You may have already heard or read about the controversy surrounding RBC’s decision to outsource technology jobs to an Indian firm.
I must admit that when I read the article I thought to myself, why are they only speaking of these 45 jobs? As a technologist I have seen may “organizational redevelopments” as they are called, and I do see why RBC and hundreds of other employers would be looking at outsourcing certain jobs.
While I was abroad a few years ago, I met a Canadian from Vancouver who started his own company that manages online medical records for Americans. He needed to develop several applications and was considering using offshore workers.
He had looked at three different countries for software developers, here’s what he found to be the cost of a developer:
- Canadian: $65,000
- Argentinian: $17,500
- Indian: $7,000
He explained that he couldn’t afford the $65k for a local developer and the India based ones didn’t deliver the kind of quality he was looking for.
He decided to use Argentinian coders as a middle of the road solution and ended up basing his whole operation in the country!
Related: How Did You Choose Your Career?
Without employing people in a country with lower wages and a lower cost of living, he never would have gotten his company off the ground. Since his company is based in Canada, he pays corporate taxes in Canada which then benefits the country.
Jobs are mobile
The fact is, many technology jobs are mobile and can be done from just about anywhere. Reforms to the Temporary Foreign Worker Program may limit some of the losses, but the trend will continue.
Companies are in business to make a profit, so they will take advantage of any legal way to increase their profits.
Since a computer is a computer no matter where you go, the technical skills someone learns in Canada are identical to those taught in other countries.
So if certain technology jobs are the same in Canada as they are in India, then the jobs will go to the county with the cheapest labour due to cost.
Related: Is A Long Commute Destroying Your Job Satisfaction?
However, if Canadian employers need special skill sets that are only available in Canada, then employers will pay a premium and hire Canadians to fill these roles.
Companies can’t offshore everything
Some technology jobs are much more suitable to outsourcing than others, with expertise playing a big factor. A company might be able to offshore a 1st level support role but would have great difficulty with a highly skilled Network Architect role.
There is another major factor to consider when it comes to outsourcing jobs; soft skills. Giving presentations, writing management level reports, and managing people are all tasks that are best carried out by people locally.
When I was in college and learning about networking, coding and system administration, I didn’t care much for my mandatory arts classes. I just wanted to bang away on the keyboard.
Isn’t it interesting that many years later, the arts classes are the ones that help protect a job from getting off-shored?
A book I read recently, 23 Things They Don’t Tell You About Capitalism has a great chapter on the effects of immigration on jobs and wages.
What to do if you are concerned about your job
For those that feel their jobs could be at risk of getting outsourced, here are a few things you can do.
1) Build relationships
I heard an updated version of an old saying, “it’s not what you know, it’s who knows what you know”. Not only should you build lots of relationships with people that can potentially help get you a job, but you should also make sure they understand the skill set that you have.
Building relationships takes time, simply attending a couple of networking events isn’t going to cut it.
2) Differentiate your skill set
A larger skill set makes you more valuable and difficult to replace. In the technology world, if you’ve only ever worked with Windows, learn and master Unix!
Even if your job does get off-shored you can use your new found skills to get another job. You will also differentiate yourself from other local candidates.
Remember that employers look for well-rounded employees; knowing a different language, having hobbies and being in good health are advantages too.
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3) Get closer to the business
It’s easy to outsource a back office job that is far removed from the actual running of the business. By moving closer to the front office staff in a consulting role, your job will be more secure.
Companies don’t want to offshore critical parts of their business or those that work closest with them.
Remember, outsourcing isn’t going to go away, it is a fact of life in today’s modern world. This cycle has happened before and will happen again in the future, just try to keep up!
Andrew Martin is a Canadian personal finance and investing blogger who recently moved to London, England. He has a background in technology and a passion for travel. His blog, She Thinks I’m Cheap aims to help Canadians build wealth by sharing facts, stories and advice.
