Canadian ICT Sector Profile

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• About 32,700 companies comprise the Information and Communications Technologies (ICT) sector, of which 80.3% are in the software and computer services industries and 9.4% in the wholesaling industries.

• The number of large companies in the Canadian ICT sector is relatively small; in 2010, there were approximately 100 companies with more than 500 employees. Comparatively, there were over 27,000 companies with less than 10 employees, accounting for 83% of all the companies in the sector.

• Among the three sub–sectors, manufacturing stands out as the one with larger companies. In 2010, 14% of the manufacturing companies had more than 50 employees while for the whole ICT sector, this share was only 3.7%.

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• Revenues in the ICT sector increased by 6.0% in 2010, recovering from a slight decline in 2009 (–0.7%). The 2010 growth was driven by the wholesaling industries which grew by 14.3% and accounted for 59% of the sector's growth. The services industries grew by 3.3%, led by strong growth in software and computer systems design. The services sub–sector accounted for 34% of the sector's growth while the manufacturing industries accounted for only 7%. The manufacturing industries grew by 3.0% in 2010 recovering from a 8.6% decline in 2009.

• ICT sector revenues increased from $129 to $162 billion between 2002 and 2010, a 25% increase. Depicted at right is a clear shift from manufacturing industries towards services industries (as a share of the sector). Since 2002, manufacturing revenues have declined by 15%, while services revenues grew by 49%.

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• The ICT sector contributed $60.8 billion to Canadian GDP (in 2002 constant dollars) in 2010 — accounting for 4.9% of Canadian output, up from 4.2% in 2002.

• The ICT sector recovered from the downtown in 2009, up 3.0%. However, for the first time since 2002, the ICT sector grew at a slower pace than the overall economy, which increased by 3.6% in 2010. On average, annual growth in this sector has been 3.8% since 2002, which is two times higher than that of the overall economy (1.8%). This faster growth also means that the ICT industries have accounted for 9.5% of the Canadian GDP growth since 2002.

• The 2010 growth in value–added was bolstered by a 16.0% jump in wholesaling industries GDP. The manufacturing industries also had strong growth (8.8%) in GDP in 2010 led by the commercial and service machinery industry. GDP in the services industries only increased by 0.9% in 2010 due to very slow growth in the communications services industries (0.5%). However, since 2002, the services industries have driven the ICT sector by generating 72% of the growth.

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• Employment in the ICT sector increased by 2.7% in 2010 to reach 563,269. In 2010, 3.3% of all Canadian workers were employed by the ICT sector.

• The vast majority of the employment gains in the ICT sector in 2010 occurred in the computer system design industry. This industry's workforce increased by more than 12,200 people while employment in the whole ICT sector increased by 14,600. This situation is not exceptional. Since 2002, the number of workers in the computer system design industry has increased by 28,000 while it only grew by 16,500 in the whole ICT sector. Employment in the manufacturing industries has dropped by 17,000 during the same period.

• Reflecting structural changes that are happening in the ICT sector, the share of the manufacturing industries in total ICT sector employment has been declining from 18.5% in 2002 to 14.9% in 2010, while the share of the services industries has been increasing from 67.7% to 71.6% over the same period of time.

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• ICT sector R&D expenditures dropped 11.2% to $4.9 billion in 2010. R&D spending declined in all three sub–sectors; manufacturing (–15.2%), services (–8.1%) and wholesaling (–2.9%). After growing from 2002 to 2007, ICT sector R&D dropped by 15% in the last three years. Even with this recent decline, the ICT sector is still the largest performer of R&D, accounting for 33.4% of all private sector R&D expenditures in Canada.

• At the industry level, the communications equipment industry (–22.9%) and the computer systems design industry (–12.2%) posted the largest declines in 2010 while the largest gain was recorded by the computer and peripheral industry (6.1%).

• Since 2002, R&D spending in the ICT manufacturing industries has declined by 32.8% while it has increased by 31.7% in the services industries. As a result, in 2010, services industries R&D expenditures ($2.2 billion) were almost as high as manufacturing industries expenditures ($2.3 billion).

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• ICT sector employment is characterized by a highly educated workforce. In fact, 44.4% of workers had a university degree in 2010, compared to a national average of 25.6%.

• The top three industries that employ the largest share of university educated personnel are software and computer services (52.5%), communications equipment manufacturing (48.4%) and computer equipment manufacturing (46.0%).

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• Employees in the ICT sector are also well compensated. These workers earned on average $67,225 in 2010, or 52% more than the economy–wide average of $44,366.

• The highest earners in the sector are in the software and computer services industries. In fact, average earnings in these industries were $71,647 in 2010. Despite being the lowest paid workers ($53,877) in the ICT sector, employees in the electronic components industry still earned 21% more than the national average.

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• ICTT exports dropped by 5.1% in 2010, totalling $25.7 billion. Exports of goods decreased for the fourth consecutive year, down 7.9% to $17.1 billion. On the other hand, exports of services increased by 1.0% to $8.6 billion.

• The Canadian manufacturing sub–sector relies heavily on the export market. In fact, 60% of ICT products manufactured in Canada were exported in 2010.

• However, exports of ICT goods dropped by 18.7% between 2002 and 2010. Since 2002, exports fell the most in wired communications equipment, and increased the most in instruments. Over this period, the share of wired communications equipment in total ICT goods exports dropped by 8.1 percentage points from 20.3% to 12.2% while the share of instruments increased from 15.0% to 22.4%.

• Exports of ICT services grew 23.2% between 2002 and 2010 with growth in all services. Software and computer services are the most important accounting for almost 69% of total ICT services exports.

• Exports of ICT goods to the United States fell by 9.4% in 2010 to $10.9 billion, accounting for 64% of Canadian ICT goods exports. Shipments to the US have dropped noticeably since 2002, when they were $16.6 billion, and represented 79% of Canadian ICT goods exports. Shipments to the Asia–Pacific region in 2010 decreased by 3.3% to a total of $2.0 billion, or 12.1% of Canada's exports of ICT goods (up from 8.7% in 2002). Exports to the European Union decreased in 2010 by 5.4% to a total of $2.2 billion or 12.6% of Canada's exports (compared to 8.9% in 2002).

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• Canada's trade deficit increased by 24.9% to $24.5 billion in 2010. The trade deficit in goods, valued at $26.6 billion, increased by 24.0%. Computer equipment alone accounted for 35% of the trade deficit observed in ICT goods in 2010, followed by audio and video equipment (18%), and electronic components (17%). Computer equipment has been the largest contributor to the trade deficit since 2000.

• In ICT services, Canada recorded $2.0 billion surplus. Software and computer services accounted for 84% of this surplus.