The University of Toronto. Canada s Information and Communications Technology (ICT) Sector Analysis

Transcription

1 The University of Toronto Canada s Information and Communications Technology (ICT) Sector Analysis 1

2 Presentation Overview 1. ICT Industry Overview Introduction Scope / Scale Emerging Markets Industry Trends 2. ICT Companies Sector Profile Top Industry Players 3. Factors Labour Force Salary Information Education and Training Infrastructure / Cluster Information 4. Industry Relationships - International Comparison 5. Intellectual Property Measures Patents R&D Funding (including Foreign Investment) International Comparison 2

3 ICT Industry Overview Introduction 3

4 In 2009, ICT sector revenues have declined by 0.8% from the 2008 level Market Value In 2009, ICT sector revenues have declined for the first time since the ICT sector revenues were estimated at $154.2 billion in 2009, a decrease of 0.8% from the 2008 level But the cumulative revenues from the top 250 ICT companies in Canada increased by 3.66% from $71.32 billion in 2009 to $73.93 billion in 2010 but still trailing the $75.97 billion generated in 2008 Source: Industry Canada Sector Report 2010; Branham Group: Canada s Top 300 Tech Companies

5 Alberta continued its emergence as a hotbed for leading ICT activity as the province realized a 46.3% increase in provincial revenue Results by Region Alberta, British Columbia, Ontario and Quebec represented more than 97% of total revenues on this 2010 top 250 ICT companies Companies from Ontario represent 55% of revenues collected from the top 250 ICT companies of Canada Source: Branham Group: Canada s Top 300 Tech Companies

6 ICT Industry Overview Scope/Scale 6

7 On average, the annual growth in this sector has been 4.1% since 2002 Source: Industry Canada Sector Report

8 There is a clear trend towards ICT services. ICT Services is the only segment which grew by 2.8% in 2009 reaching an estimated total of $92.8 billion Source: Industry Canada Sector Report

9 Telecommunications and Computer Systems Design & Related Services account for 63.7% of ICT s contributions to the GDP in 2009 Source: Industry Canada Sector Report

10 Communication Services and Wholesaling accounted for close to 60% of growth in revenues for 2009 Source: Industry Canada Sector Report

11 Canada ranks eleventh in ICT expenditure per capita in the world Source: TRRA Reports

12 ICT Canada expects software to grow the fastest at an average annual rate of growth of 4.8% 12

13 Greatest increase in investment is expected to take place with computer and electronic manufacturing sub-sector Source: TRRA Reports

14 ICT Industry Overview Emerging Markets 14

15 An emerging market is the multimedia sector which is growing at 20% and generates $3B in revenue Emerging Markets: Digital Media The expansion of distribution channels has Digital Media companies seeking to exploit the direct-to-consumer online distribution channels Canada is on the cutting edge of the digital revolution when it comes to multimedia and gaming technologies Canada s multimedia industry is growing at an annual rate of about 20% and generates $3 billion a year in revenue Canada has over 2,300 multimedia firms that employ over 18,000 employees Canada enjoys a 6.2% cost advantage over the US in web and multimedia content development Canada has vibrant multimedia clusters that are located in Montreal, Vancouver, and Toronto Source: Industry Canada Sector Report 2010; Conference Board of Canada 2006, Location Canada

16 Telecommunications Services and Environmental Sustainability are emerging trends in ICT Emerging Markets: Telecommunications Telecommunications Services accounted for 33.7% of the ICT sector revenues despite erosion of traditional voice services New technologies are helping the telecom industry lower its cost base and generate new products Since 2002, the wireless communication equipment industry has grown by 143%, an annualized growth rate of 13.5% Emerging Markets Environmental Sustainability The global information and communications technology (ICT) industry accounts for approximately 2 percent of global carbon dioxide (CO2) Gartner, a leading IT research and advisory company, expects consumer awareness of the impact of ICT on the environment A growing concern for improved public health processes and ecofriendly IT has created new niches for existing players Source: Industry Canada Sector Report 2010, Gartner 2007, Branham Group: Canada s Top 300 Tech Companies 2011; utoronto report 16

17 ICT Industry Overview Industry Trends 17

18 Software and Computer Services forms the largest product and service group of Canadian exports Source: Industry Canada Sector Report

19 Total ICT exports decreased by 13.2% in 2009, totaling $27 billion. As total Canadian exports decreased by 24.1% in 2009, the share of the ICT sector in total of Canadian exports has increased to 6.7% Source: Industry Canada Sector Report

20 Canadian exports of ICT goods declined by 16.2% in 2009 and further declined by 7.9% in 2010 and totaled at 17.1 billion; Exports of ICT services also declined by 5.4% in 2009 Source: Industry Canada Sector Report

21 Computer and Peripheral Equipment constitutes the largest product group of Canadian Imports Source: Industry Canada Sector Report

