A global IT solutions company is opening a nearshore facility in Montreal – its first in Canada – to complement a global service delivery network that includes India and the Philippines.

Avanade Canada is a subsidiary of Avanade Inc., which delivers IT solutions based on the Microsoft platform. Its Montreal node is part of the Americas Delivery Network (ADN), which includes two nodes in the U.S. The ADN is designed to deliver nearshore development and applications management outsourcing services; Montreal will offer 20 consultants this month and 50 by October.

“The IT community in Montreal is very well-educated and has very strong professional ethics and can effectively communicate in both official languages,” said Benoit Bertrand, solution delivery director with Mississauga, Ont.-based Avanade Canada, which has offices in Ottawa, Calgary, Edmonton and Vancouver.

Avanade already has offshore facilities in India and the Philippines. “What the offshore (facilities) did not provide to Canadian customers was the bilingual aspect,” he said. “It’s very important to be able to provide very effective services in both official languages, especially in the Quebec market or when you’re dealing with government customers.”

The Montreal node will focus on four service delivery capabilities: custom application development, enterprise integration, application management, and information worker enablement (such as business intelligence). It will offer multi-site delivery, 24-by-seven support and competitive pricing, he added.

Its consulting staff will work with customers to figure out their business requirements and come up with an appropriate solution. “We bring that work to the Montreal facility where we do the design, the development and even the deployment,” said Bertrand. “The customer can come over and supervise the work or interact with our consultants.” This helps to decrease costs, he added, because the development environment is already set up.

The Montreal node will service Canada, the U.S. and Europe. “It’s really turning Montreal toward the world as well – it’s not just looking at the Quebec market,” he said. But it will appeal to customers in different ways, he added. Some prefer to have some or all of their IT services provided by nearshore facilities, while for others it’s a language issue. “Not every customer we have is willing to send the work offshore for various reasons,” he said. “With the uptake we’re seeing (in our nearshore facilities), it’s something that was missing in our offering.”

The previous advantages over offshore are dissipating, though, as the Canadian dollar continues to climb or hover at its current rate, said Sebastien Ruest, vice-president of services research with IDC Canada. In the past, a nearshore facility was advantageous because the dollar was so low it was cost-competitive in comparison to other locations in North America.

“That’s sort of gone,” he said. “The advantage of having a global delivery (node) in Canada is really to be able to capture the North American opportunity, which is still very substantial.” Some 60 per cent of the work being done in Canada from a global delivery model comes from the U.S. There are also the traditional advantages of political stability, language availability and a pool of high-quality technical skills.

“(Nearshore facilities) are a hub on a metaphorical large spoke and they play a pivotal role,” said Ruest. “You get the low-cost providers in India and China, and then you’ve got the value-added providers in Canada, so it’s part of an integrated sourcing strategy.” Avanade’s Montreal node, for example, is positioned near SAP’s development centre, as well as Accenture, with which it has a strong alliance.

While customers want local flavour, they also want to cut costs. “You can’t have it both ways,” said Ruest. “If you only want to do it cheaper, then the model is to send it to an offshore facility or low-cost provider. If you want some transformation or value-add, then you need this hybrid model.”

Comment: info@itbusiness.ca

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