Canada update – Amidst TFWP reforms - Gagan Sabharwal, NASSCOM
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Transcript of Canada update – Amidst TFWP reforms - Gagan Sabharwal, NASSCOM
Canada update – amidst TFWP reforms
Sep 2012
Gagan Sabharwal
NASSCOM
Indian IT-BPO industry revenue crossesUSD 100 billion
INDIAN IT-BPO INDUSTRY
Note: 1) Exports (IT services, software products, OSPD, ER&D, BPO, hardware); Domestic (Hardware, IT services (incl. ER&D), S/W products, BPO)
E: Estimate
Source: World Bank, NASSCOM
• Total revenue: ~USD 101 billion
• Relative to India’s GDP: ~7.5 per cent
• Relative to merchandise exports: ~25%
• Value add: 60-70 per cent
• Exports CAGR: 17 per cent for last 5 years
• Domestic CAGR in USD: ~10 per cent – reflects impact
of variable rupee
4147 50
59
69
22 22 2429 32
6.4%6.7% 6.5%
7.1%7.5%
FY2008 FY2009 FY2010 FY2011 FY2012E
Exports Domestic Percentage of GDP
USD billionIT-BPO revenue aggregate
1
India-Canada total Trade
Indian exports Indian imports Trade Deficit
2.11
2.15
2.11
0.04
3Apr 8, 2023
Source: Statistics Canada
• India currently runs trade deficit
of more $400Mn with Canada
annually
• Trade between two nations is
expected to cross $15bn post FTA
India-Canadian Trade 2010
(In USDbn)
India Canada
1.63
1.53
• India and Canada are both similar
sized economies
• But India has a massive growing
middle class population
Size of the India and Canadian economy GDP
(In USDTr)
Source: CIA Worldfactbook
4
US; $36.3UK; $10.1
Others; $10.9
Canada; $1.5
Indian IT-BPO exports and
Canada’s share (FY11 in USD bn)
• Indian IT BPO companies get less
than $2bn as revenues from
Canada
• Post FTA we believe India will
struggle to keep deficit in check
Industry’s exports and Canada share
IT-BPO Export revenues*
(USD billion)
FY2011 FY2012E
33.539.8
14.2
15.9
11.3
13.0
IT Services BPO S/W prod and Engg
59
68.7
Source: NASSCOM * Excluding Hardware
Changes in the trade visas categories
LMO visa (April – Aug’13 )• ALMO suspended - visas for trusted
companies withdrawn
• Removing 5-15% salary discount
• Customers made to certify that they are not displacing any local worker’s in the next 2 years while awarding the outsourcing contract
• Increased authority to suspend and/or revoke work permits and LMOs ; Sweeping powers like premises inspection without notice and look back years
• New forms, with questions regarding impact of the foreign hire on the Canadian labour market
• A non-refundable processing fee of $275
• Advertising period extended from 2 weeks to a minimum of 4 weeks
ICT visa (Aug-Sep’13)• Wage indicator: e.g. minimum wage
hiked to $90,000 p.a. Vs $50,000 (comparable number)
• Experience: for both related (job-specific) and company experience aspects. E.g. increasing min experience to 5 years instead of 1 year committed at GATS
• Extent of specialized knowledge workers: limiting number of Specialised workers can a company have by putting in arbitrary caps
• Outplacement ban: limiting ICTs assigned to third- party work sites
Sep’2010 – Software pilot project visa stopped
Canada Chapter
• Currently has 20+ member companies in current form
• Many associate members helping us with SME viz. Green & Spiegel, B&M, Deloitte, IDC, etc.
