Bagnall: Growth Expected Despite Soft U.S. Economy
The Ottawa Citizen
March 20, 2008
Bryan Brulotte, the CEO and owner of MaxSys, says the amount spent each year by government has been increasing slowly but steadily.
However, MaxSys and several Ottawa-based competitors are exceeding this pace by stealing business from the industry’s bigger firms such as IBM or Computer Sciences — and expanding their reach geographically.
“Government procurement officials are getting more savvy,” says Brulotte, who launched MaxSys in 2001 following an unsuccessful run as a Tory in the 2000 federal election. “When contracts expire for the multinationals, they’ve been soliciting more bids from specialty companies such as ours — we can do the job just as well for less money.”
MaxSys recorded $30 million in sales in 2007, up 43 per cent compared to the year before. While MaxSys landed a couple of significant new deals last year — one each from government and an unnamed private sector firm — most of its growth was driven by an expansion of the firm’s reach.
In the past three years, MaxSys has opened offices in Montreal, Vancouver and Ogdensburg, New York. Burlotte says he is evaluating potential acquisitions in Toronto. If a deal doesn’t emerge by summer, he’ll open a MaxSys office and add staff more gradually.
It has been a remarkable journey for Brulotte, a Royal Military College graduate who served in the army from 1982 to 1993.
When he left his peacekeeping duties behind, he started his first consulting business at age 28 and earned an executive MBA from the University of Ottawa.
Brulotte was considered something of a star candidate when he contested the riding of Lanark-Carleton in 2000 — a key plank was his promise to extend high-tech services to rural areas outside Kanata.
He considers his loss to Canadian Alliance candidate Scott Reid “the best thing that ever happened” because he re-focused all his attention on MaxSys.
Staffing services firms such as MaxSys play a surprisingly big role in the tech sector. Each company directly employs a small group that recruits workers and manages staffing services agreements on behalf of thousands of contract employees.
For instance, MaxSys has 35 employees who look after 700 contract workers. Roughly 500 of the latter are based in Ottawa.
Eagle Professional Resources is the city’s second-largest staffing services company after Calian. It employs 90 who manage contracts for 800 workers across the country. Less than 15 per cent of Eagle’s revenues come from government clients, in sharp contrast to MaxSys, which relies on government for 70 per cent of its sales.
Eagle last year reported a 10-percent drop in revenues to $88.5 million but the decline had relatively little to do with trends in staffing services.
Eagle CEO Kevin Dee says two factors contributed to weaker revenues. The first was a deliberate change in company focus away from lower margin payroll contracts. The second factor was a botched installation of staffing software — a situation that has since been rectified.
Dee is confident respectable growth will return in 2008.
In light of the weakening U.S. economy, it’s not clear the tech industry’s other sectors will be able to follow suit.
