US software co Versata transferring lab from Bangalore to Halifax

U.S. software firm Versata transferring lab from Bangalore, India, to Halifax

By Keith Doucette Canadian Press Thursday, July 14, 2005

Halifax (CP) - An overheated information technology sector in India is behind a move by American software firm Versata Inc. to transfer its development lab from Bangalore to Halifax, eventually locating up to 85 jobs in Nova Scotia.

Brett Adam, Versatas' chief technology officer, said Thursday it is increasingly difficult to retain staff in Bangalore - the nucleus of India's thriving high-tech outsourcing industry. "We're an innovation company, we need sustaining relationships with our technologists," Adam said at a news conference announcing the move.

He said it was challenging to keep Indian workers on staff for more than nine months due to the number of rich job opportunities available to them.

Adam said the "post-bubble" environment of the technology sector in the United States, Australia and Canada is more stable than in some other countries.

Versata, with its head office in Oakland, Calif., currently has 75 employees worldwide, including 15 in Halifax. The workforce expansion in the Nova Scotia capital is expected to take place over seven years.

The company, which had revenues of $15.3 million in 2004, provides software systems for customers such as Bank of America, J.P. Morgan Chase and Merrill Lynch.

The Nova Scotia government will give Versata (Nasdaq:VATA) up to $2.5 million in payroll rebates over seven years if the company brings up to 85 new positions to Halifax.

The jobs are expected to pay an average of $75,000 annually.

Adams said the performance of its existing Halifax operation got company executives interested in a return to North America.

"The willingness to engage with a problem, to find a solution, was exactly the kind of aggressive, innovative mindset that we needed," said Adam.

He said it was difficult at times to foster that atbreastude in Versata's development organization in India.

While Adam was careful not to call the move symptomatic of a "precipitous change" in business atbreastudes toward outsourcing in India, the CEO of Nova Scotia's business development agency threw caution to the wind.

"I can guarantee you that this is a trend," said Stephen Lund of Nova Scotia Business Inc.

"There's a lot more coming and, to me, this is one of the biggest opportunities we have as a province in the next 10 years."

Lund said the information technology field has stabilized in North America and the challenge remained to convince young people that there will be plenty of high-paying jobs that will have to be filled in the future.

"We've got to make sure that we've got the workers for these companies that are going to look for Nova Scotia," he said.

Lund said the bolstering of operations in Halifax by firms like Versata and the California-based SupportSoft, is proof that firms are beginning to look to the province as a viable market for operations. A recent study by Deloitte & Touche found Canada ranked among the top five places in the world for communications providers to "offshore" call-centres and IT operations.

It also noted that although wage levels are much higher than in India or other emerging "ofshoring" countries, they are lower than in the U.S.

But Adam said that bottom-line costs are not all that matters to a company like Versata.

"The cost equation is not as different as one might expect at first blush," said Adam, who added it was only marginally cheaper for his company to operate in India.

He cited large cost overheads for management, travel and time-zone communication as factors in the company's decision to move to Nova Scotia.

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Atlantic Canada need to make big noise about this. It could be a ticket to a "have province".

Posted on 7-14-2005 by -=SuperSecretAgent=-

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