourcing move affects 45 jobs, with some of that work moving to India.
However, while the story caused a public-relations problem for RBC, other banks also use temporary workers to deal with hard-to-fill positions.
Bank of Montreal and Toronto-Dominion Bank also use temporary workers, primarily for technology jobs. “We have made use of this program in situations where short-term skills gaps exist, while complying fully with the letter and spirit of federal regulations,” BMO spokesman Paul Deegan said in an e-mail.
A spokeswoman for TD said the bank expects its contractors to comply with the rules. “We use this program selectively and only in the way it’s intended – for current TD employees relocating for a fixed-term assignment or hiring an executive with international experience if we can’t find one in Canada,” TD spokeswoman Barbara Timmins said.
Bank of Nova Scotia said it is not planning to outsource jobs at the bank to temporary foreign workers, but will expand the use of international call centres, chief executive officer Rick Waugh told the bank’s annual meeting Tuesday.
IGate said Tuesday that it is in full compliance with the local laws of each of the countries where it operates, including Canada. “We will fully co-operate with requests from the government for information on this matter,” the company said.
Although RBC has distanced itself from iGate recently, saying it does not get involved in the firm’s operations, corporate records and bank sources confirm they have a long relationship.
The bank is repeatedly mentioned in iGate’s corporate filings, along with General Electric, as one of its top two corporate clients. The proportion of iGate’s business that came from RBC contracts reached a high of 35 per cent in 2010, when the bank was iGate’s biggest client.
Through a major acquisition in 2011, iGate grew dramatically, from $280.6-million (U.S.) in revenue for 2010 to $1.1-billion in 2012.
Starting around 2005, a top executive at RBC was instrumental in helping iGate grow to what it is today.
Martin Lippert, then-head of global technology and operations for RBC who now works for MetLife Inc., worked closely with iGate as it expanded to meet RBC’s needs for outsourcing work. The bank had grown rapidly between 2000 and 2005 and needed help staffing its technology needs.
“We recognized that the demand we were seeing was not going to be met with just internal resources,” Mr. Lippert told the Hindu Business Line in 2007. “We did not enter into the outsourcing engagement with iGate to drive costs down in the organization, though that has been a side benefit,” he told the publication.
That public concern is not likely to be calmed by iGate’s disclosures regarding executive compensation.
iGate’s headquarters is in a 12,000-square-foot property in Fremont. However, of its 19 properties, 12 are in India, two are the U.S., and two are in Mexico. There are also properties in Australia, China and Ireland. Its biggest office is in Bangalore, India, where the company owns a 966,000-square-foot property.
In the financial sector, iGate has a reputation of working closest with RBC, although other financial institutions have been clients of iGate in the past, including Toronto-Dominion Bank. Canada’s second-largest bank said it did business with an affiliated company.
“TD is not currently a client of iGate. Several years ago we did some business with a subsidiary of theirs but it was not outsourcing,” Ms. Timmins said in an e-mail.
With a report from The Canadian Press