22 Total ICT Imports were $45.8 billion in 2009, 8.9% decline over 2008, compared to a drop of 14.8% in total Canadian imports Source: Industry Canada Sector Report

23 Canadian imports of ICT goods declined by 9.5% in 2009 and increased by 9.2% in 2010 and totaled at 43.6 billion; Imports of ICT services also declined in 2009 Source: Industry Canada Sector Report

24 ICT Companies Sector Profile Source: 24

25 ICT companies are relatively small in size and there were only 100 companies which had employees greater than 500 The ICT sector consists of mainly small companies 79% of the 31,500 companies in the ICT sector are in software and computer services Within the software and computer services sub-sector, computer systems design contributes over 94% of total companies. ICT wholesaling accounts for 10.6% and ICT manufacturing for 6.9% The ICT manufacturing subsector has more than 15% of the companies which have more than 50 employees while the whole ICT industry has 4.2% of the companies having more than 50 employees Some of the key Canadian players in the industry are Research in Motion, BCE Inc., Rogers Many global companies have also selected Canada to operate world-class ICT research centers, including IBM, Xerox, Open Text, Cisco, Nokia, and Ericsson Source: Industry Canada Sector Report 2010, Location Canada

26 The majority of ICT firms are small in size with 98.1% having less than 100 employees Source: Industry Canada Sector Report

27 In 2008, 79% of the companies in the ICT sector specialize in Software and Computer Services Sub sector % Software and Computer Services 78.6% ICT Wholesaling 10.6% ICT Manufacturing 6.9% Communications Services 3.9% Source: Industry Canada Sector Report

28 ICT Companies Top Players 28

29 The top ten Canadian and multi-national firms by revenue are shown below Top Canadian Players Research In Motion BCE Inc. (wireless and data) Rogers Wireless Communications Inc. TELUS Corporation (wireless and data) Celestica Inc. CGI Group Inc. Shaw Communications Inc. (Internet) CAE Inc. SoftChoice MacDonald, Dettwiler and Associates Ltd. (MDA) Top Multi-Nationals IBM Canada Ltd. Hewlett-Packard (Canada) Ltd. Apple Canada Microsoft Canada Co. Cisco Systems Canada Co. Xerox Canada Inc. Ericsson Canada Oracle Canada Wipro Technologies SAP Canada Source: Branham Group: Canada s Top 300 Tech Companies

30 Factors Labour Force Source: 30

31 Over 544,900 people are employed in the ICT sector. An additional 89,000 jobs are expected to be created in 3-4 years Current Labour Force 544,900 people are employed in the ICT sector; approximately 3.2% of all Canadian workers The gains in employment have come from software and computer services subsectors, with telecommunications services growing to 20% higher than that in 1997 ICT manufacturing employment decreased by 2.9% in 2009, to around 92,300 employees. Since 2002 employment in the manufacturing sector has gone down by 8.8% or 1.3% pm average annually ICT services employment increased by 2.2% in 2009, reaching approximately to 376,000 employees ICT wholesaling employment declined by 2.5% in 2009, reaching about 76,000 employees ICT sector needs to fill 89,000 jobs in the next 3-4 years ICT employment has not changed much since 2002, growing by 0.2% on average annual basis Source: Industry Canada Sector Report 2010, ICTC - Enhancing and Leveraging Capacity: Information Strategies for Internationally Educated Professionals

32 The ICT sector employed approximately 3.4% of all Canadian workers in 2008 Source: Industry Canada Sector Report

33 ICT employment has not changed much since 2002, growing by 1.6% in total Source: Industry Canada Sector Report

34 The top ICT sectors in terms of employment are related to Computer Systems Design, and Communications Services (2009) Source: Industry Canada Sector Report

35 ICT manufacturing employment decreased by 2.9% in 2009; ICT services employment increased by 2.9% in 2009; ICT wholesaling employment declined by 2.5% in 2009 Source: Industry Canada Sector Report

36 Factors Labour Force 36

37 Canada has the highest post secondary education attainment levels of all OECD members Source: ICTC ICT Sector Diagnostic 2008, Outlook for Canadian IT Occupational Employment

38 In Canada s ICT industry, jobs requiring specialization are in demand while manufacturing jobs are declining Changes in ICT Labour In the ICT industry, jobs requiring specialization and high levels of innovation are coveted while a range of manufacturing and assembly jobs are transferred to low cost locales to save money Canada s ICT sector is losing manufacturing, production, basic technical, data processing and information services positions Employment has risen since 2003 with most gains in software and computer services The main challenge is to attract top managers, engineers, programmers, designers and other ICT specialists for the development and commercialization of innovative and desirable products and services ICIT s ICT focus group indicated a shift from generalists with a broad awareness of ICTs to product and application specialists Source: ICTC ICT Sector Diagnostic 2008, Outlook for Canadian IT Occupational Employment