When you start your career your financial priorities revolve around the present – paying off student loans, buying a house, your next vacation.
You completed the company pension forms because they were part of your new employee documents package. You opened an RRSP account because someone told you it was a good idea – and you received a good tax refund each year.
Retirement is a far off idea – you’re interested in living life to the max now.
As you get older you start formulating your wish list. Most financial plans focus on accumulating sufficient money to retire on, but have you actually thought about what your retirement life would be like?
What will you do In Retirement?
Travel is high on the list for many people.
- Cruise around the world.
- Tour all the interesting countries you see on the travel programs.
- Visit your homeland and reconnect with extended family.
- Buy an RV or motorcycle, and drive from one coast to the other.
My friend Gloria has travelled to New Zealand, China and Africa with her Seniors Club travel group and finally has the time to spend 6 weeks to 3 months to explore countries she’s interested in.
Related: How This Couple Spends Their Retirement Travelling
Others would rather stay close to home and spend more time with their spouse and family.
Pursuing hobbies is another common desire – golf, fishing, gardening, photography, and woodworking, to name a few. You can rekindle an old interest – or try something new.
Some people want to help worthy causes – volunteering in far off countries, or in their own communities.
Others would like to keep working – especially part-time – for extra income, to fund their hobbies and travel, for the social aspect, and to keep busy. You could turn a hobby into a small business.
- Stan goes to garage/estate sales and flea markets looking for collectibles to resell.
- Evelyn designs wire-sculpted jewelry to sell at the consignment store she works in.
- Roger enjoyed his previous job and keeps his hand in by consulting occasionally.
Where will you live?
We Canadians like to dream of living somewhere away from snow – or at least someplace warm for the winter. There are many ex-pats living in such countries as Mexico, Costa Rica, Ecuador, Italy and the Southern United States, either year round or just in the winter months.
Related: Snowbirds – What You Need To Know
A common wish is for a place close to the beach or a waterfront property (lake or ocean).
Many retirees purchase a smaller downtown condo to be closer to the arts and cultural events.
Some people expect to stay in their family home for as long as possible to be with close friends and good neighbours, and pursue community activities.
Think ahead
You may think how wonderful life would be once the 9 to 5 grind was behind you – you can sleep in, not have to dress up every day or commute in bad weather. If you say all you want to do is relax you will quickly become bored by not having anything to look forward to each day.
An astounding 40% of retirees are disenchanted with retirement and say they were happier when they were working.
While I can definitely waste my time with the best of them, I do better when I have plans and some structure to my day.
Related: Create A Retirement Income Plan
People have a better chance of living a long and happy retirement if they plan and set goals for things they want to accomplish instead of aimlessly puttering around and getting up every day for the next 30+ years and doing it all over again.
Don’t be like this person – When a retiree was asked what advice he could give to someone just retiring, he replied, “Don’t go to the bank and the post office the same day.”
Be realistic
I always wanted to live on an acreage with a small herd of alpacas, a couple of those funny smiling New Zealand pigs and a few chickens. This puzzles my husband because we are both city born and bred with absolutely no experience with farm animals (plus I’m a little bit afraid of chickens).
While retirement is a great time to re-invent yourself you still need to be realistic. Try the things you think you want to do ahead of time.
- Rent an RV for your next trip and see if it’s a good fit for you.
- If you want to move abroad, on your next visit do some of the things you’d do if you lived there rather than just lounging on the beach with a fruity cocktail.
Final thoughts
Everyone prepares financially for retirement and preparing for the life that will be lived is an important piece of the puzzle. What are your priorities? How do you make yourself useful?
Related: Our Retirement Philosophy – Lock It Away Until You Need It
“How am I going to have enough time to do everything I want?” should be the question you face, not “What am I going to do with my days?”
With some planning you won’t have that problem.
What is your dream retirement?
Where will you be? What will you do? When will you do it?
Are you on track to reach your dreams?
If you are already retired, is it what you envisioned?
