How Christchurch reeled in an HP development centre worth $40 million a year
HP is expanding its software development and support centre in Christchurch in a move expected to create hundreds of high-end high tech jobs.
The US tech giant, which recently merged with EDS, currently employs about 50 staff at the centre. It has near-term plans to upgrade that to around 150 to fill out a new converted warehouse space opened August 1. The company has an option on a second warehouse next door.
HP's Singapore-based Asia-Pacific and Japan VP of application services, Eric Clark, wouldn’t say exactly how many staff, or when, saying it was contingent on how much contract work the new centre picked up.
However, Mr Clark said it would be a similar staffing level to other HP “Near Shore” support centres in China, India, South America and the Middle East, each of which runs to hundreds of staff.
$40 million a year
Canterbury Development Corporation chief executive Bill Luff, who is more privy to HP’s numbers (the CDC assisted the local HP operation’s bid), said that once it’s running at full steam, the expanded centre will be worth $40 million a year to Christchurch’s economy.
How Christchurch won
HP national application services manager Alex Bouma – a 20-year HP veteran in Christchurch – said that his city won out over a number of other contenders across Australasia.
Mr Bouma said HP received no rates-breaks or other financial incentives to choose the Canterbury city over alternatives.
Lower labour cost
Part of the reason was what Mr Bouma politely referred to as “labour arbitrage”, or the fact that people in Christchurch have lower salary expectations than their Auckland, Wellington, Sydney or Melbourne – even given that the Best Shore opertion is not a low-end call centre but providing high-level assistance to corporates developing Sun Java and Microsoft .Net systems.
But Mr Bouma also pointed to Enable Networks, the dark fibre network founded by the city council, and recently the subject of a $36 million upgrade funded by the CDC.
At the recent TelCon10 conference, TelstraClear chief executive Allan Freeth savaged Enable as a waste of ratepayer money and a dampener on private investment.
However, Enable has proved one of the key incentives for HP to pour money and high-tech jobs into the city. (And, one, could note, it hasn’t ultimately dissuaded TelstraClear, which a few weeks after his TelCon 10 speech announced a 100Mbit/s upgrade over the next 12 months for its Christchurch, Wellington and Kapiti cable systems).
Mayor Bob Parker, on hand for the HP launch, played down the obvious upside for skilled workers weighing whether to come to his city - its lower cost of living - preferring to focus on recreation and lifestyle opportunities, and the state-of-the-art infrastructure provided by Enable.
Down from HP’s Singapore office, Mr Clark said that the Christchurch support and development centre, which will help businesses and government departments in NZ, Australia and as far afield as Japan manage their business software, would not have any “cultural issues”, or issues revolving around language.
Hunger to beat demographic blues
The CDC has been very assertive in attracting high-tech companies to Christchurch (more of this shortly). And Mayor Parker used sharp language in describing its need to attract more high-tech and high-end jobs.
With the city’s baby boomers aging, the city needs to attract quality jobs for the emerging workforce or face “death by demographics,” said the mayor. “We need to hold young people here in the city.”
Christchurch has a 10-year window to beat its demographic problems, said the mayor.
He said he hoped young people would continue to head-off on an OE, but that as a medium size city, Christchurch had to work hard to give them a reason to come back.
HP’s centre will also need recruits from outside the city. University of Canterbury vice chancellor Rod Carr (an ex Jade chief executive) was on hand to promote his computer science and business IT graduates, six of whom have been hired by HP during its first wave of recruiting. But even so, if the HP development centre ramps up to its expected hundreds of staff, it’s likely the US multinational will be looking to bring staff to Christchurch from around New Zealand.