IT Strategy

Why Companies Might Outsource to Canada: 9 Reasons

When you think of outsourcing software development, nearshoring a project to Canada isn’t the first thing that comes to mind. Over the last couple of decades, American companies have built their business on outsourcing development to countries like India, the Philippines, and Ukraine, but that’s changing.

Canada is growing into a leading nearshoring destination for US companies looking to fill the talent gap. As IT spending soars to $3.8 trillion (an increase of 3.2% from 2018), companies will have to get creative to effectively manage their restrictive budgets and the tech talent shortage in the country.

But why Canada?

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While Canada might be known for ice hockey and Tim Horton's coffee, it has so much more to offer the rest of the world. It’s also the birthplace of the Java programming language, and in recent years, the nation has also taken its place as a leader in Artificial Intelligence (AI).

Alaisdar M. Graham, (Boston based) Keane's managing director for Canada, "in some cases we use Canada as a front end to India. We find that this takes away the issues people have with India."

According to Robert Scott, a partner at PricewaterhouseCoopers, Canada, "we do not have the same volume of people as India, but Canada is generally competing at the leading edge of technology where close interaction between business users and developers is critical."

Here are nine reasons why American tech companies should outsource software development to Canada.

1. Similar Timezones

As Canada is right next door, it shares the same or similar time zone with major US cities. This makes it easy for companies to engage in cross border collaboration and video conferencing.

When software engineers are working for you at the same time, it makes it easy to augment staff and fill the talent gaps. This approach also helps to make the software development cycle more predictable.

2. Same Language

Canada’s official languages are English and French, and over 80% of Canadians can converse in English. As both countries also share a similar culture and history, cultural nuances won’t be misunderstood.

When English isn’t someone’s first language, you always risk important instructions being lost in translation. This won’t happen if you nearshore software development to Canada.

3. Lower Costs

The IT outsourcing model itself was born to help enterprises cut costs. While it’s no longer the primary driver of offshoring or nearshoring, it still carries a lot of weight.

When American companies outsource development to Canada, they will enjoy highly favorable currency exchange rates. With the Canadian dollar trading lower than the US dollar, development costs can be substantially lower. This means that your money can go much further in Canada than in the US.

4. Education

When it comes to the academic standards between the two countries, there’s hardly any difference. Some of the leading universities in the world like the University of Toronto are based in Canada and regularly produce STEM graduates.

As the government heavily invests in STEM education, you can also expect a steady stream of tech talent to hit the job market every year.

5. Mature Tech Industry

If you never thought Canada was a technology leader, think again. Cities like Montreal, Toronto, and Vancouver have thriving startup scenes that can go head to head with the best in Silicon Valley.

Some leading Canadian startups to keep an eye on:

  • Figure 1
  • Element AI
  • Hopper
  • Kindred
  • Thalmic Labs

Some tech giants that came out of Canada include Avigilon, Bench, and Hootsuite. Most of the startups and corporate tech giants based in Canada focus on AI, Business Intelligence, cybersecurity, eCommerce, FinTech, Software-as-a-Service (SaaS), and web technologies.

6. Wide and Diverse Talent Pool

Canada boasts a highly educated, skilled, and experienced workforce. As a result, whenever you outsource software development to the neighbor up north, you can count on unparalleled quality.

Canada has a healthy stock of back-end developers, front-end developers, full-stack developers, and web developers. When you consider the standard of living and the quality of life in the region, you can count on lower turnover than what you’ll find in countries like India or the Philippines.

7. Geographical Proximity

Geographical proximity means that you can fly to major Canadian cities within a matter of hours. In fact, you can go meet your development team and get back to base within the same day.

Because Canada is right next door, travel to and from Canadian cities will also be highly cost-effective. This makes it much easier to manage large and complex projects that might demand your occasional presence during the build.

8. Similarities in Law and Political Stability

Both Canada and the US share much more than language and culture. Local and national laws also have a lot in common. This makes it easier to ensure that trade secrets are protected.

Political stability will reduce your exposure to risk on long-term projects. It will also help ensure that projects are delivered on time and on budget.

9. The Influx of International Tech Talent

Ever since the Trump administration overhauled the H1-B work visa program, Canada quickly became a viable alternative for foreign-born tech talent.

Tech companies in the region have long relied on foreign workers to drive the industry forward, and with strong government support, it’s only going to get better.

So while America might be running out of tech talent, Canada continues to bring them in to augment an already thriving local talent pool. So whenever top tech talent is hard to find, it might serve you well to look north of the border.

To learn more about nearshoring your next software development project to Canada, contact our team.

IT Storyteller and Copywriter
Andrew's current undertaking is big data analytics and AI as well as digital design and branding. He is a contributor to various publications with the focus on emerging technology and digital marketing.