• Not just Indian companies there is fair representation of Global & Canadian MNC’s
• We are reaching out to more companies that leverage Indian talent to be part of chapter
• Chapter id [email protected] has more than 35 participants on the list
Name Organisation
Akhilesh Tripathi TCS
Andrew Shnuriwsky Infosys (Chair)
Gagan Sabharwal NASSCOM
Prasad Ganguli HCL
Rahul Petkar Polaris
Samarendra Bhattacharya Cognizant
Srivastava Kuppala
MSatyam & TechM
Nominated Canada Country Council
Council id : [email protected]
Outreach program implemented by NASSCOMOrganisation About org TO Title From DFAIT Ministry John Baird Minister EAMCIC Ministry Chris Alexander Minister Minister SibalHRSDC Ministry Jason Kenney Minister Minister SibalCommerce Dept Ministry Simon Kennedy Deputy
MinisterCommerce Secretary
CIC Ministry David Manicom Dir General NASSCOMHRSDC Ministry Alexis Conrad Dir General NASSCOMHRSDC Ministry Steven West Program
DirectorNASSCOM
Industry Canada IT Ministry Alan Beaudoin Dir General NASSCOMITAC IT Association Karna Gupta President NASSCOMCIBC Indo-Canada Council Peter Sutherland President NASSCOMCCCE CEOs Forum John Manley President and
CEONASSCOM
ICCC Indo Canada Chamber Naval Bajaj President NASSCOMCFIB SMB Association of
100K co'sDan Kelly President NASSCOM
IOCC India Ottawa Chamber Chandrakanth Arya President NASSCOMCERC Canadian Employee
Relocation CouncilStephen Cryne President NASSCOM
Markham Mayor City Frank Scarpitti Mayor NASSCOMIndo-Canada FTA Commerce Ministry Don Stephenson Chief
NegotiatorNASSCOM
GR/PA/PR mgmt- Hill & Knowlton hired to manage
Govt relations & Public Advocacy
- Creation of Coalition with CERC
leading
- Meetings with Govt stakeholders
like CIC, HRSDC, Commerce, and
Parliamentarians organized in
Ottawa
- Joint representations lodged for ICT
consultation
Briefing of CEO’s for India-Canada CEO forum in Toronto
Perception Vs. Reality Canada Tech sector
Companies in Canada are not brining Indian tech workers to replace locals
HRSDC approved LMO applications during last five years
Year Total entries
India’s share
India’s ranking
Percentage
2012 213,516* - - -
2011 190,842 6,859 8 4%
2010 179,179 7,817 7 4%
2009 176,800 6,385 8 4%
2008 190,766 7,468 7 4%
Year Total positions approved
India’s share
India’s ranking
% of tech visas
2012 202,510 12,210 4 4.6%
2011 151,055 7,545 4 3.8%2010 140,485 5,910 5 4.1%
2009 131,645 5,250 5 2.7%
2008 204,400 - - -
Entries of foreign workers on ICT visa
Source: HRSDC
• Indian tech workers are not flooding the market in Canada
• India gets 2-4% of the total work permits issued and this number is too
small to have any meaningful impact on population of 40Mn
• Philippines (24%) and Mexico (12%) account for every third work permit
issued
Source: CIC
There is no unemployment in Canadian tech sector
Feb-13 Mar-13Feb to Mar 2013
Mar 2012 to Mar 2013
Professional, scientific and technical services
1,326.70 1,337.00 10.3 27.6
• Rate of below 4% depicts shortages
in the marketplace
• In Mar’13, Canada lost 55,000, Vs.
