I am a little stunned. The CBC - who rakes the banks over the coals for offshoring - hasn't said a peep about this ? Let me check....
It is laundered through IT service contractors (like IBM) who bid on the work. There is always a local team which interacts with the government people and does some of the work but a large chunk of the work is done in India. Pick any government IT project done in the last 10 years and I would bet offshore workers are involved.
Keep in mind government officials are often faced with a choice of do nothing or offshore. There is rarely budget for a complete onshore team but a few really sensitive DOD or CRA projects might qualify for that kind of money.
Lastly, there is a huge difference between firing in house workers so their jobs can be done offshore which is what the banks did and hiring an IT services company to complete a project with offshore labour.