After Y2K insurers couldn't wait to replace old operatingsystems. They thought it was a race forsurvival.  Now that they've survived, the jittery economyhas upped the urgency for legacy replacement, but carriers struggleto afford these projects.  Software acquisition costs area fraction of their implementation expense.  CIO's needqualified people whose costs won't overwhelm the benefit. Meanwhile, legacy systems don't just disappear. 

Offshore outsourcing rates can make the price tag of a longproject not look so bad, but offshore brings communication andcultural barriers.  Dramatic time zone differences makethe ever-popular agile project, which needs proximity of teams,impractical. It's tough to ignore offshore rates, but projects liveon spreadsheets only until they begin, and there are nearshorealternatives. 

A study published by Global Services ranks Halifax, Nova Scotiasecond among emerging information technology destinations in NorthAmerica.  Nova Scotia hourly rates for senior programmers,technical architects and other lead resources are significantlylower than nearshore rates in the States. 

But if all you know about Nova Scotia is the line in a CarlySimon song, you're not alone.  It's just an hour fromBoston; less than two from New York.  Direct flights flyfrom other locations as well, and you won't need aLearjet.  Its relative anonymity is a challenge for NovaScotia Business Inc., an organization focused on growing andsustaining the economy of Nova Scotia.  

One of NSBI's goals is "to establish Nova Scotia as a globalcenter for financial services middle and back office operations byleveraging our technology talent with our insurance expertise,"says J.P. Robicheau, director of financial services and nearshoresolutions for NSBI, "but we need insurance carriers to understandthe outsourcing opportunities we have here."

Insurance-focused vendors like CGI and Keane. Inc., an NTT DataCompany, have operations in Halifax.  They provideresources, agile method expertise, and system staging environmentsto North American carriers.  According to Jay MacIsaac,senior vice president for CGI's Atlantic Canada, "The Halifaxoperation began as an application development and maintenanceeffort for Manulife."  As a result, "we have enormousdepth in insurance knowledge and cover the spectrum for systemrelated projects, from managers to developers.  We crackthe language, culture and insurance knowledge barrier and we're inthe same time zone." 

Chris Donnelly, assistant vice president and chief regulatorycounsel for Manulife, agrees.  "We've continued to growour resource commitment in Halifax largely due to the quality ofstaff there, and through our relationship with CGI," hesaid.  "The Halifax team is highly skilled and dedicatedto the company.  Our turnover is lower there than mostplaces."

Keane's Halifax Solution Center "provides our clients theability to outsource in stages, so our clients don't need to go sofar away initially," says John Gillis, director of Canadadelivery.  "Carriers get used to operating in anoutsourced solution.  After a few years, they can chooseto go offshore for greater savings." 

Keane also hosts Agile Centers of Excellence inHalifax.  These are "the gurus of the agile projectmethod," says Gillis.  "They provide training to companiesnew to distributed agile teams as well as the resources agilerequires."

CGI and Keane's Halifax operations are competitive with offshorerates.  Gillis describes Keane's as "somewhere in-betweenthe U.S. and offshore."   MacIsaac is quick tocaution rate card comparisons and references the difference betweensenior resources in India vs. Halifax. 

"We expect more from a senior for time on the job and insuranceunderstanding," MacIsaac says, "and we're skilled in multipleprogramming languages."  He also believes there is adifference in what an insurer is paying for.  "Withoffshore you're typically renting a body; with nearshore you'rebuying an output,," he says.

BF&M Limited is the holding company for a group of financialservices companies based in Bermuda.  John Wight, theirCEO, found Nova Scotia accidentally. "In 2004 we needed a backupsite to store data.  A consultant recommended NovaScotia.  Since that time we've grown to 27 employeesworking from our Halifax office for system support and applicationdevelopment.  Our people are highly motivated, understandinsurance and hit the ground running." 

BF&M, CGI and Keane worked with NSBI to set up shop in NovaScotia or to facilitate outsourcing deals.  What startedsmall for each company has grown because of the affordability, workethic and culture of the resource pool.  John Wight sumsup the opportunity succinctly.  "Whenever we need atechnology resource we ask ourselves, 'what about NovaScotia?'"