Shedding Light on the RBC Debacle

Thursday, April 18, 2013

RBC outsourcing
Royal Bank of Canada
The Royal Bank of Canada (RBC) debacle has brought outsourcing to a very negative light. A lot of Canadians are now cursing outsourcing as the bane of all evil and outsourcing practitioners is at a loss on how to pacify the angry citizens. One thing is for sure, though. The Canadians are angry that outsourcing is stealing their jobs away when in fact what happened was a lot of people jumping on the bandwagon to yet again pin something on outsourcing.

Before we delve deeper into the topic, let us talk about how this PR fiasco came about. The RBC is set to let 45 employees go at the end of April as it has outsourced its investor services division to outsourcing leader, iGate. Several iGate employees came to the RBC office to learn how the latter is operating in order to accurately transfer RBC's existing systems and business process to iGate's structure. These iGate employees entered Canada through the Temporary Foreign Worker Program (TFWP), which allows companies to bring foreigners into the country provided that the foreigners will not be taking jobs away from Canadians and that no Canadians are equipped with the proper competence with regard to the position's requirements.

Unfortunately, the presence of foreigners in RBC's facilities was translated as the bank giving away the local's positions. The transition process wherein iGate's employees are familiarizing themselves with RBC's processes was misconstrued as the bank asking employees to “train their replacements.” To make the matters worse, a lot of RBC's clients are threatening to close their accounts and boycott the bank for outsourcing.

Now would be the perfect time to explain that RBC and iGate has a longstanding relationship. In fact, there is an RBC Offshore Development Centre in Bangalore where the offshored posts would be transferred in the future. RBC was not selling its employees short, rather it was transferring some of its business processes and resources to a different supplier which happens to be iGate. It was not removing jobs from locals and giving them to foreigners. The foreigners were iGate's employees who entered the country by adhering to Canadian policies and regulations.

In the midst of all these controversies, Gord Nixon, RBC's CEO, apologized to the public. He mentioned how the firm is doing its best to find comparable job opportunities within the bank. In an interview with CBC, RBC representative Zabeen Hirji stipulated how 18 of the displaced employees are now given new roles within the company and how a small number of that figure independently pursued early retirements. Hirji also mentioned how the employees were given the help they needed to feel better about their skills and to help them get better positions in the future. Given these things, it is evident how much RBC wanted to do right by its employees.

In line with the mounting abuse outsourcing is getting from the public, iGate CEO Phaneesh Murthy finally spoke up. He said that he has always believed that outsourcing has helped economies and countries rather than hurt them. He adds that iGate is set to hire 400-500 jobs in Canada in the next 15-18 months, which is a guaranteed measure of growth for the Canadians. “Now, is that all good for the Canadian economy?” the CEO is quoted to have said. “I believe it is.”

With business process outsourcing, companies are given opportunities to grow. This growth is then reflected on the country's economy, which could only benefit from the additional revenue incurred by the business practice.

[Photo credit: Francisco Diez on Flickr.]