Paul Kent, COO Xwave Solutions

Depending on who you ask, it may be considered an opportunity or a headache to take over a company wracked by turmoil. Paul Kent, the new chief operating officer of Xwave Solutions Inc., on the job for only five weeks, clearly thought it was the former.

For several months, East Coast communications

company Aliant Inc., whose business services include local and long-distance telephone, wireless and Internet, had tried to sell Xwave, its outsourcing business. But by last summer, Aliant decided to cancel the search for a suitor, frustrated by a dearth of acceptable candidates.

At that point, Halifax-based Xwave underwent some changes. “”The main focus of that was to help streamline and ready the organization for a new chief operating officer, to align its workforce and to reorganize its structure,”” says Kent. The organization was trimmed by less than 10 per cent, bringing the staff count to 2,300 employees.

Strengthening the bond between the two companies was also seen as a top priority. This is why Kent says he was given a dual role as Aliant’s senior vice-president and Xwave’s COO — part of a strategy in which senior management in both companies are closely linked — with a mandate of drawing the two organizations’ strengths into the marketplace and borrowing each other’s best practices.

In the past, Aliant and Xwave understood little about each other’s business models because the business plans called for them to run independently, Kent explains. Today, the new relationship requires “”openness and frankness and trust-based relationships within our marketing organization, within our delivery organization.””

During the reorganization, it was urged that the changes not interfere with the quality of client service, says Kent.

Industry observers say Xwave, in fact, has been successful in keeping its clients happy throughout the upheaval. With a well-regarded telco as its owner, Xwave will be able to attract business and government clients even though as a unit it will for some time see its share of disappointments and poor profits, says Albert Daoust, market analyst for Evans Research Group in Toronto.

This year saw Xwave renew all large service-level contracts related to government work on the east coast, as well as score new business such as the Greater Toronto Airport Authority, Nova Scotia Community College and the Department of National Defence.

Interestingly, it seems Xwave had nothing to fear from competitors eager to capitalize on the outsourcer’s weeks of uncertainty. A “”dead”” market meant the firm’s target clientele was initiating few new projects, which, as it happens, Xwave was the “”most qualified company in the business [to take on] in their region,”” says Daoust.

Moreover, Xwave is predicted to fare better than the industry despite its problems in 2003. “”My best estimate is they’re going to come in at $366 million this year,”” revenues that are five per cent better than others in Xwave’s sector, says Daoust.

In the new year, the firm plans to concentrate on larger outsourcing and systems integration projects in the areas of telecom, energy and the public sector, says Kent. It will take part in transformational projects, which allow a client to reposition its business or exploit new domains within its business, and explore near-shore interest in Atlantic Canada from organizations in the northeastern U.S. At the moment, Xwave is developing Microsoft applications for government clients stateside.

Looking more often beyond its Canadian borders is something Xwave is also mulling. As well as an operation in Maine, it has a small office in Ireland that Kent says provides “”a footprint”” in the European marketplace, largely in the government-services area.

Kent says that among his business challenges as COO is leveraging the interaction between Aliant and Xwave as the telecom and IT industries move further apart. A close second, he says, is ensuring his staff understand, and are consumed by, where the company is headed.

But some argue Kent faces another hurdle: No one has seen the last of Aliant’s attempts to unload Xwave, which may well occur when market conditions improve, warns Daoust. With high-calibre staff, services and clients, “”They do remain an extremely attractive takeover target. [Aliant] can carry a large number of losses for a long time. That doesn’t mean they’re going to.””

Yet, the culture of Atlantic Canada suggests that clientele like to deal with firms that are loyal to their staff, he adds. “”It’s a society with a high degree of solidarity.”” So for now, it seems, Kent has little to worry about.

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