500 NEW JOBS FOR CALGARY A WELCOME, HOPEFUL SIGN ON ECONOMIC TRANSITION
Nothing will replace impact of oilpatch, but growing digital investment promising
Too many times over the past year, it's felt like Calgary has been mired in an economic losing streak, like a football team that can't get the ball past midfield.
Every time progress was made, another setback seemed to arrive: an oil-price war, pipeline projects being blocked, a crushing pandemic, small businesses forced to close and a wave of oilpatch consolidation leading to layoffs.
Today is not one of those days. On Wednesday afternoon, multinational information technology firm Infosys will announce 500 new jobs are coming to the city in the next three years.
The India-based company, which has a mammoth market capitalization of US$77 billion and provides digital services and consulting around the planet — it already has more than 2,000 Canadian employees — will create an innovation and tech hub in the city to serve clients in Canada and the United States.
Just as important, however, is what the announcement signifies. It's a tangible sign of the promise of a digital future for Calgary, with a major global player validating that the local industry is primed to expand.
Infosys president Ravi Kumar said the city's quality of life, low cost of living, strong post-secondary institutions — along with the opportunity to draw upon existing talent and retrain local workers — were key reasons it decided to set up a major hub in Calgary.
“This is an initial commitment and if we progress well, we will increase the numbers and that's our goal. And this is a starting point,” Kumar told Postmedia's Amanda Stephenson.
“We are very excited about the prospects of leading the path for making Calgary a tech-digital hub of the future.”
In the past two years, Calgary has seen a number of local technology firms take flight, raising more capital, finding new customers and hiring new staff.
Last month, software company Symend raised $55 million. Local businesses such as financial technology company Neo Financial and robotics supply chain firm Attabotics have also raised significant sums in the past year.
In February, Calgary-based Eavor Technologies Inc., which is working on scalable geothermal power technology, announced it successfully raised $51 million, including from energy majors BP Ventures and Chevron Technology Ventures.
“Necessity is the mother of invention,” said Eavor CEO John Redfern, who noted his partner and co-founder Paul Cairns lives in Calgary and they set up shop in the city in 2017.
“Calgary has been, unfortunately, in very tough economic times since 2014. And so that period of pain has spurred people on like Paul and others to say, `How can we do something different?'”
Benevity Inc., a firm that specializes in software that enables employee volunteering and giving in the workplace, has grown to 650 employees. Its roster of clients includes Google and Apple. In December, the company earned a 10-figure valuation after private British firm Hg Capital LLP acquired a majority stake in Benevity.
There are still plenty of reasons to be concerned about the delicate state of the city's economy today. Oil prices sank to record lows last year, prompting a wave of cost-cutting and consolidation that continues.
Businesses of all sizes have faced unprecedented obstacles with the COVID-19 pandemic.
According to a new report by the Conference Board of Canada, Calgary's economy contracted by 5.7 per cent last year, marking its biggest annual decline since the think-tank began keeping such data in 1987.
And yet, oil prices have hovered around US$60 a barrel in recent weeks, Calgary housing prices are rising and retail sales are expected to jump up by three per cent this year.
The board projects the city's economy will expand by 5.1 per cent in 2021 and then increase by 4.7 per cent next year. In fact,
Calgary is expected to see the second-highest GDP growth among Canada's largest cities between 2022 and 2025.
Board chief economist Pedro Antunes said the city will see a recovery this year as the economy reopens, while stronger oil prices should lead to improved industry profits and more investment.
“We are expecting a fairly good rebound for the city and the province. Of course, that is coming off a very depressed situation,” he said Tuesday.
“I do think better times are ahead.”
The biggest worry remains the slow recovery in employment, which is one of the reasons the Infosys announcement is so welcome.
Jobs in the hospitality, tourism and travel sector are still being pounded by the pandemic.
Last year, employment in Calgary fell by 6.5 per cent, but it should increase by 5.6 per cent in 2021. The jobless rate, which touched 15.6 per cent last June, will average 10.6 per cent this year, according to the study.
As the broader economy rebounds, international migration is expected to pick up.
The local real estate market is heating up. The Calgary Real Estate Board reports 1,836 homes were sold last month, the best February on record in seven years, while the benchmark housing price jumped four per cent to $431,000 from a year earlier.
These are encouraging indicators that confidence is coming back.
The technology sector has also made recent gains and, in the future, it represents “an important opportunity for the city,” Antunes said.
“Not to take away from the tech sector and the other sectors that are adding to growth — these are important opportunities — but it is hard to displace the impact of the oilpatch,” he cautioned.
It's too much to expect one promising sector to take up the slack from a much larger industry in the midst of a long-term transition.
But the city's technology sector is providing a valuable commodity to Calgarians these days: Hope that the economic future will improve as it also continues to change.