Monday 5 July 1999

Stemming the brain drain

U.S. subsidiaries keep Canadian experts at home

Marcel Chenier, left, vice-president, product development, and Claude Dupuis, senior vice-president, engineering, have established a strong R&D presence in Ottawa for Premisys Communications Inc.

It is being touted as a possible solution for Canada's high-tech brain drain. Established U.S. companies are setting up shop in Ottawa and in doing so, helping to stem the exodus of skilled Canadian talent departing for better opportunities.

"What we have here is a significant opportunity for Canadians," says Paul Swinwood, president of the Software Human Resource Council. "While we see a (high-tech) skills shortage in Canada, it's nowhere near what it is in the U.S. and as bad as it is here, it's worse there."

According to the latest Information Technology Association of America and Department of Commerce figures, the United States is facing a shortage of some 400,000 skilled high-tech workers. And while some American companies are luring talented Canadians to help fill that void, others are building research and development centres where the workers are.

"Ottawa is recognized as a telecommunications leader," explains Claude Dupuis, the executive in charge of developing an Ottawa R&D centre for Fremont, California-based Premisys Communications Inc.

"As we introduced new products, we had different talent requirements ... and while the Silicon Valley is strong in computing and IT expertise, the Ottawa Valley has more data and voice expertise."

After scouting out other hot telecommunication centres in North America including the Boston area and Raleigh-Durham, Premisys set up shop in Ottawa last January "eager to build on the region's solid bedrock of telecom expertise." Eighteen months later the company, an acknowledged world leader in telecommunication integrated access solutions, says business couldn't be better.

"We've been able to build a very strong team in R&D in Ottawa and we've actually surprised ourselves," Mr. Dupuis says. "There is no question, the Ottawa team is working on some key projects and will continue to do so."

The Ottawa centre has been so successful, in fact, that after only six months of operation the centre's mandate was expanded to include hardware design, as well as software.

The centre, exceeding all of its R&D targets, is now in charge of verification engineering and has entire product-line mandates.

And the initial staff of eight has grown to more than 40, many of whom are senior software engineering professionals.

"You can really see that what we're doing (in Ottawa) is contributing to the bottom line," says Premisys engineer Mike Duffin.

A 16-year industry veteran, Mr. Duffin has seen first-hand the effects of the high-tech brain drain.

"The struggle to find qualified people is pretty intense," he says. "And so businesses will now go to where the people are."

And when it comes to telecommunications, increasingly, that destination is Ottawa. Other R&D arrivals in the region over the last few years include such industry leaders as Cadence Design Systems, Cisco Systems and Fore Systems.

"There is a long list of companies that have set up an operation in Ottawa," says Ottawa Economic Development Corporation president Brian Barge. "This recognizes Ottawa's capacity and quality workforce. Ottawa has the highest education -- three times that of Montreal or Toronto and seven times more software expertise (than those cities)."

Yet, despite Ottawa's skilled workforce and the city's opportunity for development, a larger question remains. With higher taxes and the possibility of greater restrictions, how comparable is the cost of doing business in Canada?

"Our costs are competitive, largely because of the (low Canadian) dollar," says Mr. Barge. "In a recent KPMG study, Canada was compared with seven other industrial countries based on salaries, taxes and other benefits and Canada was found to be the most competitive."

"We're in a very global economy," adds Mr. Dupuis. "When we created the lab, we didn't think about the money. We were really looking strategically for the best opportunity to grow -- that was the basis for our decision (to come to Ottawa)."

Since the U.S. company first opened its doors in 1990, Premisys has partnered with global telecom leaders and has agreements with several major international vendors, including Nortel. As a result of these third-party distribution channels, Premisys says they have been able to achieve "rapid market penetration."

Company revenues for 1997, the last fiscal year available, reached $78.3 million U.S. and R&D spending rose 42 per cent from the year before to $10.5 million U.S.

R&D growth peaked last year for Premisys with the creation of the Ottawa centre, and the company says that trend should continue. With a mandate to design software for "the next generation of Premisys products," the Ottawa centre is slated to play a key role in Premisys' plan to dominate the projected $1.2-billion U.S. integrated access device market. Canadian Claude Dupuis, responsible for starting the Ottawa operation and newly in charge of all R&D operations for the company, realizes more than anyone else the importance of the Ottawa centre. "Whether headquarters are here or in California, the key is really the mandate," he says. "And even though the R&D arm of the company is in Fremont, the (Ottawa centre) is empowered: they have a strong mandate ... and that should continue."

"Ottawa makes a strong impact on the bottom line," adds Marcel Chenier, the new Premisys vice-president of product development in charge of the Ottawa operation. "And so, as the company grows, we will grow."

For industry experts and business leaders, it's a clear endorsement of Ottawa's high-tech ability and capability. "This just shows what Ottawa can do," Mr. Barge says. "And it's hard to find a downside when the world is coming to you."