Momentum boasts 130 workers in country's capital.

By Glenn Drexhage, Business in Vancouver.

September 30, 2003 - VANCOUVER, BC - Skilled technology workers on the other side of the world are boosting business for a fledgling local firm. Vancouver's Momentum Technologies Inc. has benefited from the emergence of India as a global outsourcing powerhouse.

Momentum has eight local employees and four others at offices in Calgary and Seattle. Meanwhile, it maintains about 130 employees at its software development facility in Noida, a suburb of Indian capital New Delhi. Momentum provides outsourcing services for tech companies and information-technology departments in areas such as finance and manufacturing. The Indian facility focuses on software development, while areas such as customer relations and project management are handled locally.

Since its 1999 inception, Momentum's revenues have grown by about 30 per cent on an annual basis, said founder and CEO Pankaj Agarwal. The company, which includes financial services giant Citigroup as a strategic investor, is also profitable. Agarwal, 35, said current revenues are in the range of a few million dollars, adding that he expects that figure to grow to between $5 million and $6 million within a year. He's hoping to hit revenues of $10 million within three years. Agarwal predicts that the Noida facility could grow to 200 employees within a year. He also anticipates hiring up to five more staffers at the Vancouver office in six to 12 months.  Agarwal said his firm has worked with more than 50 clients from Canada and the U.S. Local customers include London Drugs and Teekay Shipping Corp. After receiving degrees from the Indian Institute of Technology and the Indian Institute of Management, Agarwal joined Wipro Technologies, a major Indian outsourcing company. In 1999, he set up Momentum Technologies in India and relocated to Vancouver the following year.

Agarwal had visited here previously and liked the setting and the tech community. "If you want to do business on the West Coast, it's a good place to be," he said.

India's status as a world-leading outsourcing centre has been underlined by an educated, English-speaking workforce. Agarwal estimates that Momentum customers can expect cost savings between 30 per cent and 40 per cent as a result of outsourced development strategies. He said that on average, Indian salaries are 40 per cent to 45 per cent lower compared to local wages. However, he said that there were other benefits. "It's not just a cost issue. It's also a question of whether I can ramp up and can I get work of good quality."

Class Software Solutions Ltd. is one client that's been pleased. The Burnaby firm first entered a pilot project with Momentum about two and a half years ago.  "We've basically expanded the ways in which we use them to the point today where they are considered a full development partner, with their resources getting used in the same way that we assign work to internal staff," said Michael Nienhuis, vice-president, operations at Class Software. Nienhuis said his firm has about 20 in-house developers who work in conjunction with about 10 others at Momentum's Indian facility. About five more should be added to the Indian team at the end of October. He lauded the company's recent achievement of the highest rating for software development from the Software Engineering Institute in the U.S. "There's very, very few companies, obviously, that ever get to that level," Nienhuis said. "It indicates significant competency, no question."

As the outsourcing market continues to expand, some have been concerned about the impact on tech jobs in North America. However, Jason Bremner, director, outsourcing services for research firm IDC Canada Ltd. in Toronto, said this was not yet a big issue in Canada. Still, others are adapting. "There's no question that we're seeing a fair number of Indian companies going after business here," said Grant Gisel, president and CEO of Vancouver's Sierra Systems Group Inc. Sierra offers systems integration services, of which software development is a part. Gisel said that Sierra has worked with Indian partner Nucleus Software on some projects for about the past two years. Gisel expects the outsourcing market to keep growing. "Everybody's looking to get the best, cost-effective solution so that's going to be a part of it," he said. "To some extent that's competition, but...if you're clever about it, that's part of the solution." Near the end of 2002, Vancouver's Pivotal Corp. announced the creation of Pivotal India, a development and support facility in Bangalore. That facility now employs about 60, said a Pivotal spokeswoman.

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