While the issue of exporting jobs abroad is rapidly becoming an election issue in the United States, a new study finds that American companies are favouring Canada.
Moreover, the study suggested that cost was not a major factor when companies consider exporting business processes, but the availability of qualified professionals.
In a process called "near-shore off-shoring," the study, commissioned by Detroit-based Compuware Corp. and conducted by analysts at the Massachusetts-based IDC consultancy, found that U.S. companies are more likely to use near-shore rather than off-shore outsourcing when the cost benefit is 65 per cent or lower than the cost of a U.S. provider.
Entitled Global Sourcing Trends Necessitate Considerations of Near-Shore Sourcing in Canada, the study surveyed 127 U.S. IT executives regarding their decision-making processes when they considered outsourcing their application development projects outside of the United States.
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When asked to rank 10 factors for selecting a service provider, more than 46 per cent of respondents said the availability of experienced professionals was the most important.
Access to specific technical skills came in second, and third place was a high quality of English competency.
A shared business culture and access to a local expert are also significant factors.
"A key conclusion that can be drawn from this study is that outsourcing to a near-shore location such as Canada represents a valuable compromise between on-site on-shore service delivery and off-shore service delivery for reducing outsourced services costs," IDC Canada senior analyst Jim Westcott said.
The results of the study also confirm that IT projects are again in the works. Only one-eighth of the respondents have no projects planned and the average is three project categories per respondent.
Eighty per cent of the respondents are considering or plan to use external providers, while only 50 per cent have used them in the past. Yet only half had knowledge of off-shore or near-shore providers.
Compuware, a maker of software and provider of services for enterprise customers, commissioned the study. It operates the Compuware NearShore Development Centre in Montreal.
The survey was administered from November 2003 to December 2003, with 127 completed interviews conducted over the Web. Qualifying participants had to have knowledge of off-shore or near-shore service providers and had to have used external service providers for application development projects.