MapleWorks is beginning to feel an easing of the effects of the recession through renewed interest in outsourcing.

Several prospects have begun to realize that they can no longer stand on the sidelines of product development and succeed in 2010.  At the same time, they lack confidence that the economy has stabilized and still have concerns about cash availability.

Since they are at this crossroads, they have chosen to engage MapleWorks rather than hire full time staff to work on new product innovation. This way, they get the best of both worlds – MapleWorks’ expertise and experience, without the liability of full time staff.  They can also reduce their need to use cash reserves for capital equipment.

Examples of these exciting new opportunities for MapleWorks include developing an element management system for a video server, developing a voice distribution system for a cloud voice over internet protocol (VoIP) supplier, porting an enterprise application to iPod and Android smartphones, and a peer-to-peer communication system for remote monitoring.

Generally, the high tech market remains soft with no specific signs that things will improve in the near future. In the WSJ Venture Capital Dispatch on July 8, 2009, it was reported that venture capital funding plunged 63% ($5.1 billion) in the first half of 2009 as compared to the first half of 2008 ($13.6 billion). Across all asset classes, the amount of capital raised was down 64% in the first half of 2009 from the same period a year earlier. The inability to raise additional funding, has slowed the flow of funds into both new and existing companies.

There was one bright spot on the horizon as reported in the MHT on July 18, 2009. The second quarter of 2009 appeared to mark a turnaround for venture capital investing, as total dollars invested in venture-backed companies increased over the previous quarter for the first time since Q2, 2008, according to numbers released Saturday by Dow Jones VentureSource.

Nationwide, across all sectors, venture-backed companies took in $5.3 billion in Q2, 2009, spread across 595 funding deals, the financial tracking organization reported. The total dollars represented a 31.7 percent increase over Q1’s dismal $4 billion invested – the greatest Q2 over Q1 increase in the past five years.  Nationally, numbers remained down compared to last year’s second quarter, according to VentureSource.  Overall venture dollars invested dropped 36.7 percent, to $5.3 billion.  IT investment dropped 41.4 percent, to $1.9 billion.  Healthcare investment fell 14.3 percent, to $2.2 billion, and renewable energy investment dropped 75.4 percent, to $220.6 million, quarter over quarter.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)

The argument for BPO offshore outsourcing may hold water, but it does not apply when it comes to finding a partner to create innovative software products. The real costs of offshore can be found not in the unit labor costs, but in the cost of ownership associated with doing business offshore. There are the obvious ones such as the cost of travel, the cost of communication, and the cost processing H1B visas. The real costs are associated with having inexperienced people with a non- North American development culture attempting to meet the innovative demands of new software products that will meet market demand and enable a profitable business.

Start with the fact that only in North America do developers work in an iterative way with the marketing department to develop a product that meets the demands of the customer base. Going offshore means you are with an inexperienced work force that only knows how to build to specification. No room for deviation or creativity. Products just don’t get developed that way in the US, so the resulting build to spec product has to be built over and over again until finally it is market ready.

Compound this problem with the fact that the people building the product are unfamiliar with the technology and the problem becomes even more severe. Not to mention the fact that the people that started on the project probably are not the ones that are working on it when it is finished, since employee turnover can reach 40%-50% per year in many offshore locations. Oh by the way, did I mention that the language is different, and since the time zones are totally out of synch, there is limited real time communication to keep things on track. Then there is the management issue. Since you are dealing with an inexperienced development team thousands of miles and many time zones away, you need to dedicate staff to managing the team. Also, that manager must spend a lot of time in the foreign country, away from home and family, not doing much for employee morale back home. Hopefully, once the product does get built, your intellectual property will not get stolen and find its way to a position on the shelf next to yours at a fraction of the price.

Unit labor costs of doing business offshore is certainly lest than doing development onshore. But you get what you pay for, which are a big migraine and not much more.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development. He posted the above blog as a response at http://www.trybpo.com/offshore-vs-onshore-outsourcing-pros-and-cons/)

(Please welcome Krys Pritchard as our guest blogger this month.)

Where are the technical writing jobs? They aren’t in Ottawa. From what others in the field are telling me, the tech writing jobs aren’t in Seattle or Dallas-Fort Worth or the Silicon Valley or points in between. From the beginning of April through the end of June, there were four positions for technical writers advertised on workopolis.com in Ottawa. I know five senior technical writers who are looking for work. Not one of them landed one of those jobs. Only one of the five has a casual job, she is pouring concrete lawn ornaments. From words to concrete, that’s quite a career change.

The reality of being self-employed
Many technical writers, like others in the writing field, are self-employed. Self-employed people who are without work do not draw employment insurance benefits and are not counted in unemployment statistics. These non-working self-employed people also do not qualify for government-funded retraining programs. Non-working self-employed people are not dining out, having their clothes dry cleaned, picking up a loaf of bread at the bakery, going on vacations, or buying new cars, electronics, or houses. More jobs are affected by offshoring than those directly made redundant.