39 There has been a 22% decline in enrolments in computer science, computer engineering and software engineering from 2002 to 2007 Source: ICTC ICT Sector Diagnostic 2008, Outlook for Canadian IT Occupational Employment

40 Canada s ICT sector will experience annual growth of 2.3% resulting in an additional 58,000 jobs by 2010 Labour Shortages In the next three to five years, there will be a significant shortage of people in the six major occupational groupings: managers, engineers, analysts, programmers, technicians, and technical writers and designers The ICT sector will experience continued employment growth at a compound annual rate of 2.3% through 2010, adding an estimated 58,000 jobs to the existing base of 600,000 Source: ICTC ICT Sector Diagnostic 2008, Outlook for Canadian IT Occupational Employment

41 Employment growth is primarily in applications development and technical skills Labour Shortages Employment will grow by approximately 2.7% in the IT producer industries, but only 1.9% in the IT user industries Hiring plans for 2008 would require a 5% increase in the current IT workforce; an unlikely occurrence given that over the last five years the industry attracted less than 7% of its current population. So the skills shortage reported in previous years continues, but is more acute for specific skill sets, particularly applications development technical skills, which is the largest IT job category and the one presenting the greatest challenge for hiring managers The computer industry is hiring the greater number of application developers while the end-user organizations the banks, retailers and manufacturers, etc. are focused more on project management, business analysis and architecture skills, all of which are identified by hiring managers as difficult to find Source: ICTC ICT Sector Diagnostic 2008, Outlook for Canadian IT Occupational Employment

42 Factors Salary Information 42

43 In 2008 on average, employees in the ICT sector earned 47% more than the Canadian average Salary Information On average, employees in the ICT sector earned 47% more ($61,618) than the Canadian average of $42,143 The largest salaries were paid to software and computer services employees, who earned an average salary of $68,126 The lowest paid subsector in ICT, electronic components, earned $50,836 on average which is 20.6% more than the average Canadian Source: Industry Canada Sector Report

44 In 2008, the Software and Computer Services subsector receives the highest compensation on average Source: Industry Canada Sector Report

45 Factors Education and Training 45

46 The ICT sector employs a knowledge intensive workforce Education 42.1% of workers had a university degree in 2008, compared to a national average of 23.9% The top three industries that employ the largest share of university educated personnel are: Communications equipment (50%) Software and computer services (51%) Computer equipment (43%) Electronic components and instruments manufacturing industries recorded the greatest increases of university educated workers from 2006 to 2007 at 3.9% and 3.5% respectively Training Canada's universities produce more than 40,000 graduates a year in mathematics, engineering, and pure and applied sciences Source: Industry Canada Sector Report 2009, ICTC - Enhancing and Leveraging Capacity: Information Strategies for Internationally Educated Professionals 46

47 42% of ICT workers had a university degree in 2008, compared to a national average of 24% Source: Industry Canada Sector Report

48 Factors Infrastructure/Cluster 48

49 Canada s four ICT clusters are dominated by foreign multinationals, except for Vancouver Overview Canada has for main metropolitan cluster areas: Toronto, Montreal, Ottawa and Vancouver Foreign multinationals (e.g. IBM, HP, Siemens, Microsoft, Xerox, Cisco, etc.) dominate the Canadian ICT industry in all clusters except Vancouver Source: ICT/LIFE SCIENCES CONVERGING TECHNOLOGIES CLUSTER STUDY: Greytech Management Inc. 2004, Denmark Report

50 Toronto is the largest ICT cluster in Canada contributing over $20B a year to the economy Toronto The cluster in Toronto includes Toronto, Markham and Mississauga and is the largest cluster in Canada The Toronto cluster consists of approximately 9,000 companies and 200,000 employees Toronto s ICT sector has contributed more than $20B/year to the Canadian economy Toronto s ICT sector does little manufacturing and specializes in development of software, e-business, new media and communications equipment Montreal The Montreal cluster consists of approximately 2,500 companies and 110,000 employees Montreal represents approximately 20% of the Canadian ICT industry Montreal s ICT sector specializes in telecommunications and new media and shifting its emphasis from traditional manufacturing to emerging markets Source: ICT/LIFE SCIENCES CONVERGING TECHNOLOGIES CLUSTER STUDY: Greytech Management Inc. 2004, Denmark Report

