Beaverton jobs bound for B.C.
April 7, 2004By Jeff Kosseff
Copyright 2004 The Oregonian
Stream International plans to move between 100 and 200 Beaverton call-center jobs out of the United States.
But it's not sending the technical-support jobs to India, Vietnam or the Philippines -- the much publicized, low-cost hot spots for offshore outsourcing. The jobs are moving to British Columbia.
Between now and July, Stream will move 100 to 200 jobs from Beaverton to Chilliwack, B.C., company officials said Tuesday.
Stream, which employs about 800 people in Beaverton, will move technical support work that it handles for Hewlett-Packard. Stream's parent, Solectron, last month agreed to sell Stream to the parent company of ECE Holdings, a competitor. Derek Handova, a Solectron spokesman, said Tuesday the move was "a business decision" and is "not directly related" to the planned sale.
The transfer of jobs to Canada illustrates a little-discussed option for some businesses that want to reduce overall labor costs.
Business experts say many technology-related businesses have long found a skilled work force and relatively low total compensation costs in Canada, in part because of nationalized health care and favorable exchange rates.
"Canada is trying to strategically position itself as near-shore," said Jim LeBlanc, U.S. executive director of the Canadian Advanced Technology Alliance, a trade group. "You're never going to compete on price the way they do in India, but there's a number of value-added reasons companies look to Canada."
According to Competitive Alternatives, consulting firm KPMG's ranking of international business costs, total business costs in Canada are nearly 9 percent lower than in the United States. Of 11 countries in the report, Canada had the lowest total business cost ranking. The rankings consider a range of cost factors, including wages, taxes, benefits, land, buildings and utilities.
Many high-tech service providers, such as EDS Corp. and Science Applications International Corp., have operations in Canada, LeBlanc said. But Canada hasn't drawn the ire from outsourcing opponents that India and some other far-away countries have.
Political and economic observers say Canada has escaped criticism for a variety of reasons. The country historically has been one of the top U.S. trade partners; its wages are near those of the United States, and many of the service jobs in Canada are on the lower end of the technology food chain.
James Blanchard, who was U.S. ambassador to Canada from 1993 to 1996, said he doesn't see outsourcing to Canada as a significant threat to the United States. He said Canada has long been an important U.S. trading partner.
"This is a trading relationship that's very significant to us not just in terms of jobs but national security," said Blanchard, a former governor of Michigan who is a partner at Piper Rudnick, a law firm in Washington, D.C.
Although often slightly below those of the United States, Canada's service-sector wages aren't nearly as low as those in India. But Indian outsourcers face higher costs in other areas, such as employee training, telecommunications and security.
Canada's proximity, similar culture and U.S. time-zone overlaps also make it attractive to businesses that are wary of sending jobs to Asia.
"There's more of a natural affinity for those concerned about the geopolitical situation," LeBlanc said.
LiveBridge, a Portland-based call-center company, employs about 3,000 people in call centers in the United States, Canada and India. It has operated in Canada since 1998, when it acquired a business with operations there.
Many LiveBridge customers ask the company not to route their calls to India, where call-center workers require extensive training on U.S. culture and accents.
But Canada does not face the same challenges, said Patrick Hanlin, LiveBridge chief executive.
"People in Canada know what a home-equity line is," said Hanlin, whose company employs about 550 people in two Canadian call centers. "They know what credit card debt is."
Also the telecommunications costs in Canada are much lower than those in India, Hanlin said.
Although the Canadian dollar has strengthened recently, the exchange rate still makes it cheaper to do business in Canada than in the United States, Hanlin said.
"The exchange rate is the No. 1 cost benefit," he said. "The dollar has a favorable rate, even though it's not nearly as good as it used to be."
Canada's nationalized health system also provides a huge cost-saving tool for employers, said Joseph McKinney, an economics professor at Baylor University.
"Health insurance costs are largely born by the government," McKinney said. "If you consider the total package, wage costs are somewhat less."
So far, many experts say Canada has mostly taken lower-level technology service jobs, such as call-center work.
"I don't know of very high-level jobs moving to Canada, but I don't see why some of that wouldn't happen," said Ron Hira, chairman of the careers and work-force policy committee of the Institute of Electrical and Electronics Engineers-USA, which represents tech workers.
Stream, based in Canton, Mass., is trying to find other jobs in Beaverton for employees who have handled the Hewlett-Packard work, so it would not estimate the number of jobs that will be lost by the move.