Background Information
Between 1997 and 2002, the export-oriented Information and Communications Technology (ICT) sector has grown faster than the Canadian economy. Average annual growth in this sector has been 10.7% since 1997 compared to 4.0% economy wide. In 2002, it contributed $54.3 billion to Canadian GDP ($1997), representing 5.5% of Canadian GDP. The ICT services industries continued to grow in 2002, with a growth rate of 6.5% and an increase in revenue of $1.6 billion in software and computer services alone.
From 1997 to 2000, the computer and related services sector had posted some of the strongest growth within the ICT industry, with a compound annual growth rate (CAGR) of 22.6%; the sector developed at an output growth rate five times that of the overall Canadian economy. As a result of this strong growth, the ICT industry accounted for 6.2% of total Canadian GDP in 2000, while the computer and related services sector represented about 1%.
Emerging Markets
While the IT market has slowed considerably since 2000, growth and development remain constant in many countries. Data for the global IT industry suggests that important opportunities exist in established and emerging markets, both of which continue to grow. Of particular note are a number of countries that appear to be important emerging markets for computer related services. The most important are China, India, Korea, Singapore and Taiwan; spending on IT services grew substantially in all of these countries over two and five year periods dating back from 2001 and is predicted to continue to grow. Other potentially important markets include Brazil, Poland, Mexico and the Philippines. Brazil is a relatively large market and is predicted to grow well in the next five years. Poland grew by 70% between 1999 and 2001 and is predicted to increase as well. Philippines, while a small market, grew over 400% between 1999 and 2001. Mexico has grown relatively well, and is predicted to increase it's spending on IT services over the next five years1.
Employment
The Canadian computer and related services sector was comprised of more than 42,500 firms in 1999; together, these firms generated total revenues of $17.4 billion. Employment in this sector grew by an impressive 22.1% during that year, totalling 190,000 workers. This number includes 74,000 self-employed, which represents almost 40% of the total workforce. Employment data also indicate an average number of three employees per firm, suggesting an overwhelming prevalence of small firms in the Canadian computer and related services sector. Large firms account for over two-thirds of total revenues and some 90% of total exports. Small- and medium-sized enterprises however, tend to have higher profit margins.
Revenues
Most of the firms and most of the sector revenues are concentrated in Ontario (with 54% of total revenues in 1999), Quebec (21%), Alberta (10%) and British Columbia (9%). The employment and revenue data also indicate that the size of the firms is larger in Ontario and Quebec than in the rest of the country. The Prairie region contributes significantly to foreign revenues in the area of data processing and Quebec is particularly active in respect of software publishing.