whereas tech sector added 10K
jobs in ‘Professional, scientific and
technical services’
• The data from Statistics Canada
clearly shows IT jobs are thriving
despite downturn Source: Statistics Canada
2.2%unemployment in the
ICT sector in Canada
7.2%unemployment rate in
in Canada
Tech sector consistently adding jobs in the labour market
11
Goods-producing sector
Manufacturing Agriculture Construction Forestry, mining, oil & gas1
Accommodation & food services
Prof, scientific and technical services
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Employment change by sectors (inK’s)
2006 2008 2010 2012
Only sector that has been steadily
adding jobs since 2006
Source: Statistics Canada
Brining in foreign workers does not depresses wages in the tech sector
Overall Rank
Job
Growth in # of
employees(2006-2012)
Change in salary
(2006-2012)
Projected job openings for every person
looking in 2020
Median annual salary (2012)
25 Software engineer 34% 8% 0.77 $79,997
28 Computer engineer 19% 14% 1.02 $75,005
Source: http://www.canadianbusiness.com/companies-and-industries/canadas-best-jobs-2013-ranking/
• IT jobs continue to thrive despite the downturn and high
unemployment headline number
• Core IT jobs figure in Top 50 Canadian jobs ; and salary
raise are decent given the backdrop
Companies do not use TFWP for undercutting local workers
13
Source: ICTC report
Companies use TFWP to fill skill shortages in the local marketplace
• As per Canadian Immigration law, each
employer has to pay prevailing
minimum wage (PLV) to foreign
workers,
• Besides PLV, companies also need to
pay for air travel & visa costs (for
family), attorney costs, relocation costs,
education costs of the accompanying
children, etc. while employing foreign
workers
• Contracting foreign workers to work in
Canada is very expensive proposition
Vs. local hires if available with right
skill set and if job is for longer
duration / if not permanent
Demand for IT skills in Canada
14Source: ICTC report
As per ICTC report Canada will need about 110,000 ICT workers by 2016
Long term supply chain-STEM course registration declining
15Apr 8, 2023
Full-Time Enrolment in Mathematics and Computer and Information Sciences 1992/93 to 2009/10 Statistics
Canada,
16
Eu
rop
eA
sia
No
rth
Am
eri
ca
11Netherlands
83
75Japan
207
222U.S.
23
24Canada
40
41U.K.
39
37Italy
55
53Germany
11
Eu
rop
eA
sia
No
rth
Am
eri
ca
2
9
5
3
7
38
54U.S.
Canada
13U.K.
12
14Italy
16
18Germany
Netherlands
27
35Japan
•Working age population of the
Canada will stagnate
•Whereas the economy would have
grown by 15% (at an average of
1.5% a year)
• Shortfall will need to be filled by
attracting skilled workforce
Long term - Demographic trendIncreasing imbalance in the Global workforce
Source: UN population prospects, 2004; McKinsey Global Forces Research
2008 2020
Working age population Non-working population
Why can’t companies hire locally?
• Companies have no option to bring in foreign workers if the jobs are of shorter durations (1-3) years ; it is not ethical to hire and fire workers while catering to short durations projects
• In competitive times customers expect productive/ skilled / experienced resources with JIT (Just-in-time) concept as soon as the project is awarded
• Each company has its proprietary framework for resources to deliver on projects that differentiates them from the competition and it is impossible to find such a resource [locally]
• Hiring locally and investing about 12 months for training on proprietary framework and techniques is really not an option for short duration projects
• Besides there are inherit shortages in the local marketplace that deters companies to hire locally even for longer duration projects
As per ICTC report Canada will need about 110,000 ICT workers by 2016 and supply will not match
What should Govt of Canada be doing?
NASSCOM Canada chapter will be happy to partner with Govt on all these objectives
Short term
• Instead of curbing TFWP Govt should be considering ways and means of –
• Tweaking policy to be able to attract ‘best and brightest’ to Canada to keep the torch of innovation high
• Should remove hurdles for the economy to acquire skills in the short term through immigration or trade visas
Long term
• Promoting STEM courses amongst student community to ensure long term supply for the knowledge sector
• Provide grants and scholarships for STEM graduates
• Encourage community programs that promote tech courses amongst the younger generation
ICT visa consultation
Coalition of business – response to ICT consultation
No. Organization
1 CERC
2 Canadian Council of Chief Executives
3 The Canadian Chamber of Commerce
4 NASSCOM
5 Canadian Manufacturers & Exporters
6 Aerospace Industries Association of Canada
7 MAGNA INTERNATIONAL INC.
8 Fluor Canada Ltd.
9 Electro-Federation Canada
10 Canadian Steel Producers Association (CSPA)Karna
11 ITAC - Information Technology Association of Canada
12 Canadian Association of Railway Suppliers
Key highlights
• The current regime of ICT category is efficient and provides business with predictability
• Changes as proposed by CIC are unnecessary and ill conceived
• Will negatively impact Canada’s economy and disrupt business operations in many Canada’s key industries
• Changes will convey a clear message to trading partners that Canada is not prepared to comply with its international trading agreements
Thank you