Business owners don’t blame the self-employed for a dip in your monthly or annual revenues; cast the blame where it belongs: managers at those companies that wanted to please their stockholders by reducing costs, regardless of the price to North American workers and the North American economy. When management started to view employees as “bodies warming chairs,” often the first body to be given a pink slip (or in some cases, sent an email that the person’s services were no longer needed), was the one that the manager perceived as contributing the least value to the project—often the technical writer.

These managers “discovered and exploited” the labor markets in low-cost nations to cut labor costs. The managers of a Canadian flagship company were so good at reducing costs through offshore outsourcing, the company shall soon be no more; stockholders will not receive any financial rewards from misguided decision to take jobs to China or India; and the labor pool of skilled and talented people available in Ottawa will grow. But where are the jobs for these talented people? IBM recently initiated a program called “Project Match” for its redundant North American workers to relocate to in India, China, and Brazil (http://www.informationweek.com/news/global-cio/outsourcing/showArticle.jhtml?articleID=213000389) has drawn heavy criticism in the business world. Employees who accepted this offer would work for the reduced wages in the lower-cost countries. Not to mention the difficulty to return to North America if they lost their newfound jobs.

© Copyright 2009 K. Prichard and Capital Writing Services. All Rights Reserved

Capital Writing Services is located in the Ottawa area. To contact CWS, E-mail cws@ripnet.com.

About the blogger: Krys Prichard, President, Capital Writing Services, has 20 years’ experience in the technical and business communications fields.

By Paul Gasparro

Two feet (9.44 cm) of snow fell in Denver over the weekend. I called my contact to ask if we should reschedule our Tuesday meeting.  He told me “don’t worry be happy” it will melt before you arrive. By the time I got there the snow was gone and the temperature was 75 F (22 C) and sunny. On Monday the Dow Jones fell 300 points because people thought that the BoA results were too good. On Tuesday it rose over 120 points beause Geitner told Wall Street “don’t worry, be happy” the banks are strong. Things change very fast in the world today. Part of the reason for the change is attitude. Read the Secret by Rhonda Byrne.

Many people are talking about the demise of the Venture Capital industry. In fact, investments in the first quarter($3.9B)in the US were 50% lower than in the first quarter in 2008. However when you look for the silver lining it actually exists. Scott Austin of VentureWire Alert does find it.  In the April 21 edition of Venture Dispatch he makes 3 excellent points about the recent quarter. First, the percentage of investment money going into startups has remained relatively constant (39%) since 2002. Second, not all regions of the country have been hit hard.  In fact, New England was down only 15%. Finally, the VC’s are flushed with cash having raised $24.7B in 2008, which has to be put to work.

So as the saying goes “don’t worry be happy”. The high tech industry will soon be vibrant again and  you will begin to turn on your product development faucet. When that happens, you can be sure that MapleWorks will be ready to support your needs. We have been using this economic slump to build cash reserves and strengthen our staff. We are in a position to turn on as fast as you need us.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)

by Dawn McGee

For anyone who had the opportunity to read my latest newsletter, you’ve already seen this title, but let me take a moment to expand upon it. It is springtime in New England, so there is a sense of rebirth in the air already, and maybe you’re thinking that I took my exuberance too far.

I was wondering the same thing. Really though, it does feel like there is a small sense of relief in the high tech community, even if it’s not necessarily right here in the Northeast. Normally, there is a regional nature to business, particularly in high tech. However, over the past year or so, everyone has been sharing the same sense of doom. Lately, though, the daily alerts that I’ve been receiving from Venture Deal have been strongly pointing to a resurgence of funding for California companies.

So that’s one data point. As I surfed a little more, I found that Cisco is buying up companies again. They just purchased Tidal Software and Pure Digital Technologies. I also found that VC firms based in the San Francisco Bay area are reporting more confidence again. Lastly, to bolster a general sense that the banking world will survive, Wells Fargo reported a record quarterly profit, giving some hope that the deterioriation in the financial sector is slowing if not outright reversing.

Am I making a mountain out of a molehill? Who can really say for sure? What I know is this – if the world is going to continue turning and businesses are going to continue running, innovation will also continue to occur and software projects will still need to be architected and developed. For me, at least, this speaks well of our future.

Dawn McGee is a Business Development Manager for MapleWorks – the smart choice for onshore software development.

By Paul Gasparro

When someone asks Bert Hill of the Ottawa Citizen, “why Canada?”, his answer is simple, “a highly-educated workforce, R&D tax credits that cut up to 70 per cent (of the cost of ) developing technology, and backed by the world’s soundest banking system.”

Canada always comes out on top of any survey for outsourcing when evaluated for language, infrastructure, culture, education, security, etc. just take a look at the recent Gartner report. The only place it does not excel is in labor costs.

The economy is almost in a freefall and governments are in a rush to put money into the economy to create jobs. Canada is ahead of the game with Scientific Research and Experimental Development (SR&ED), Industrial Research Assistance Program (IRAP), Quebec’s eBusiness, etc. IP incentive programs. These benefits are being passed onto US customers in the form of reduced costs, with the result being that Canada now leads in total cost of ownership

In a research report published by Black Book Research and Brown-Wilson Group, ranking the safest countries in the world to do outsourcing—India ranked in the bottom ten, Canada, the top ten.