51 Vancouver is a unique cluster with a lack of multinationals Ottawa The Ottawa cluster consists of approximately 1,500 companies and 64,000 employees Ottawa s ICT sector s key strength is its wireless and photonics industries Ottawa s ICT sector focuses on ICT services (60%) and the government is the main customer Nortel is the largest player with approximately 6,000 people Vancouver The Vancouver cluster consists of approximately 1,000 companies and 30,000 employees Vancouver represents approximately 10% of the Canadian ICT industry The Vancouver cluster is unique with few multi-nationals and a large number of smaller service providers Vancouver s ICT sector specializes in new media and wireless communications Telus is the largest player with approximately 10,000 people in 2003 Source: ICT/LIFE SCIENCES CONVERGING TECHNOLOGIES CLUSTER STUDY: Greytech Management Inc. 2004, Denmark Report

52 Industry Relationships 52

53 Since ICT is an enabler of productivity in other sectors, linkages are a key area for exploration Relationships with Other Industries Based on the major metropolitan clusters for ICT, the following industries are ones where partnership or licensing is possible Toronto: Canada s largest ICT cluster and 3 rd largest in North America. New media, finance, automotive, manufacturing, retail and health Montreal: New media, aerospace, transportation and distribution Ottawa: Government and bio photonics Vancouver: Wireless cluster, Bioinformatics Source: Centre for the Study of Living Standards

54 Industry Relationships International Comparison 54

55 Canada lags the US in business sector ICT investment ICT Investment In 2010, total economy ICT investment in Canada, expressed in current dollars, increased 1.6 per cent to $39.0 billion This is slightly below the average annual increase of 2.1 per cent experienced between 2000 and 2009, but still a good performance compared to the 4.3 per cent decline witnessed in 2009 ICT Investment per Worker Nominal ICT investment increased 1.6 per cent in 2010, and the number of people employed increased by 1.4 per cent the same year This resulted in a 0.2 per cent increase in nominal ICT investment per worker in 2010, slightly below the average annual growth rate of 0.6 per cent for the period ICT Prices ICT prices fell in both countries, but more sharply in Canada due to the strength of the currency Prices of all ICT components have declined substantially since 2000, with computer prices falling the most (66.0 per cent), followed by communication equipment (33.7 per cent) and finally software (12.3 per cent) Source: Centre for the Study of Living Standards

56 In 2004, investment in ICT per worker in Canada was 32.9% less than the United States Source: Institute of Competitiveness and Prosperity, Financial Services in Toronto Report

57 However, Canada has a cost advantage, though the appreciating Canadian dollar has diminished this advantage Cost Advantage Canada is the cost leader among the nine established industrialized countries examined with business costs 5.0 percent below the US. With the appreciation of the Canadian dollar, Canada s cost advantage over the U.S. decreased from 9.0% in the 2004 study Source: KPMG 2010 Competitive Alternatives Study 57

58 Intellectual Property Measures Patents 58

59 14,436 ICT patents in Canada from Patents in Canadian ICT Clusters In Vancouver, the number of patents is high, particularly in the wireless area where some 375 patents have been filed In Montreal, patenting in ICTs has declined by at least 20% since % of the patents filed in Canada are ICT patents, which is just above the total across all countries measured Source: OECD Science: Technology and Industry Scoreboard 2007; 59

60 Canada is 6 th in ICT related patents filed under the Patent Cooperation Treaty (PCT) Source: OECD Science: Technology and Industry Scoreboard

61 Intellectual Property Measures Funding 61

62 The ICT sector is the largest private R&D performer in Canada ($6.2B) R&D Funding The ICT sector is the largest private R&D performer in Canada R&D spending in the ICT sector was $6.2B in 2009, up 2.5% from 2008 Since 2002 there has been a 17% decrease in R&D spending in communications equipment. The industry accounted for 27% of ICT Sector and 10% of total Canadian private sector R&D in 2009 Since 2002, software industry has been one of the most impressive performers in R&D expenditures with a 28% increase in R&D spending in 2009 when compared with 2008 and 158% increase since 2002 Electronics component industry s R&D expenditure has shrunk by 11% in Since 2002, the industry has managed to grow by only 2.1% which is well below the total sector s growth rate of 17.7% Source: Industry Canada ICT Sector Report

63 ICT R&D expenditures have been constantly growing since 2002 and have risen by 17.7% Source: Industry Canada Sector Report

64 ICT Manufacturing industry s R&D expenses is decreasing by 1.7% every year whereas ICT services is increasing by 7% a year Source: Industry Canada Sector Report

65 The gap between R&D expenditure in Canadian Private sector and ICT sector is narrowing down Source: Industry Canada Sector Report

66 Intellectual Property Measures International Comparison 66

67 Canada ranks 9 th and 6 th respectively in ICT R&D spending on manufacturing and services Worldwide ICT R&D Spending Outlook Canada ranks 9 th in business R&D expenditure in ICT manufacturing Canada ranks 6 th in business R&D expenditure in ICT services Source: OECD Science: Technology and Industry Scoreboard

68 In 2004, Canada spent a smaller percentage of its GDP on ICT R&D and filed fewer patents per capita than many countries Source: Developing and Innovating the ICT Industry