The ongoing job action by striking diplomats is threatening Canada's reputation as a destination for international students, a spokesperson for Canada’s colleges and universities says, and it could wind up costing the economy billions of dollars.

According to the president of the Association of Universities and Colleges of Canada, the ongoing labour dispute between the federal government and foreign service officers has led to a backlog of student visa applications.

"It’s a little bit like Amazon facing a strike just before Christmas," Paul Davidson told CTV’s Canada AM, suggesting that Canada is at risk of losing international students to the United States, Britain and Australia.

"Canada needs those students," he said, noting that people who come from abroad to study in Canada represent an approximately $8 billion contribution to Canada's economy.

"That's actually bigger than the export of softwood lumber," he said. "That $8 billion is not just tuition to universities. It's also the rent they pay, the groceries they buy and their families coming to visit them."

Davidson said the next six weeks are a crucial time for international students, with classes starting soon.

However, the dispute between Ottawa and foreign diplomats appears to have no end in sight.

About 150 of foreign service officers are on strike in the 15 largest immigration processing centres --including Beijing, New Delhi, Mexico City and London.

The Canadian Foreign Service has been without a contract since June 2011 and the union's 1,350 members have been in a legal strike position since April. The job action escalated earlier this week after an attempt to seek binding arbitration broke down.

The union representing the workers is seeking a wage adjustment to keep the pay of foreign service officer comparable with other federal employees, including lawyers, economists, policy analysts, and commerce officers, who perform the same work in Canada. The union says foreign service officers stationed overseas are paid $3,000 to $14,000 less per year.

The government, on the other hand, maintains that the highly sought-after jobs pay very well.

Treasury Board President Tony Clement, the government’s representative at the contract negotiations, said Tuesday: “We are looking at all our options, and that includes things that have not been done in the past."

Sources told CTV News that the government is considering outsourcing some diplomatic work at missions abroad, but Clement would not confirm or deny the reports.