Talking to a prospect the other day, he said he really was not interested in the price, he was interested in expertise. I AGREED. I told him MapleWorks engineers have an average of 15 years experience with all of our DNA in network communications—HE AGREED.

The economy has placed ever more pressure on companies to save money while avoiding risks. Offshoring is adventurous and risky. Onshoring (MapleWorks) offers services that provide an innovative, high quality solution on time, without the geopolitical risks of offshoring and at significantly lower cost than US development.

It is hard to believe anyone that says they have not been impacted by the downturn.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)

By Paul Gasparro

The economic downturn in the U.S. has hit every industry including high tech. Sun Microsystems (18% of workforce), Teradyne (5% of workforce), National Semiconductor (330 people), and Applied Materials (1,800 people). The list goes on in the telecom ecosystem that MapleWorks is part of. Gigaom identified dramatic cuts at Nokia (600), Motorola (3,000), and Nortel (10% of its work force).

In spite of the layoffs, tech companies are under pressure to get products to market with reduced staffs. How does the CEO address this issue? The answer is not to nibble at the problem, but to take drastic actions. The aggressive action will create an environment of rethinking the going forward model. So instead of cutting 10% or even 20%, set a plan to cut by 30% or 40%.

With this plan in place, the next move is to take advantage of Canada’s excellent telecom R&D skills and cost advantages. Working with MapleWorks Technology gives you access to the best development resources available in the world (see Larry Dignan’s report on Gartner findings) at a cost reduction of up to 40% from the US resources, and on the same continent.

An experienced engineer in the US will cost a company about $200K (salary, benefits, overhead) annually. This means that a staff of 20 represents a $4M fixed expense. The company could reduce the staff by 75%, and add 15 people in Canada at a cost of about $90K per person annually. The new expense rate will be $2.4M, or about 40% less. The quality and efficiency of the staff will not suffer. Future staff additions can be made at MapleWorks without losing a beat from the development perspective, and without investing in the capital associated with typical US hiring.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)

Private companies are also feeling the hatchet. The October 21, 2008 edition of VentureWire Alert identified a whole batch of layoffs. Online video company Heavy Inc.cut 14% of its staff, online wiki provider Wikia Inc. has laid off about than 10% of its staff in a “restructuring,” and other companies to announce layoffs in recent days include Hi5 Networks Inc., Pandora Media Inc., SearchMe Inc., Zillow.com, Zivity Inc., AdBrite Inc., Jive Software Inc., Redfin Corp., and Seesmic Inc. These companies are under pressure to reduce burn rates and preserve cash. The prospects of getting more are poor.

The pressure is being applied as Venture Capitalists are being pressured by their limited partners to conserve cash. These limited partners are in many cases forced to rethink their high risk investment strategy as their portfolios dwindle with the sinking of the stock markets. Hence they are hedging on their commitments to fund the VC’s, or in some extreme cases trying to recover previously committed funds. VCs have adopted a combat field position. Save the bleeding companies with a reasonable chance of survival, let the dying companies die, and let the walking wounded stay in pain. This philosophy was best articulated at a Sequoia Capital at a now well-documented meeting with all its portfolio companies on Oct. 7 to warn them that the “good times” were over.

On-shore Versus Offshore Outsourcing – Canada’s on the Ball with Top Rating – Better than India

By Paul Gasparro

ZDNet’s Larry Digman covered a report on October 16th rating countries around the globe for off-shore outsourcing. The rating was based on a series of 10 metrics ranging from Language skills and Labor Pool, to Cultural Compatibility and IP Security. Canada was overall far and above any other location, including India. The only two areas that Canada did not rate Very Good or Excellent was Government Support and Cost.

In the case of Government Support, I do not believe that Gartner understands the depth and breadth of Canada’s Scientific Research and Experimental Development (SR&ED) program. This program provides cash and tax incentives for the development of intellectual property (IP) in Canada.

I believe, particularly with the improvements in size of the grants, and administration of the claims, that the SR&ED program is very good. Certainly it could be improved, but it does serve to encourage the development of IP, and hence serves to provide an incentive for companies like MapleWorks to do outsourcing development work in Canada.

As far as cost, you get what you pay for. Doing nearshore outsourcing development in Canada means doing it once, not two or three times. Even if the cost of labor is higher (yet significantly lower than the U.S.), the efficiency and effectiveness of the development team means net cost is lower. In addition to improved development efficiency, the labor pool is very experienced and does not require extensive management by the home team. So overhead is reduced.

It is worth looking at the Gartner charts and drawing your own conclusions. I believe you will reach the same one that I share. Canada trumps all for your next outsourcing project, and MapleWorks trumps all in North America as the choice for your next outsourced network communications project. Contact us and let’s discuss your plans.

(Paul Gasparro is Co-founder and Vice President of Business Development for MapleWorks – the smart choice for on-shore software development.)