Is Canada smart enough when it comes to ICT?
Canada has an impressive roster of people with information and communications technology skills and expertise. Approximately 900,000 individuals work in the ICT sector at more than 39,000 companies.
Despite all this homegrown technology talent, there are many cases where Canadian-born ICT companies are overlooked by large enterprises and government entities. A research report from the University of Ottawa’s Telfer School of Management found that a minority of small-to-midsize companies are doing any kind of business with the federal government. And since little more than 100 of those 39,000 ICT companies are large enterprises, it means many firms are on the outside looking in at the massive $20 billion government spend, of which $6 billion is on IT.
This stat is surprising, since Canada has developed into a major force in the ICT space, with more than $150 billion in annual revenue, which equates to more than five per cent of the country’s gross domestic product. Compare that to global ICT revenues, projected by Statistica at nearly 4.5 trillion euros ($6.7 trillion) by 2019, and Canada is more than holding its own in this sector.
One of the more highprofile examples of Canadian ICT companies getting overlooked was this summer’s single-source, $500 million contract awarded to IBM Canada by the government. The Canadian ICT sector was up in arms over this deal because there was no bidding process.
Benjamin Bergen, the executive director of the Council of Canadian Innovators, took to the airwaves after the IBM Canada deal was announced to criticize it on behalf of his constituents. The Council of Canadian Innovators is a newly formed lobby group founded by ex-RIM co-CEO Jim Balsillie, with a focus on advocating for Canadian technology companies and to helping them scale globally.
In a published report, Bergen said the IBM deal is another example of how the government’s procurement system favours large multinational companies and does not give highly qualified Canadian-born companies a fair shot.
IBM Canada has won more than $3 billion worth of government contracts since 2016, mainly because the current procurement system gives Big Blue and other large multi-national vendors an inside track. For instance, the feds mandate that all applying companies must show they have done five equivalent projects as a minimum. Since the project in question was for a massive 500-plus data centre consolidation, it slammed the door shut on home-grown Canadian ICT before they could get started applying.
Even Judy Foote, the federal minister of public services and procurement, admitted before she resigned in August 2017 that the procurement system in this country is slow and needs to be fixed.
Despite the negative implications, another factor sometimes leaves government and other enterprises with little choice but to seek larger vendors: the overwhelming IT skills shortage in Canada.
According to the Information and Communications Technology Council, Canada falls short of meeting the current demand for ICT services in the marketplace, and will suffer from a significant skills gap — to the tune of a 182,000-worker shortfall — in 2019.
Despite this shortfall, the rest of the world uses Canadian skills and expertise. According to the latest data from Statistics Canada, ICT enabled services accounted for more than half of total exports in services in Canada, an increase of 4.9 per cent from 2006.
That data paints a somewhat rosy outlook, but Jason Bremner, vice-president of IDC Canada’s industry and business solutions practice, has taken a deeper dive into the findings, and saw that the definition being used includes digital services – which would consist of an insurance worker, for example, who collaborated with an IT person on a project. “Digital is growing faster than pure ICT services,” he says, noting that IDC Canada forecasts pure ICT services growth at just three per cent. The takeaway: “We need more talent in ICT to do both,” Bremner adds.
The government has stepped up somewhat by creating the Office of Small and Medium Enterprises inside the public services and procurement department. This office advocates on behalf of SMEs, along with bringing more awareness to federal government procurement through webinars, free seminars and a 1-800 info line.
The program is a start, but more needs to happen from the federal government, along with large enterprises such as banks, to give preference to smart ICT companies in this country. Opening up all contracts to a fair bidding process and identifying talented Canadian-born ICT companies, instead of always leaning on foreign incumbents, would be good next step.
By supporting these innovative companies, the government would drive skills development throughout the country, especially in rural communities. The demand created by these home-grown companies would create an influx of talent, especially from women in STEM (science, technology, engineering and math) fields.
All these people and communities are looking for a fair opportunity. It’s time the Canadian government gave them a shot.