UPDATE 1-RBC CEO apologizes for controversy over outsourcing

Thu Apr 11, 2013 6:25pm EDT

TORONTO, April 11 (Reuters) - The head of Royal Bank of Canada apologized to employees on Thursday in a move to quell a media firestorm over the bank's plan to outsource jobs, and to assure Canadians that the nation's largest bank complies with labor regulations.

"I want to apologize to the employees affected by this outsourcing arrangement as we should have been more sensitive and helpful to them," RBC Chief Executive Gord Nixon said in an "Open Letter to Canadians" on Thursday.

RBC, which is also Canada's largest public company, has been heavily criticized following revelations of its relationship with U.S. outsourcing firm iGate and a report that iGate used temporary foreign worker visas as it worked to replace a few dozen staff at the bank's Toronto investor services division.

The bank said it trusted iGate to comply with local regulations, and iGate said in a statement to Reuters that its hiring practices were fully compliant with Canadian law.

But the revelations, in a report last week by the Canadian Broadcasting Corporation, triggered an investigation by the Conservative Government into the use of the visas.

Prime Minister Stephen Harper said on Thursday the purpose of the program was just to relieve acute and temporary labor shortages. With RBC's actions raising concerns that the program was being used to replace Canadian employees with foreign workers, Harper said the government would ensure the program would not be abused.

"The reality is in this country ... there are occupations and there are circumstances where there is an absolute labor shortage and certain employers need to find workers from outside the country," Harper told reporters at an appearance in Calgary, Alberta. "But this is not supposed to have a purpose beyond that and we will make sure it is not used for purposes beyond that."

The report sparked outrage in social media sites such as Twitter and Facebook over the bank's plan to outsource work to California-based iGate, which operates mainly in India.

In the letter, Nixon said the bank has complied with regulations and that affected employees would be offered comparable job opportunities within the bank.

"We are reviewing our supplier arrangements and policies with continued focus on Canadian jobs and prosperity," he said, adding that the bank's Canadian client call centers would remain in Canada. He said RBC employs over 57,000 in Canada.

While the bank's reputation may have taken a hit this week, its share price remained steadfast on the week, adding 3 percent over the past four sessions.