U.S. companies lured by Montreal salary subsidies

Montreal-based IT recruitment agency Kovasys Inc. receives frequent phone calls from U.S.-based IT companies looking to expand operations in the city, and acquire local IT talent. It's a surge in interest the director of operations Alex Kovalenko credits to employee salary subsidies for high-tech companies, introduced by the Government of Quebec last year.

While tax credits for R&D are still available, Kovalenko said the qualification process is comparatively difficult and lengthy. "If a company wants to qualify, they have to jump through loop holes ... and it can take many years."

According to Kovalenko, applying for the newly introduced subsidies is a relatively easier task, requiring only a handful of forms to be filled and a mere month or so to be qualified.

But it's not just the subsidies that are making Montreal an attractive breeding ground for U.S. IT companies. Kovalenko said a lower rental rate for office space compared to Toronto, where the average is C$25 (US$20) per square foot, is a definite factor. "Here in Montreal, you can find rental rates for $12 to 13 per square foot right downtown."

In the same vein, Kovalenko said the cost of living is relatively cheaper in Montreal, resulting in, from his agency's experience, a lower salary expectation of 10 to 15 per cent.

Even in a recession, the hunt for IT talent continues throughout geographical areas where it is abundant, said Bernard Courtois, president & CEO of Ottawa-based Information Technology Association of Canada (ITAC). "What really draws companies is the talent first and foremost, and then it has to be cost-effective," said Courtois.

And while the bad economic climate tends to mask the business activity that's ongoing, Courtois said, generally speaking, outsourcing continues to mature. "Businesses are looking for the right mix of nearshoring and offshoring, and that's to the advantage of Canada with the dollar now at 80 cents," he said.

Courtois said the fact that IT companies operating in Montreal have the advantage of tax credits for employee salaries, specifically for developers, means that the kinds of operations that would be attracted to the city are those who do application development. "The province of Quebec has probably made the biggest effort in its most recent budget in terms of venture capital," he said.

Courtois said it's great to see different cities presenting their own advantages. Besides Montreal's attractions, he also pointed out that Ottawa is a hotbed of advanced skill in communications and semiconductors, and Waterloo, Ont., is a platform for global corporations where venture capital activity abounds.

The benefits afforded to businesses setting up shop across the country is evidenced by foreign-based companies expanding offices in cities like Montreal, Waterloo, Ottawa and Toronto, said Courtois, noting that those U.S.-based companies may not necessarily be new to Canadian soil, but were likely already operating here and are merely expanding their presence.

In the past six months, Kovasys has relocated 10 IT professionals to jobs in Montreal. The activity from U.S.-based businesses, venture capitalists and startups in Montreal will make the city an even better place to live, thinks Kovalenko, possibly becoming "like Silicon Valley in Canada." And, it's a good thing for the perception of IT careers among youth, he added.

Although the recession may have hit hard, Courtois thinks the IT industry is still faring better than others, and people are catching on to the fact that the sector is witnessing growth. Youth who are making decisions on a career right now are catching on, too, he thinks. "I'm convinced the mindset is changing."

This story, "U.S. companies lured by Montreal salary subsidies" was originally published by ComputerWorld-Canada.

Copyright © 2009 IDG Communications, Inc.

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