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.)