Canada update – Amidst TFWP reforms - Gagan Sabharwal, NASSCOM


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Canada update – Amidst TFWP reforms - Gagan Sabharwal, NASSCOM

  1. 1. Canada update – amidst TFWP reforms Sep 2012 Gagan Sabharwal NASSCOM
  2. 2. Indian IT-BPO industry revenue crosses USD 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 41 47 50 59 69 22 22 24 29 32 6.4% 6.7% 6.5% 7.1% 7.5% FY2008 FY2009 FY2010 FY2011 FY2012E Exports Domestic Percentage of GDP USD billion IT-BPO revenue aggregate1
  3. 3. India-Canada total Trade 2.11 2.15 2.11 0.04 Indian exports Indian imports Trade Deficit 3 17-Sep-13 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) 1.63 1.53 India Canada • 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. 4. 4 US, $36.3 UK, $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) 33.5 39.8 14.2 15.9 11.3 13.0 FY2011 FY2012E IT Services BPO S/W prod and Engg 59 68.7 Source: NASSCOM * Excluding Hardware
  5. 5. Changes in the trade visas categories LMO visa (April – Aug’13 ) • ALMO suspended - visas for trusted companies withdrawn • Removing 5-15% salary discount • Customers made to certify that they are not displacing any local worker’s in the next 2 years while awarding the outsourcing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
  6. 6. 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 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 :
  7. 7. Outreach program implemented by NASSCOM Organisation About org TO Title From DFAIT Ministry John Baird Minister EAM CIC Ministry Chris Alexander Minister Minister Sibal HRSDC Ministry Jason Kenney Minister Minister Sibal Commerce Dept Ministry Simon Kennedy Deputy Minister Commerce Secretary CIC Ministry David Manicom Dir General NASSCOM HRSDC Ministry Alexis Conrad Dir General NASSCOM HRSDC Ministry Steven West Program Director NASSCOM Industry Canada IT Ministry Alan Beaudoin Dir General NASSCOM ITAC IT Association Karna Gupta President NASSCOM CIBC Indo-Canada Council Peter Sutherland President NASSCOM CCCE CEOs Forum John Manley President and CEO NASSCOM ICCC Indo Canada Chamber Naval Bajaj President NASSCOM CFIB SMB Association of 100K co's Dan Kelly President NASSCOM IOCC India Ottawa Chamber Chandrakanth Arya President NASSCOM CERC Canadian Employee Relocation Council Stephen Cryne President NASSCOM Markham Mayor City Frank Scarpitti Mayor NASSCOM Indo-Canada FTA Commerce Ministry Don Stephenson Chief Negotiator NASSCOM 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
  8. 8. Perception Vs. Reality Canada Tech sector
  9. 9. 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 Percent age 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
  10. 10. There is no unemployment in Canadian tech sector Feb-13 Mar-13 Feb 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
  11. 11. Tech sector consistently adding jobs in the labour market 11 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Goods-producing sector Manufacturing Agriculture Construction Forestry, mining, oil & gas1 Accommodation & food services Prof, scientific and technical services Employment change by sectors (inK’s) 2006 2008 2010 2012 Only sector that has been steadily adding jobs since 2006 Source: Statistics Canada
  12. 12. 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: • 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
  13. 13. 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
  14. 14. Demand for IT skills in Canada 14Source: ICTC report As per ICTC report Canada will need about 110,000 ICT workers by 2016
  15. 15. Long term supply chain- STEM course registration declining 15 17-Sep-13 Full-Time Enrolment in Mathematics and Computer and Information Sciences 1992/93 to 2009/10 Statistics Canada,
  16. 16. 16 EuropeAsiaNorthAmerica 11 Netherlands 83 75 Japan 207 222 U.S. 23 24 Canada 40 41 U.K. 39 37 Italy 55 53 Germany 11 EuropeAsiaNorthAmerica 2 9 5 3 7 38 54 U.S. Canada 13 U.K. 12 14 Italy 16 18 Germany Netherlands 27 35 Japan •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 trend Increasing imbalance in the Global workforce Source: UN population prospects, 2004; McKinsey Global Forces Research 2008 2020 Working age population Non-working population
  17. 17. 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
  18. 18. What should Govt of Canada be doing? NASSCOM Canada chapter will be happy to partner with Govt on all these objectives • 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 Short 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 Long term
  19. 19. ICT visa consultation
  20. 20. 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
  21. 21. Thank you