TECHNOLOGY
Canada’s technology sector: An industry on the rise
F
or the best part of a decade, Canada’s technology sector has been going from strength to strength. The arrivals of big international players such as Google and Facebook have
complemented homegrown success stories such as Hootsuite, while behind the headlines sits a huge landscape of tech SMEs. According to figures from Industry Canada, the Canadian ICT
(information and communications technologies) sector is made up of around 37,000 companies, of which 87.6 per cent are in software and computer services and 5.6 per cent are in wholesaling. The remainder are split across ICT manufacturing and communications services. Despite a narrative that tends to focus on the big players (and
the start-ups and scale-ups in their orbit), the vast majority of tech companies in Canada, in terms of volume, are SMEs. In 2013, there were just 80 ICT companies in Canada that employed more than 500 people. By contrast, there were 32,000 companies with fewer than ten employees, making up 86 per cent of all companies in the sector. While smaller companies dominate the landscape in terms of
volume, larger companies, including Shopify, Stingray Digital and Mogo Finance, have made a splash this year by going public on the Toronto Stock Exchange (TSX). Another TSX-listed Canadian tech company, DH Corporation, raised nearly CAD1 billion to fund a major international acquisition. A total of 50 tech firms – more than in any other sector – have
gone public on the TSX/TSX Venture Exchange (TSXV) since the start of 2014, and analysts are watching keenly for the next ‘unicorn’ that will hit a valuation of a billion dollars or more.
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ICT manufacturing forges ahead Michael Kousaie, head of business development for technology at the TSX and TSXV, has also noted that tech and innovation have been the fastest-growing sectors on the two exchanges since the start of 2013. Between them, they’re valued at over CAD250 billion, more than the aggregate value of the mining sector. Furthermore, tech and innovation companies listed on the TSX and TSXV have raised nearly CAD12 billion in equity capital since the beginning of 2014. One subsector that stands out as having larger employers is
manufacturing. In 2013, 14.1 per cent of ICT manufacturers had upwards of 50 employees, compared with 3.1 per cent of firms in the ICT sector as a whole. Manufacturing is declining in prominence in Canada’s tech scene, however, as its decline in revenue share shows. Overall, tech revenue has been increasing significantly. From 2007
to 2013, it shot up from CAD133.4 billion to CAD159.9 billion, an increase of 19.8 per cent. Manufacturing saw a notable decline over the period, dropping by 16.1 per cent, but that was more than offset by gains in the other subsectors. The sector is a major source of jobs in Canada. As of 2014, it
accounted for 3 per cent of national employment, according to Industry Canada. From 2007 to 2013, the job share of the software and computer services subsector within the overall ICT sector increased from 54.1 per cent to 61.7 per cent. Over the same period, manufacturing’s share declined from 11.9 per cent to 6.9 per cent. Perhaps unsurprisingly, the ICT sector has a highly educated workforce. In 2013, 47.2 per cent of workers had a degree, compared with a Canadian
12 | Re:locate | Canada Spring 2016
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