Royal Bank releases supplier code of conduct after outsourcing backlash

TORONTO – The Royal Bank (TSX:RY), which faced a fierce backlash earlier this year over an outsourcing arrangement involving the use of temporary foreign workers, said Friday it won’t send work offshore just to save on salaries.

The bank, which released a new supplier code of conduct, said it will only send work to offshore suppliers when their scale, technology or knowledge provides capabilities the bank cannot duplicate.

“For example, RBC’s Canadian client call centres are located in Canada, supporting RBC’s domestic and U.S. business, and they will remain in Canada despite the trend in many industries to offshore them,” the bank said in a statement.

The supplier code of conduct was part of a package of promises made by RBC chief executive Gord Nixon in April following a controversy over the bank’s decision to outsource the work of about 45 employees to iGate, which used the temporary foreign worker program.

IGate brought its own employees into Canada under the federal program so they could be trained for the services they would be providing to Royal Bank.

The bank’s new supplier code says its suppliers adhere to human rights, labour and employment standards legislation.

It also says suppliers must not hire foreign workers from outside of Canada when performing services on behalf of RBC when a worker eligible to work in Canada is available.

The United Steelworkers union said it welcomed the decision.

“Public pressure and solid campaigning by the labour movement on the corporate abuse of the temporary foreign worker program has led RBC to make these changes to its supplier code,” said Ken Neumann, USW national director.

“This action by RBC should be a strong message to all employers who exploit temporary foreign workers or try to use the program as a source of cheap labour,” added Stephen Hunt, USW Western Canada director.

“Now it’s time for our federal and provincial governments to abandon their low-wage strategy and require all corporations to follow suit. We will continue to press for meaningful reform.”

The controversy over the temporary foreign workers program spilled over into the political arena, prompting federal Human Resources Minister Diane Finley to ask officials to review documents submitted by iGate after apparent discrepancies appeared between public statements made by RBC and information previously provided to the government by iGate.

Last month, the government announced changes to the program, including an end to a rule that allowed businesses to pay foreign workers up to 15 per cent below average wages for a job.

The Conservatives also put a hold on a program that fast-tracked the ability of some companies to bring in workers from outside Canada through what’s known as an accelerated labour market opinion.

In 2012, some 213,516 people entered Canada via the temporary foreign worker program, more than three times the number admitted a decade ago.