UPDATE: RBC outsource partner iGate has violated hiring laws before

Global IT outsourcing firm iGate conducts most of its business in India. Ottawa is looking into company filings submitted for foreign employees hired to handle some domestic outsourcing duties for RBC. Getty Images
[UPDATE: iGate Corp. has responded to requests for comment from Global News. Please see iGate’s response below the original article.]

Billing itself as a company who works with “mega-corporations” wanting to squeeze better results from outsourced business functions, iGate Corp. has had a steady customer in Royal Bank of Canada.

RBC, the country’s largest bank, is the target of popular scorn and political scrutiny because of the relationship and a possible plan to axe jobs currently held by internal RBC employees in favour of iGate workers.

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As part of its business philosophy, iGate’s founder and chief, Phaneesh Murthy, said in an interview with Forbes last year the outsourcing IT firm relied on overall authority – “carte blanche” rule – to manage its staffing and operations for clients.

It appears the company’s model also relies at least in part on the hiring of foreign temp workers, too.

“We were taking a … process, cutting the cost of that and giving you [the client] a large savings on that basis,” Murthy said.

This isn’t the first time iGate has been tied to controversial hiring practices.

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In 2008, the U.S. Department of Justice fined iGate, which at the time was based in Pittsburgh, for unlawfully discriminating against U.S. citizens who had applied for IT jobs. iGate was “expressly” hiring foreign workers with temporary visas.

In the settlement, the DoJ added that it also “requires iGate to train recruitment personnel” and that the department would continue to monitor the company.

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In Canada, the hiring of foreign temp workers to replace long-held domestic jobs at RBC could pose a similar violation of a government program to bring skilled workers from abroad, a statement from Diane Finley, the Minister of Human Resources and Skills Development, said.

“The purpose of the Temporary Foreign Worker Program is to fill acute labour needs when Canadians are not available for the work required. It was never intended as a means to bring in temporary foreign workers in order to replace already-employed Canadian workers,” a statement from Minister Finley said.

The minister’s department said it was determining its “next steps.”

RBC has said it has not hired temporary foreign workers to replace existing bank staff. Previous reports have suggested the bank planned to eliminate or offshore about 50 jobs related to investor services.

Still, legal experts suggested Monday that while the move might draw public ire, it didn’t appear offside with labour and immigration laws.

“It’s my understanding that it’s certainly not a violation,” Asiya Hirji, a lawyer at Mamann, Sandaluk & Kingwell, a Toronto immigration law firm said.

Normally, foreign nationals hired by Canadian companies have to attain a “labour market opinion (LMO)” from Human Resources and Skills Development Canada that validates the need for the service and why Canadians aren’t able to fill the role, as well as a visa.

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Alyson Queen, a spokeswoman for Minister Finley told Global News the iGate workers, numbering about 45 in all, had received LMO approvals from the department but those are now being scrutinized.

“An investigation is underway and HRSDC officials are currently reviewing the labour market opinions submitted by iGate in great detail, based on apparent discrepancies between RBC’s public statement and information which has previously been provided to the government.”

A request for comment from iGate was not responded to.

Beyond the current arrangement, RBC is an established client of the U.S. outsourcing firm.

In fact, in iGate’s U.S. regulatory filings, the company said RBC is it’s second-biggest customer, accounting for just over $100-million or 11 per cent of the company’s revenues in 2012.

The bank has been a client since at least 2010, according to the company’s 10-K filing.

“The services provided to RBC … primarily include consulting, independent verification and validation, application development and maintenance, infrastructure management, BPO and other related IT services,” filings said.

A statement from RBC’s chief procurement officer said the bank ensured all of its “suppliers” including iGate abided by applicable laws and regulations.

Other clients of of iGate include General Electric, automaker Honda as well as U.S. media giant Time Warner, according to the company’s website.

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With files from Laura Stone.

iGate’s Response:

Toronto, April 8TH, 2013 –This statement is in response to recent media reports about iGATE and its customer RBC. We would like to clarify that as a publicly listed company (NASDAQ: iGATE), iGATE brings a high level of integrity to its business practices. We are in compliance with the local laws of each of the countries where we operate, including Canada. We will fully cooperate with requests from the government for information on this matter.

Reiterating iGATE’s position, Jason Trussell, SVP and Regional Head, Canada said, “iGATE’s hiring practices are in full compliance with all Canadian laws. We provide end-to-end software and technology solutions to our clients in Canada and across 25 countries. As an employer in Canada, we were recently recognized in the Best Employer Survey, conducted by Aon-Hewitt in association with Queen’s University, for the Greater Toronto Area and Canada region.”

iGATE is a NASDAQ listed and U.S. headquartered company with over 28,000 professionals, working with several Fortune 1000 and Global 2000 companies on an outcomes-based global delivery model. In every country that we operate, we strictly adhere to all laws of the land and immigration policies.

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