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The low cost BPOs in Asia and the Middle East are threatening the existence of Canadian call-centers, which though producing high quality work could never match the lower production rates offered by the former.
Roberta Fox, president and senior partner with Fox Group Consulting, said companies in India, the Philippines, United Arab Emirates and Ireland have been moving aggressively to bulk up their share of the global market.
"The labour costs, depending on what country, could be as low as one-tenth," Fox said. "That's a big deal when, in call-centre business, two-thirds of your operating costs are human capital." That means costs per call are a mere fraction of those in North America, making it cheaper for companies - regardless of where they are based - to transfer jobs abroad.
And this is why, if burgeoning Asian and Middle Eastern outsourcing firms continue to ride a wave of global consolidation, Canadian call-centre jobs, especially those in the Atlantic Provinces, will be in jeopardy.
India, in particular, has become the world's call-centre capital with its growing pool of English speakers, relatively low wages and modern technological infrastructure. The Indian government has invested heavily in telecommunications and it is estimated that more than one million call-centre jobs have been created there in the last decade.
Ironically, Indian business and political leaders are merely duplicating a strategy first employed by their Canadian counterparts about 15 years ago.
Call-centre operations now exist in every Canadian province, with the largest concentration in the Maritimes - particularly New Brunswick.
In the 1990s, former New Brunswick premier Frank McKenna speaheaded a campaign to make his province Canada's call-centre mecca. By touting New Brunswick's low-cost labour, he succeeded in attracting big name corporations like Purolator Courier Ltd. and Federal Express Canada Ltd.
Currently, New Brunswick's sector employs more than 20,000 people in about 100 call centres, contributing $1 billion to the provincial economy every year.
But some industry observers suggest that New Brunswick and other provinces are losing ground to lower-cost Asian rivals.
"It is certainly something that we are aware of. But at this point in time, we believe that New Brunswick has carved out a service that is still very much in demand," said Sarah Ketcheson, spokeswoman for the Department of Business New Brunswick.
She cited CentreBeam, a Calfornia-based IT outsourcing firm, as an example of a foreign company that's moved to beef up its New Brunswick employee base in the last year.
"We have positioned ourselves as a high-end, knowledge industry location and we are still seeing the benefits," she added.
But it is exactly that technological expertise and solid contract base that makes Canadian companies the ideal takeover targets for Asian and Middle Eastern firms, observed Fox.
"Some of the Canadian-based call centres have been very leading in advanced technologies," Fox said, noting the development of web-based call centres.
Last month, TransWorks Information Services of India announced a $200-million takeover of Minacs Worldwide Inc., a Toronto-based call centre specialist.
TransWorks is part of the Aditya Birla Group, one of India's leading business process outsourcing companies. It employs over 4,200 employees in India and Canada.
Minacs CEO Bruce Simmonds has given assurances that neither job cuts nor transfers are part of TransWorks' agenda. The firm employs about 6,000 people in Canada, the United States and Europe.
But Peter Ryan, an analyst with Datamonitor PLC, said it remains possible that some jobs could be moved offshore in the future.
He added: "It wouldn't surprise me if more firms in the Middle East or Asia decide they are going to look at profitable North American or West European companies for the purposes of consolidation."
Other players in the sector include CGI Group Inc., MDC Partners Inc. and Morneau Sobeco Income Fund.
"They could be acquired, or they could actually acquire other companies because you need the scale to be able to support the larger customer bases," said Fox.
"The challenge, though, will be access to capital. That's always the Canadian challenge."
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