Canadian ICT Sector Profile

March 2013

The ICT Sector consists mainly of small companies...

• About 33,300 companies comprise the Information and Communications Technologies (ICT) sector, of which 86.9% are in the software and computer services industries and 6.2% in the wholesaling industries.
• The number of large companies in the Canadian ICT sector is relatively small; in 2011, there were about 75 companies with more than 500 employees. Comparatively, there were over 28,300 companies with less than 10 employees, accounting for 85% of all the companies in the sector.
• Among the four sub-sectors, manufacturing stands out as the one with larger companies. In 2011, 16.4% of the manufacturing companies had more than 50 employees while for the whole ICT sector, this share was only 3.3%.

...and generates $155 billion in revenues.

• Revenues in the ICT sector increased by 5.6% in 2011, led by the software and computer services industries which posted the fastest growth (7.3%). The three other sub-sectors also posted gains: the wholesaling industries grew by 6.0%; the manufacturing industries by 4.5% and the communications services industries by 4.3%.
• From 2007 to 2011, ICT sector revenues increased from $134 to $155 billion, a 16% increase. During this period, the ICT manufacturing industries declined by 21.9% while all the services industries posted gains: the software and computer services grew by 23.2%; the wholesaling industries by 21.2% and the communications services industries by 19.6%.
• Over the period, the share of the manufacturing industries in the total ICT sector revenues dropped from 12.0% to 8.1%.

The ICT Sector makes a substantial contribution to the Canadian GDP...

• The ICT sector contributed $67.2 billion to the Canadian GDP (in 2007 constant dollars) in 2011.
• The ICT sector outgrew the overall economy in 2011. The sector increased by 3.2% from 2010 compared to a 2.6% increase for the total Canadian economy. On average, annual growth in this sector has been 1.6% since 2007, compared to 0.9% for the overall economy. This faster growth also means that the ICT industries have accounted for 7.5% of the Canadian GDP growth since 2007.
• The manufacturing industries also had the highest growth in GDP in 2011, up 10.0% from 2010. This growth was led by the electronic components industry. The ICT wholesaling industries GDP also had strong growth, up 6.1%. GDP in the software and computer services industries increased by 2.8% in 2011, while the communications services industries increased by 1.7%.

...and is a major source of jobs.

• The ICT sector accounts for 3.0% of total employment. However, employment in the ICT sector decreased 1.1% in 2011, amounting to 521,702.
• Employment decreased in three ICT sub-sectors in 2011. Employment in the wholesaling, manufacturing, and software and computer services industries dropped by 1.7%, 1.4%, and 1.8%, respectively. Meanwhile, employment in communications services increased by 1.2%.
• Reflecting structural changes that are happening in the ICT sector, the share of the manufacturing industries in total ICT sector employment has declined from 11.9% in 2007 to 9.1% in 2011, while the share of the software and computer services industries has increased from 54.4% to 58.2% over the same period of time.

ICT industries are the largest performers of private sector R&D...

• ICT sector R&D expenditures totalled $4.8 billion in 2011. After falling for three years in a row from 2008 to 2010, ICT sector R&D increased by 8.7% in 2011. R&D spending increased in all four sub-sectors; manufacturing (13.6%), communications services (11.2%), wholesaling (9.5%), and software and computer services (2.6%). The ICT sector continues to be the largest performer of R&D, accounting for 30.6% of all private sector R&D expenditures in Canada.
• At the industry level, the data processing (24.1%), communications equipment (21.4%), and communications services (11.2%) industries posted the largest increases in 2011, while the electronic components manufacturing industry (-2.9%) recorded the only decrease.
• From 2007 to 2011, R&D spending in the ICT industries has fallen by 11.9%. While spending has increased in the wholesaling (145%) and communications services (11.2%) industries, it has decreased in the manufacturing (-21%) and software and computer services (-17%) industries.

...and have a knowledge-intensive workforce...

• ICT sector employment is characterized by a highly educated workforce. In fact, 45.1% of workers had a university degree in 2011, compared to a national average of 26.0%.
• The top three industries that employ the largest share of university educated personnel are computer equipment manufacturing (64.7%), software and computer services (52.0%), and communications equipment manufacturing (51.6%).

...that earns above-average wages.

• Employees in the ICT sector are also well compensated. These workers earned on average $68,231 in 2011, or 50% more than the economy-wide average of $45,488.
• The highest earners in the sector work in the software and computer services industries. Average earnings in these industries were $71,533 in 2011. Despite being the lowest paid workers ($48,889) in the ICT sector, employees in the electronic components industry still earned 7% more than the national average in 2011.

ICT manufacturing industries are export-oriented...

• The Canadian ICT manufacturing sub-sector relies on the export market. About 58% of ICT products manufactured in Canada were exported in 2011.
• Canadian exports of ICT goods decreased by 1.0% in 2011 to $11.1 billion. Decreases in exports of wired communications equipment ($378 million) contributed the most to this decline.
• Exports of ICT goods dropped by 33.4% between 2007 and 2011. Since 2007, exports of wired communications equipment (-55.9%) fell the most while exports of audio and video equipment (21.4%) increased the most. Over this period, the share of wired communications equipment in total ICT goods exports dropped from 29.1% to 19.2%.
• Exports of ICT goods to the United States dropped by 2.3% in 2011 to $7.1 billion, accounting for 64.0% of Canadian ICT goods exports. Shipments to the US have dropped since 2007, when they were totalling $11.2 billion, and representing 67.0% of Canadian ICT goods exports. Shipments to the Asia-Pacific region increased 1.7% in 2011, totalling $1.2 billion or 10.8% of Canada's ICT goods exports. Since 2007, the share of shipments to the Asia-Pacific has decreased by 0.4 percentage points. Exports to the European Union increased by 7.9% in 2011 to a total of $1.4  billion or 12.9% of Canada's ICT exports. Exports to all other countries accounted for $1.4 billion, or 12.3% of Canadian ICT goods exports in 2011, up 4.4 percentage points since 2007.

...while ICT services industries are more domestically oriented

• Exports of ICT services have been trending up, growing by 7.6% from 2007 to 2011. However, the increase in exports of ICT services during the 2007-2011 period was not large enough to offset the decline in exports of ICT goods. Total ICT goods and services exports decreased by 19.1% during that same period.