Managed IT Outsourcing - Business in Vancouver May 2-8, 2006; 862

Business owners are looking outside their companies for help with their information technology problems

by Glen Korstrom

Martin Carsky fired his information technology staff and outsourced their jobs soon after he took the helm at Vancouver’s Cryopak Industries Inc. in mid-2003.

He has since renewed the outsourced IT contract because he said his new system cut his IT costs from $150,000 a year to $75,000 a year.

Carsky’s reusable ice-substitute manufacturing company was grappling with how to integrate Montreal’s Ice-Pak Group, which it had bought for $6.5 million in 2002. He was hired to smooth the process.

Strangely, Cryopak relied on Ice-Pak’s IT staff and servers based in La Belle Province even though Vancouver is the location of the company’s head office.

“My immediate thought is that I’ll get rid of two people in Montreal, move the equipment here and I’ll hire ‘Joe the IT guy,’ ” Carsky recalled.

But he listened to a consultant who advocated a more cost-effective solution: managed IT outsourcing.

Carsky signed a one-year contract with Vancouver’s Dyrand Systems Inc. and has never looked back.

Managed IT outsourcing is a rapidly growing segment of the outsourced IT market. It differs from the conventional break-and-fix model where problems occur and managers pays someone to repair the glitch. Instead, clients pay a flat rate for all IT services and technicians perform much of the work remotely via the Internet.

Carsky phones Dyrand when problems arise and when he wants new software. But Dyrand technicians seldom have to visit Carsky’s office.

“I’ll phone a help desk number and someone will say, ‘Martin log out for 10 minutes, and I’ll log in as you and I’ll fix whatever the problem is. Then, you can log back in,’ ” he said.

Trent Dyrsmid sold his house to finance founding Dyrand in 2001.

Dyrsmid’s company differs from other IT outsourcing companies that are shifting to the managed outsource model because Dyrand was a managed outsourcing company from the get-go, Dyrsmid said.

He explained that because he closely follows industry trends in the United States, he was able to clue into an emerging IT outsourcing business model used by companies such as Everdream Corp. and Centrebeam Inc.

“I noticed that there were some larger companies in the U.S. that had raised substantial amounts of money to pursue this managed outsourcing business model,” Dyrsmid said. “I obviously didn’t have the same amount of money available to me but I thought, Hey, if they’re pursuing this then maybe it is something I should take a look at.”

Now 100 customers strong, with $1.5 million in revenue and steady 40 per cent annual growth, Dyrsmid is confident. He’s projecting steep growth ahead thanks to recently getting a six-figure bank loan and a separate, government-backed small business loan.

Other IT outsourcing corporate heads have similarly seen growth.

Vancouver-based Netdigix Systems president Nathan Jang pins his annual growth at 75 per cent for the past few years. He said last year’s revenue was approximately $350,000.

Most of Jang’s business is break-and-fix style service. But, he said a growing 30 per cent of his business is managed services to customers who would rather pay a set amount on an ongoing basis.

“Two or three years ago, managed IT wasn’t in high demand,” said Jang. “That’s probably because we were coming off the swing of the dot-com crash, and people were just not willing to spend money,” he said.

Some clients heading to managed IT service find that neither Jang or Dyrsmid can meet their standards.

The Vancouver International Airport Authority outsourced its after-hours IT support to Maryland’s ARINC Managed Services LLC in January because “a local company would be trying to support some software that they didn’t understand,” said the VIAA’s vice-president for simplified passenger travel and chief information officer, Kevin Molloy.

The VIAA assumed responsibility for the IT side of passenger check-in from the airlines in 2003, Molloy said. That work has grown in both volume and complication, he added, so the VIAA started to investigate potential outsourcers last year.

Malloy found that only two companies in the world could provide the outsourced service it needed: ARINC and France-based SITA.

The VIAA did not lay off any of its IT staff as the new managed outsource agreement is only for problems that arise after hours, Molloy said.