February 2, 2022
A new report from The Business Development Bank of Canada (“BDC”) predicts that tech sector revenue in Canada will grow 22.4 percent by 2024.
The report, generated from four surveys conducted in 2021 and supplemented by a series of expert interviews and analysis, demonstrates that the tech sector continues to drive growth across the Canadian economy. The tech sector pulled in an estimated $95.7 billion in revenues in 2020 with companies seeing an average revenue growth of 9.4 percent between 2015 and 2020.
Mergers and acquisitions in the tech sector have rebounded quickly after waves of the COVID-19 pandemic. 70 percent of companies indicated that the main reason for purchasing a business is to acquire technology and intellectual property. The BDC report demonstrates that tech companies that have made acquisitions in the previous 10 years are three times more likely than their peers to have experienced annual sales growth of 5 percent or more over the past year.
Another trend noted by BDC is a transition to everything-as-a-service (XaaS). Companies are delivering a range of technology products and tools to users as services over the Internet rather than locally or on site using a flexible consumption model. Software-as-a-service (SaaS), infrastructure-as-a-service (IaaS) and platform-as-a-service (Paas) companies are among the fastest-growing segments in the software sector. The report expects average annual growth of 15 percent in this area until 2024.
However, the growth of the tech sector does not come without challenges. Sector growth is limited by a scarcity of skilled workers. 55 percent of tech entrepreneurs surveyed said they are struggling to hire employees. Although the current remote working model has increased opportunities for Canadian startups to access to global talent pool, a growing number of international companies are also taking advantage of this and tapping into the Canadian tech workforce.
Another challenge is increased threats from cybercriminals who target businesses for their customer, partner and supplier data, financial information, medical data, payments, and proprietary information. According to BDC’s surveys, only 55 percent of the businesses train their employees on cybersecurity.
By: Rebecca Ro