Canada as an IT services leader: what does that look like?
While everyone keeps busy attempting to win the cloud computing race, some are playing another game that is bigger and more lucrative: IT services.
There is no question that cloud is in hyper growth mode. It’s projected to reach an incredible $411 billion by 2020. But that number pales in comparison to the IT services market, which is four times as large, according to industry analyst David Senf of Cyverity Ltd. in Toronto.
The high demand for IT services can also become an important aspect of local employment growth throughout Canada, along with positioning the country as the leader in this sector.
“Canadian governments and organizations rely on security, integration, transformation and many IT services to keep all of their on-premise and cloud technologies running smoothly,” says Senf, who was previously vice-president at research firm IDC Canada. “Over $25 billion per year is spent in IT services in Canada. That makes it larger than the entire global music industry, just to put it in perspective.”
With demand for IT services reaching unprecedented levels, the next question is whether a country such as Canada can meet the demand in the marketplace today. And, secondarily, can it meet the demand worldwide?
Canada gets top marks in both areas, Senf says. Canada has a full and complete range of IT services through local providers, while also sporting global subsidiaries and nationwide services providers whose fixed-cost as-a-service offerings address IT demand today while future-proofing for tomorrow.
Senf adds that Canadian IT services are offered across technology domains, from infrastructure and application to devices including cyber-security services.
If there’s a challenge to Canada being an IT services leader in the world, it lies in the IT workers shortfall of more than 150,000. But this shortfall does not necessarily mean the country lacks IT talent. IT worker shortages are a problem in every country.
“Canada is a world leader in technology education, skill level and IT certifications,” Senf says. “Canada is the most educated country in the world. Most of the working-age population in Canada has a college or other post-secondary diploma.”
He is correct. When it comes to education, there is no better country to work with than Canada. According to the Organisation for Economic Co-operation and Development, Canada ranks No. 1 on the list of the world’s most educated countries. An OECD report found that more than 56 per cent of adults in Canada have earned a post-high-school degree or diploma.
Prime Minister Justin Trudeau is positioning education as Canada’s “greatest resource.” When elected in 2015, Trudeau became the first G7 leader to introduce technology and research as a pillar of his government’s economic plan.
The fact that Canada stands atop in education may be surprising. The country is followed by other highly educated countries such as Japan, Israel and South Korea. The United States, which had eight of the top ranked universities in the world, ranks sixth on the OECD’s list.
Senf argues that Canada has an IT talent pool ideally suited for near- and offshore consumption. Whether an organization is in the United States or overseas, Canadian services organizations have highly skilled and certified professionals to host, manage and optimize IT environments.
Couple this talent base with the lower Canadian dollar (currently valued at 76 cents U.S.), and businesses and organizations in the U.S. and Europe will start to realize significant cost advantages.
Cost advantages are already being used in industries such as entertainment and manufacturing. “Labour arbitrage to get high skills at lower costs continues to be a compelling consideration for foreign firms to outsource IT requirements to Canada,” Senf says.
When you mirror the opportunity in IT services with that of the digital transformation market, which is expected to surge to close to $500 billion in the next five years, you might have the incentive for businesses and organizations outside of Canada to come calling for help.
Senf adds that successful digital transformation is based on both IT and business services. “There are many IT services that can help a digital transformation project be successful,” he says. “Key IT services for digital transformation include API integration/app development, machine learning and security.”
Canada is already a recognized leader in areas such as artificial intelligence, quantum computing, and business process automation. It’s not that big a leap to include IT services on that list.
So can Canada become the world’s IT services leader? The answer is yes.