A US start-up company setting up an operation in Belfast hopes to create almost 500 jobs within five years.

Avalanche Technologies will invest £8.5 million sterling (€14.1 million) to establish a base which will provide 136 jobs, mainly for software graduates and systems designers, over the next 12 months.

Established in Denver, Colorado, in June, the Internet-focused outsourcing operation

employs 30 people. Belfast will host its first outsourcing operation. The firm, supported by international venture capital company 3i, has plans to increase the number of jobs to 480 by the end of 2005. The North's Industrial Development Board has provided a grant of £3 million sterling towards the cost of the investment.

Announcing the investment, the Minister of Enterprise, Trade and Investment, Sir Reg Empey, said the company had identified a significant opportunity in the fast-growing IT outsourcing services sectors in the US and Britain.

"This investment is a further indication that Northern Ireland is being recognised increasingly as one of Europe's best locations for IT and Internet-focused business," Sir Reg said.

Mr Fred Crowe, Avalanche's chief executive, said the firm would address the skills drought brought about by the explosion in e-business.

He said the firm had "devised a completely unique approach to solving the skills crisis" in that instead of providing "offshore outsourcing", its location enabled it to provide "near-shore outsourcing". This would minimise differences in culture, time zone and language.

Avalanche aimed to be recognised as the premier provider of long term off-site managed IT services by 2005, he said.

Mr Crowe said: "The choice of Northern Ireland over other potential locations in the US and Europe was influenced by the superb education system, the first-class training support, and the sharp focus of the two universities on information technology."

Meanwhile, a boom in demand for low-emission diesel engines has led to the creation of more jobs at Montupet, a French-owned engine components plant at Dunmurry near Belfast. The firm said demand for a new engine, fitted to Peugeot and Citroen cars, was rising so quickly that it had had to introduce an extra shift to meet new targets.