The Toronto Star

Friday, May 06, 2005

Offshore Starts In Toronto
Indian firms hoping to lure U.S. business to locate here
Recent Canadian trade mission boosts investment ties

PRITHI YELAJA
STAFF REPORTER

For Polaris, a software company headquartered in Chennai, India, setting up shop in Toronto made good business sense.

Having an office in the Exchange Tower at York and King Sts. gave the publicly listed company — with annual revenues of $180 million (U.S.) and 6,000 employees around the world — easy access to the all-important American market without the hassles of visa restrictions and the higher costs associated with basing itself there.

"We were looking for a near-shore centre that would let us access the Canadian financial market as well as help us support the U.S. as a marketplace in North America," said Rahul Petkar, who established the Toronto office last fall with a dozen employees.

More than 40 per cent of Polaris's revenues, which provides IT solutions for banks and insurance companies, is derived from the United States, where the company has three offices. However, the wage structure and generous tax credits given to companies establishing here, particularly if they do research and development work, brings down the cost of doing business considerably, says Petkar.

That enables them to provide expertise at a cost that is about 30 per cent lower than in the U.S., adds Petkar, pointing out that the quality of life, especially the public health system here, is also a plus. There are other advantages, too. Dealing with an Indian company through a Toronto office gives American clients a level of comfort because it's in the same time zone, and easily allows for face-to-face meetings when necessary.

"It's culturally compatible," says Petkar, who plans to add 50 more employees in Toronto by the end of the year. "Some companies haven't done business in India, so it's totally alien to them." While Polaris and a few other mostly software India-based companies, notably Satyam and Infosys, have made the leap to Toronto, they're in the minority. Even Polaris opened offices in Australia, Singapore, Hong Kong, Tokyo, the Middle East and Europe before Toronto.

"Frankly, Canada is not on the radar screen in India at all," says Petkar, adding that the country needs to sell itself more aggressively. "It's the Australians, New Zealanders, Germans, French and the Americans who are all over India and for at least five years now."

That's where the Greater Toronto Marketing Alliance's new India Committee comes in. An 18-member delegation headed by Mississauga Mayor Hazel McCallion travelled to New Delhi, Bangalore, Chennai, Hyderabad and Mumbai earlier this year in a bid to raise Toronto's profile among India's business elite and entice them to set up operations here.

The delegation included participants from the University of Toronto's Rotman School of Management, its Munk Centre for International Studies and representatives from the cities of Toronto, Mississauga and the town of Markham.The GTA is willing to do "cartwheels" to attract their business, McCallion says she told Indian business leaders.

"There's a lot of potential in India. They're getting their house in order and ready to boom forward."Unlike previous trade missions where the focus was to sell Canadian goods and services to India, the main objective this time was to attract Indian investment to the GTA.

"India is emerging as a global economic player," says Kasi Rao, a senior fellow with the Munk Centre, who was on the mission.

"We need to make sure they're thinking about Canada and particularly the GTA as a place to invest." The mission was warmly received in India, says Rao, adding that competition is keen to lure Indian investment.

"When we were in Bangalore, so were the Finns. All the countries, including China — another emerging global economic power — are there (making pitches in India)."

Aside from the advantages mentioned by Petkar, the alliance stressed Canada's openness to diversity and multiculturalism as a key selling point in their pitch to Indian companies, says Karen Campbell, GTMA president.

"We have a very large Indo-Canadian population, (so) they'd feel right at home....We do have an openness to new people coming into our community and offer a very multicultural and cosmopolitan type of lifestyle."

The delegates remarked on the extent of India's English language capability."Even in small towns and villages, they'll have signs in English," says Campbell. "It's very easy to travel in India because of that ... it's not like going to China where you'd have to have an interpreter."