Technology giants Microsoft Corp. (Nasdaq:MSFT), Amazon.com Inc. (Nasdaq:AMZN) and others are increasing their presence in Vancouver, hiring some of the city’s brightest technology workers and making it more difficult for others to recruit top local talent.
Adding to the recruitment challenge in the technology sector is organic growth at Vancouver-based technology companies such as Hootsuite and Avigilon Corp. (TSX:AVO).
Then there are the small Vancouver technology companies, which are expanding thanks to being recently bought by deep-pocketed new owners. Retail giant Staples Inc. (Nasdaq:SPLS) bought Vancouver’s PNI Digital Media in July while CA Technologies (Nasdaq:CA) bought Layer 7 last year.
So far no Vancouver companies are following Facebook (Nasdaq:FB) and Apple’s (Nasdaq:AAPL) tactic of offering young female employees the perk of freezing eggs to allow for later pregnancy in an effort to attract employees.
Instead, more local companies are outsourcing software development because they can’t find the calibre of workers they need to do in-house work.
“We could have tried to go through hiring and training, but we realized that because we were so busy doing so many other things, it made more sense for us to outsource the work,” nTrust chief experience officer Rod Hsu told Business in Vancouver.
NTrust historically had in-house software developers make internal software. Earlier this year, however, nTrust outsourced the work when it wanted to build a mobile payment application that would allow its customers to fill cloud-based bank accounts with money and then use cyber wallets embedded in their smartphones to buy everything from shoes to coffee at participating merchants.
“We needed the application done fast and effectively,” Hsu said.
His Vancouver-based company hired Optimus Information Inc., which is one of at least two local software companies that specialize in helping clients make proprietary internal software.
Optimus and Appnovation both do that work and have different operating models.
Optimus has 150 employees, including about 20 in Vancouver. Its local employees perform face-to-face work such as sketching technical specifics on a whiteboard in front of clients, explained CEO Pankaj Agarwal.
Optimus expects to increase its “millions” of dollars in annual revenue by about 50% this year and it just doubled the size of its Vancouver office by moving to a site on West 8th Avenue, Agarwal said.
Part of what drives profit is that much of Optimus’ software coding and testing is done by workers in India, where labour and lease costs are lower.
Appnovation’s niche, in contrast, is using open-source software that is publicly available. Its software developers take public-domain code and tweak it for clients such as Cisco Systems (Nasdaq:CSCO), Pfizer Inc. (NYSE:PFE) and the New York City Department of Transportation.
Some of Appnovation’s recent work was to build a digital publishing platform so Time Inc. could better store and manage its magazine archives.
“They wanted a global digital publishing platform with complex workflows and to be able to handle a lot of content,” Appnovation CEO Arnold Leung told BIV.
Leung recently opened a 63-
employee New Brunswick office – a move that was spurred in part by provincial government subsidies for locating in Saint John.
The company now has 17 staff in Montreal as well as 14 in a rapidly expanding U.K. division that also includes an office in suburban London.
“About 80% of our work is outside Canada,” Leung said.
The third option for technology companies to outsource is to use the global auction site oDesk.
Workers bid a rate per hour or a total amount to complete a task. The client company then pays the worker for the work.
Hsu said oDesk may work as a one-off solution or for a small task but that going to a company such as Optimus is better when a larger job needs to be done reliably on time and on budget.
“There were budget increases as the project went along but we were aware of it,” he said. “They were upfront in discussions and very reliable.”