Whether you’re buying a home or looking to renew your mortgage, you’ll need to choose between a fixed or variable rate mortgage. That choice has become more difficult lately as the spread narrows between fixed and variable rates.
Ever since prime rate bottomed out at 2.25% back in April 2009 most of us predicted interest rates would return to historical levels as the economy recovered.
Related: My Biggest Home Buying Regret Was Getting In Over My Head
Indeed, by September 2010 prime rate inched up 75 basis points to 3%. But we haven’t had a rate increase since, and, with the global economy sputtering along, it doesn’t look like that will change anytime soon.
Interest Rates Expected To Rise: But When?
When I wrote 20 simple steps to improve your finances back in December 2010, my first ‘step’ was to switch to a variable interest rate mortgage.
The first comment agreed with the list, but echoed what many others were saying about mortgage rates at the time:
“Interest rates in Canada are due to rise with most experts believing they will go up 1-2% over the next year. Locking into a 5-year fixed term now is the smarter way to go.”
I believe that you’ll save money when you take either the 5-year closed variable rate mortgage, or the 1-year fixed rate mortgage, whichever is cheaper.
We bought a new house in August, 2011 and I put my money where my mouth is by taking out a 5-year closed variable rate at 2.2%.
Related: More Hinting At An Interest Rate Hike
Best mortgage rates
Okay, so that’s great for me but what if you’re looking for a mortgage today? Here’s a chart that compares the best mortgage rates in the country as of April 12th, 2013:
| Term | Interest rate |
| 5-year variable | 2.50% |
| 1-year fixed | 2.39% |
| 2-year fixed | 2.49% |
| 3-year fixed | 2.54% |
| 4-year fixed | 2.77% |
| 5-year fixed | 2.79% |
| 10-year fixed | 3.62% |
*Source: LowestRates.ca – Compare mortgage rates in Canada
The difference between most 5-year fixed rates and 5-year variable rates is less than 0.5%. Interest rates are so low that it’s hard to go wrong with any of these terms, but you’ll want to look beyond the rate and consider all the features you’ll need with a mortgage.
BMO’s controversial 2.99% ‘no-frills’ mortgage came with a few restrictions, like a limit to how much you can pre-pay or increase your monthly payments.
There are fully featured mortgage products available at these rates, so it’s best to do your research.
Fixed or Variable Rate Mortgage?
I stand my belief that you’ll save money with the better of the 5-year variable rate or the 1-year fixed rate mortgage. Today, that means taking the 1-year fixed rate.
Related: Pros And Cons Of Going Short With Your Mortgage
You’ll pay $7,039 in interest at 2.39% for one year on a $300,000 mortgage. Compare that to the 5-year fixed at 2.79% and you’ll pay interest of $8,216 in the first year. That’s nearly $1,200 in savings!
Then, when it’s time to renew in a year, you can take another 1-year fixed or watch for a really good discount off the 5-year variable rate (prime minus 0.75% or better).
Final thoughts
Banks and brokers are always screaming for you to ‘lock in’ now before rates go up. That’s because banks make more money on 5-year fixed rates and they use the fear of rising rates to scare you into locking in to a longer term.
Related: Why I Don’t Use A Mortgage Broker
Do you think your bank would be lending you money at 3% for five years if they thought they’d have to borrow at a higher rate in a few years? The banks are rarely on the losing side of a deal.
In Moshe Milevsky’s popular study, “Mortgage Financing: Floating Your Way To Prosperity”, it’s noted that:
“Canadians who can accurately predict the next move of the Bank of Canada – and decide to “lock in” their mortgage when the short rate is about to increase – are worse off on average, compared to those who float over the entire interest rate cycle.
This is due to the fact that in order to properly time the mortgage “lock in” market one requires an ability to predict movements on both short and long term points on the yield curve, which is a skill that even the Governor of the Bank of Canada is unlikely to possess.”
What do you think? Should you get a fixed or variable rate mortgage today?