Microsoft eyes Vancouver in expansion bid

Microsoft will open a new product development centre in Vancouver this fall, one of a series of development shops the software giant is building in various locations worldwide.

The new development centre is part of Microsoft’s distributed development strategy, according to Microsoft Canada president Phil Sorgen.

Sorgen said Vancouver is the latest in a line of software development centres that Microsoft has launched. The others are located in Boston, North Carolina and Bellevue in Washington, as well as in Israel, Denmark, and Ireland.

“Canada was included because it has some of the top technology talents, and we’d be able to recruit the best talent,” he said.

Microsoft has been especially interested in western Canada for some time, according to Sorgen. “Vancouver is an international gateway with an international population and reach. And being located there means being in a high-tech growth market.”

Joel Martin, vice-president for software research with IDC Canada, said that Vancouver’s geographic location—very close to the corporate headquarters in Redmond, Washington—also makes the move a strategic decision for Microsoft.

The Vancouver site could also be a lure to potential employees. “When you look at what grads look for, it’s good-paying jobs at good companies, sure, but it’s also the work/life balance, community, landscape—and we think that Canada has an environment that supports that,” said Sorgen.

The development centre will employ about 200 people to begin with, according to Sorgen, who said that the centre will focus on hands-on development work across various Microsoft product groups (higher-level research will be left to the company’s research and development centres, which are housed in United Kingdom, India, China and the Silicon Valley).

Brenda Kerton, lead research analyst with Info-Tech Research, pointed out Microsoft’s decision to build the Vancouver centre signifies a “vote of confidence” on Canadian talent. “(Microsoft) would rather recruit people into the US, and when they can’t, that’s when they set up development shops. It’s always good to have that vote of confidence for Canadian capability in terms of software development,” Kerton said.

The Info-Tech analyst also cited the U.S.’s immigration issues. “There has been a tightening around having people work in the States, and when it comes to moving different people around, there’s a point where it’s easier not to deal with it, and [Microsoft is] at that point.”

Having a Vancouver-based Microsoft mini-campus could be an incentive for workers new to the Canadian IT workforce. Citing an ITAC survey, Sorgen said that the next 12 to 18 months will see 25,000 jobs created, with only 8,000 new tech grads to fill them.

“We have a skills gap in Canada…but if we invest in this environment, then people in school tend to consider staying in Canada,” said Sorgen.

IDC’s Martin said this new centre falls right in line with the things company founder Bill Gates has said during his various trips to Canada, including his praise of graduates coming out of the Kitchener/Waterloo area.

“This way, they have access to that talent who don’t necessarily want to work in the States,” said Martin, adding that the knowledge of having a local Microsoft option might boost enrolment in science and technology programs, in which there has been a “drop-off.”

Regardless of whether computer science graduates will stick around, Kerton said the new development centre creates a perception of another option. How this will affect the brain drain remains to be seen, she said, when it comes to the current IT worker shortage.

“Having the perception of a nice big shop nearby has got to be good, but the question is, whether this move will strengthen the employment market or will it be a drain on the (IT workers who could work for other Canadian companies)? I don’t know what the impact on actual employment will be yet.”

The new Microsoft centre in Vancouver could be a boost to Canada’s innovation profile, said Sorgen, as it fits in with the country’s agenda of innovation as laid out by Prime Minister Stephen Harper. “It will attract the best and the brightest to Canada and grow the knowledge economy and economic prosperity,” said Sorgen.

It could enrich the province itself as well, he said. “Any time you invest in a country, (the company) becomes a part of the ecosystem, and it feeds other systems and groups.”

Martin agrees, saying that this could also lead to young entrepreneurs who might stick around Canada to work for Microsoft that could later enrich the ecosystem themselves by starting businesses of their own. Partnerships that arise between companies and the centre could also strengthen the IT business community.

Other large companies wanting to begin a similar investment in Canada may also be encouraged by Microsoft’s move, said Martin. The significant Canadian presence that SAP and CGI have, are examples of the booming IT ecosystem in Vancouver, he added.

“It’s a growing trend,” Martin said, pointing out such moves offset American companies’ fear about the surging dollar, allowing them to nearshore.