EDS opens door for IT subsidies

More companies could get EDS-style subsidies from the government. Just over a week ago the IT services company officially opened offices in the Smales Farm business park.

More companies could get EDS-style subsidies from the government.

A week ago the IT services company officially opened offices in the Smales Farm business park, a facility which attracted attention for housing an applications support and development centre EDS built with the help of a $1.5 million government grant.

The centre, which is being set up under EDS’ "best shore" plan of choosing appropriate countries to provide a worldwide, 24x7 support and development network, will be required to create several hundred jobs within three years or have to return the government's contribution. The multibillion-dollar EDS will be kicking in "more than $15 million" in addition to the Investment New Zealand funding, said managing director Rick Ellis.

When announcing the deal in March economic development minister Jim Anderton said the government "has considered and will consider support of local companies and clusters of companies", and there may be announcements on this front "shortly".

When reminded about the comment last week, Anderton's office pointed to recent funding initiatives, such as Budget money for achieving the objectives of the ICT Taskforce and IT expansion in education, as well as a recent $50,000 grant from Industry NZ to aid the Canterbury electronics cluster. When asked to clarify it specifically with regard to what happened with EDS, Anderson's office suggested that talks are being held, but may come to nothing.

"There are a range of companies being worked with at the moment both for business growth and for strategic investment support. The deal though is that in both cases you can never be sure of the final outcomes."

Even though there were grumbles in the industry about the contestability of the funding, few doubt the EDS centre will recoup its investment. Axon head Matt Kenealy said in March that a centre of the size of Smales Park would soon give the government a return on its money. "If it really does create 360 jobs over three years, they [government] will probably get [the $1.5 million] back in PAYE anyway."

While EDS appears confident it will not have to return the funding, another fillip for the government is that WINZ has become a major recruiter for the contact centre. Some 33 of the 44 staff recently recruited for a new contact centre came from the ranks of the unemployed. About 300 staff work in the North Shore offices at present. Out of the 125 solutions centre staff in Auckland, about 90 will be in Smales Farm by the end of July and the rest should be in place by October.

The company claimed 10 potential overseas clients when the centre was first announced, but wouldn't expand on that at the Smales Farm event.

The opening was held in the presence of customers including Auckland Regional Council CIO Tony Darby, partners such as Microsoft New Zealand head Ross Peat, the North Shore mayor George Wood and US EDS executive Steve Heidt. The offices share a building with telco TelstraClear.

Heidt spoke of the establishment of the "newest and brightest star in the constellation" of "best shore" facilities having taken a little convincing. He says Rick Ellis even left behind digital photos of the planned offices during a visit to the company's head office in Plano, Texas.

Customers for the North Shore centre include Chevron Texaco, Commonwealth Bank of Australia and Linz.

Mayor Wood says IT and communications is a big part of North Shore city's economic development plan, citing Navman and Massey University as well as Smales Farm, where Tranz Rail also has its Auckland base.

Computerworld understand EDS is considering moving executives to Auckland to better support its large local customers.

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