British Columbia’s tech sector earns a grade of “A” in the 2018 iteration of the B.C. Technology Report Card, prepared by KPMG and the B.C. Tech Association. In fact, 2018’s tech ranking is one full letter grade up from the 2016 report.

The report card rates the B.C. tech sector’s performance in a comparative context and assesses its potential for growth. There are two main story lines here: Responsible for nearly 7% of the province’s GDP, the tech sector stands first among B.C. industry sectors in terms of growth potential according to the 2018 report card. Indeed, the tech sector has exhibited consistent growth in revenues and GDP contribution over the past decade. And yet as the title of the 2018 report hints, “From Growth to Scale”, barriers to scaling-up continue to weigh on the sector’s potential.

A Snapshot of B.C. Tech

The tech sector is comprised of numerous sub-sectors, including interactive and digital media, virtual and augmented reality, clean technology, life sciences, information and communication technology, and IT and engineering services. In aggregate, tech sector revenues grew at a compound annual rate of 7.3% between 2011 and 2016 (Figure 1).

Figure 1

B.C. Technology Revenues and Growth, 2006-2016

Source: 2018 BC Tech Report, Profile of the British Columbia High Technology Sector, BC Stats, 2017.

This performance puts B.C. in first place relative to other provincial tech counterparts (Figure 2).

Figure 2

Index of Tech Sector Revenues, 2006-2016

Source: 2018 BC Tech Report, Profile of the British Columbia High Technology Sector, BC Stats, 2017.

However, when we look at per-employee revenue in B.C. compared to other jurisdictions, there remains room for improvement. While B.C.’s per-employee tech sector revenue is higher than Quebec’s, it falls behind Alberta, Ontario, and the Canadian average (Figure 3).

Figure 3

Technology Sector Revenue Per Employee, 2011-2016

Source: 2018 BC Tech Report, Profile of the British Columbia High Technology Sector, BC Stats, 2017.

The B.C. sector managed to add 14,000 jobs tied to tech industry production since 2011, growing to 106,430 jobs as of 2016 (an increase of 24%). These jobs tend to pay higher than average wages (Figure 4), with average weekly earnings for tech workers climbing to $1,690 in 2016.

Figure 4

Average Yearly Earnings, B.C. Tech Sector vs B.C. All Industries

Source: 2018 BC Tech Report, Profile of the British Columbia High Technology Sector, BC Stats, 2017.

Scaling up tech talent and firm size: What’s getting in the way?

Overall, B.C.’s tech sector received a respectable grade in the 2018 Report Card. But the findings also highlight two areas of ongoing challenge: the ability of local firms to scale-up, and access to highly-skilled talent pools.

While more small businesses have evolved into medium-sized enterprises in the 2018 report compared to the 2016 version, growth among larger companies of 50+ employees remains stagnant (Figure 5). This is concerning, as large businesses are significantly more productive than smaller ones, generally pay higher wages, and have a greater capacity to engage in international trade.

Figure 5

5A: Distribution of Companies by Employee Size, 2016

5B: Growth in Tech Company Count by Employee Size, 2014-2016

Source: 2018 BC Tech Report, Profile of the British Columbia High Technology Sector, BC Stats, 2017.

Lastly, it should be noted that Canada and B.C. continue to have among the lowest percentages of master’s graduates with technical degrees (Figure 6). At the undergraduate level, B.C. tech employers say that still not enough seats have been created in post-secondary technology and engineering programs to respond to market demand. Of concern, the report notes that B.C. also suffers from a lack of experienced and senior-level talent – individuals with a track record of building and scaling firms, doing business beyond Canada, and with well-developed functional and strategic leadership skills. This persistent talent gap needs to be addressed if B.C. and Canada want to attract and grow more global technology companies.

Figure 6

Technical Doctoral Graduates as Percent of Reference Education Level, 2005 & 2015

Source: 2018 BC Tech Report, Profile of the British Columbia High Technology Sector, BC Stats, 2017.