Offshoring and the IT worker—where are we?

July 21, 2013 - by: Gilda Villaran 0 COMMENTS

By Gilda Villaran

As we reported in May, Canada’s Temporary Foreign Worker Program (TFWP) has been under fire in recent months. The use of the TFWP to facilitate offshoring arrangements has received much attention from the prime minister, the minister of citizenship and immigration, and the media.

The immediate reaction of the government was to put a hold on all the Labour Market Opinion (LMO) applications that concerned information technology (IT) workers. Although the LMO-freezing measures have been relaxed, confusion remains.

Confusion begins

In May 2013, the government froze all LMO applications involving IT workers. This became an issue for employers using temporary foreign workers to facilitate eventual offshoring arrangements.

Soon thereafter, Service Canada, the federal entity that examines LMO applications, started sending a questionnaire to all employers asking for an LMO for an IT worker. The questionnaire asks whether the LMO application is for a worker who will facilitate “offshoring.” What is offshoring? It is defined as:

the relocation by a company of a business process from one country to another—typically an operation process, such as manufacturing, or supporting processes, such as accounting or IT services. More recently, offshoring has been associated primarily with technical and administrative services supporting domestic and global operations from outside the home country, by means of internal (captive) or external (outsourcing) delivery models.

Current landscape

So where does that leave employers wishing to engage in offshoring?

  1. If the offshoring involves jobs in areas other than IT, employers have no need to be concerned for now. So far, no policy changes have been made concerning offshoring of jobs except in information technology. This could change in the future, but, once again, for jobs in non-IT fields, LMOs are still being processed. No questions are asked on whether the hire of the foreign workers is related to a contract or subcontract that will (eventually) facilitate offshoring.
  2. Offshoring, either of IT processes or of other processes, can be put in place without ever using the TWFP. None of these processes are affected by the recent decision of the government to scrutinize LMO applications for IT workers. Canadian employers need work permits only if foreign workers are going to work in Canada. Usually, in an offshoring situation, these workers come to Canada only during a transition period (until the process is sent abroad). But if there is no transition period in Canada, offshoring can occur without ever having to make an LMO application and/or a work permit application.
  3. The only employers affected are the ones who acknowledge that the offer to a foreign worker is made in the context of a contractual arrangement that “will facilitate offshoring.” They are being asked several additional questions regarding the scope of the arrangement, its impact on Canadian workers, etc. These questions lead us to believe that all the circumstances of the arrangement will be taken into consideration before refusing the application. However, so far, these LMO applications are still on hold.
  4. To further complicate matters, not all work permits need an LMO. There are also LMO-exempted work permits. IT workers are also entitled to LMO-exempted work permits under certain circumstances:

a) Engineers (including computer and software engineers) and computer systems analysts are LMO-exempt under the North American Free Trade Agreement; and
b) There are LMO exemptions for employees being transferred within the same group of companies (intra-company transfers), either because they fill senior managerial positions or because they possess specialized knowledge (as long as certain conditions are met).

IT professionals aren’t excluded from these provisions. To date, we are unaware of any measures that would affect issuance of work permits to IT workers when they can benefit from an LMO exemption. So the offshoring transition period could be facilitated by using an LMO-exempted IT worker.

In addition to the above, we know there will be further developments when it comes to temporary foreign workers working in Canada to facilitate offshoring arrangements or otherwise. We are hopeful that any future measures will acknowledge that IT workers contribute to the Canadian economy and often fill knowledge or skills gaps. We will continue to keep you updated as the federal government makes further changes.

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