Canada wants a piece of the offshoring pie--think of it as "India north"
Canada is ramping up its efforts to get a piece of the outsourced/offshore software development market, which of course is booming in India. Did you know that several Canadian provinces offer very generous tax incentives to US and other companies that locate part of their technology development in their regions?
And with costs going up in India, software development costs can be substantially lower in Canada, says Richard Savage, a consultant who works with the province of Ontario. "You'd be surprised at how generous the tax incentives are," Mr Savage says. “Silicon Valley companies should think of Canada as ‘India north.’”
Silicon Valley VCs are adamant that they will not fund a startup if the business plan does not have an offshoring strategy. My question is whether Canada qualifies as "offshore” to VCs? Companies such as Electronic Data Systems prefer to call their Canadian based operations "near shore."
By the way, insisting on an offshoring component is a tough requirement for startups-- they have enough on their plates without having to learn how to manage offshore development teams.
Also, it’s the VCs that pocket the benefits of offshoring first. They will put less capital into a startup on the basis that offshoring will lower development costs.
As a startup CEO told me earlier this year, “We get less money but the milestones the VCs want still remain the same.”
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