Former outsourcer describes how RBC-style job destruction works: Walkom

An insider explains how Canada's big banks contract out good jobs to make even more money.

Pavel Horejsi / NYT file photo

The corporate world has invented various phrases to describe the drive to cheap labour, writes Thomas Walkom. Some versions are referred to as “organizational redevelopment.” Others are called “process reengineering.”

By: Thomas Walkom National Affairs, Published on Fri Apr 12 2013

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These are the confessions of an outsourcer. She has spent more than a decade helping some of Canada’s biggest financial institutions shed workers and replace them with low-wage help.

She has made a good living doing this. But she now thinks that contracting out middle-class jobs — the very practice she aided — is short-sighted and morally wrong.

“What kind of world do we want?” she asks. “We are not building a future for kids.”

She doesn’t want her name used, so I shall call her Arlene. Her story jibes with others I have heard since the furor over the Royal Bank’s decision to outsource high-tech workers to India broke.

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A highly trained, university-educated professional, Arlene has been at the centre of the action. She is frustrated by the media coverage of the RBC affair. She says those who focus on Ottawa’s foreign temporary worker program miss the point.

The big banks she has worked for under contract don’t bring in temporary foreign workers to take Canadian jobs. Rather they send those jobs abroad through what they call “preferred vendors,” such as the India-based outsourcing firm iGate.

True, these preferred vendors may temporarily import foreign managers to organize the job drain. But typically, such managers do not stay long.

More to the point, the lower-paid foreigners who will eventually do the actual work rarely, if ever, set foot in Canada.

Arlene says any outsourcing scheme begins with the institution’s senior management. Usually, she says, the aim is to transfer about 60 per cent of the affected jobs — often in back-shop areas like information technology — to India where wages are a fraction of those paid in Canada.

The remaining 40 per cent, which generally require more local support, are outsourced to third-party firms in Canada. They in turn, subcontract the jobs to individual Canadians.

The aim here, Arlene says, is to not only to save the bank money but ensure that it is legally insulated from those who work for it.

Technically, those Canadians doing outsourced work are viewed as self-employed. That means that the bank no longer has to pay statutory benefits such as Canada Pension Plan premiums.

In most cases, subcontracts with Canadian workers are renewed for up to two years. Then, in order to maintain the fiction that they are not real bank employees, they are let go. After a few weeks, they are rehired on another set of short-term contracts.

“It’s sad,” says Arlene. “Really and truly sad. If you’re on contract you have no security. You do exactly what you’re told or you’re gone. You look the wrong way at someone and you’re gone. If you even question someone, you’re gone.”

Foreign outsourcing works slightly differently.

In this case, the financial institution will hire not only someone like Arlene but a foreign preferred vendor like iGate. “We work side by side in the bank,” she says.

Her job might involve bundling the tasks to be outsourced. Her foreign counterpart then arranges with his home office in, say, India to have its low-wage employees do the tasks.

The foreign outsourcer might use Canadians from its Toronto office to manage what corporations euphemistically call “the transition.” Or it might bring in employees from abroad under one of several visa arrangements permitted by Ottawa.

Typically, any foreigners brought in are tasked not with doing the work being outsourced but with learning how to train others who are already abroad to do that work.

In that sense, they are not replacing qualified Canadian workers. They are merely executing a job-killing decision already made by the bank.

The corporate world has invented various phrases to describe this drive to cheap labour. Some versions are referred to as “organizational redevelopment.” Others are called “process reengineering.”

In most cases, employees about to be fired are compelled to explain how their jobs work so that cheaper workers can take over. Arlene recalls one instance where senior directors broke down in tears as they spelled out how best they could be replaced.

“One was a single mother,” she recalls. “Another had two kids . . . usually they get rid of the directors first before outsourcing the entire unit.”

Typically, she says, employees are instructed to explain their work processes before they receive their pink slips. This causes less fuss.

In the Royal Bank case, information technology professionals were given notice before being required to detail their jobs to RBC’s Indian partner. That led some to complain publicly.

“Perhaps bad planning,” says Arlene.

The former outsourcer says she now thinks outsourcing is monstrous. She says she left the field because she couldn’t bear it any more. She says she has seen too much damage up close.

She says outsourcing, either domestically or abroad, is destroying the dreams of young Canadians. She has a child of her own. She wants government to crack down on companies that, just to make a buck, deliberately kill good jobs. Her words spill out.

“This isn’t my Canada,” she says. “It’s not fair. It’s like that television show Survivor .”

Thomas Walkom's column appears Wednesday, Thursday and Saturday.