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Sign for the Royal Bank of Canada at 20 King St. West in downtown Toronto on March 12, 2013.Fred Lum/The Globe and Mail

Ottawa is examining whether Royal Bank of Canada broke the rules by subcontracting work to an offshoring firm using foreign workers to replace some of the bank's Canadian staff.

About 45 of Royal Bank's employees in Toronto are losing their jobs now that the bank has entrusted its long-time partner iGate Corp. with some of the back-office support to its investor services.

The revelation made by the CBC hit a nerve with the Harper government just days before two unions will challenge in a Federal Court the decision to allow a Chinese mining company to bring in temporary Chinese workers at a coal mine in British Columbia. Finance Minister Jim Flaherty announced in his last budget that the Conservatives will tighten the temporary foreign worker program to ensure foreigners "are relied upon only when Canadians genuinely cannot fill those jobs."

"If true, this situation is unacceptable," said Diane Finley, Minister of Human Resources and Skills Development, in a statement about the Royal Bank controversy over the weekend.

iGate, an IT offshore specialist based in Fremont, Calif., brought in personnel so that they could familiarize themselves with RBC's computer systems and learn how to perform the job from those they are replacing, confirmed Zabeen Hirji, Royal Bank's chief human resources officer. Some of the replacement workers were flown in from India, where part of the bank's work will end up. Part of Royal Bank's work will be "nearshored" in iGate Canada's offices, although Ms. Hirji couldn't specify what proportion will remain in the country.

The bank aimed to distance itself from the situation by saying it didn't hire the foreign workers. "We made a deal with our supplier. … We don't get involved in the hiring practices of our suppliers," Ms. Hirji said. RBC is iGate's second-biggest client after General Electric and accounted for 11 per cent of its 2012 revenues of close to $1.1 billion (U.S.).

News of the offshoring layoffs sparked a backlash on Twitter and Facebook, where a new account called for a boycott of the bank using the parodied slogan "Lost Canadian jobs you can bank on."

The Canadian government allows employers to hire workers from abroad under certain circumstances. However, some companies must prove that they have genuinely tried to recruit Canadians and were unable to hire qualified candidates before they get permission. This is known in government jargon as a "labour market opinion" or LMO.

The temporary foreign worker program "was never intended as a means to bring in temporary foreign workers in order to replace already employed Canadian workers," Ms. Finley said.

Ms. Finley instructed her department to work with Citizenship and Immigration Canada to "determine the next steps." The government will "review with great detail" iGate's LMOs to determine if actions need to be taken, explained Alyson Queen, director of communications.

More than 192,000 temporary foreign workers were permitted to enter Canada in 2011. That year, more than 29,000 foreign workers obtained a permanent status, according to government figures.

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