Alberta’s IT sector emerging as powerful economic force

September 16, 2010

CALGARY, AB, Sept. 16, 2010/ Troy Media/ They don’t wear cowboy hats, spray crops or work on oilrigs. Yet they contribute up to 15 per cent of the province’s gross domestic product. They’re techies, and they’re the unsung heroes of Alberta’s economy.

The statistics are impressive: Alberta’s information communications technology (ICT) sector’s direct economic impact exceeds $8 billion per year, and ICT companies are among the largest spenders on industrial research and development, according to the Alberta ICT Council, a not-for-profit advocacy group. Health care, education and government services are among the countless industries benefiting from Alberta’s burgeoning tech sector.

Driving that growth are a handful of factors, including low provincial taxes, government initiatives and an impressive talent pool.

While the presence of tech titans like Nortel once lured IT professionals to this prairie province, Ranil Herath, president of DeVry University’s Calgary campus, points to smaller outfits as being key contributors to Alberta’s economy. “These days, there are many small- to medium-size tech firms that continue to thrive in the province of Alberta, and we’re seeing a fair bit of innovation come out of them.”

Medical imaging

One of those firms is Calgary Scientific, which has developed an iPhone app that provides round-the-clock, worldwide access to medical images on mobile devices. Dubbed ResolutionMD Mobile, the life-saving software lets emergency personnel deliver to doctors CT and MRI scans and a range of other critical data that allow them to make decisions on the spot. Not bad for a business with just 53 employees.

“People’s perception is that you can’t build the kind of advanced technology that we’re building in Alberta,” says Byron Osing, CEO of Calgary Scientific. “But my team stands in front of the biggest, smartest companies in the world all the time and blows them away.”

Long gone are the days of Alberta’s gold-rush-driven work force, which spawned mass influxes – and exoduses – of talent. “Once people move here, they find the lifestyle in Alberta is wonderful,” Osing says. “It’s a great province to live in, and the personal taxes are a lot lower than many people are used to paying in Ontario or British Columbia. Once technology-based talent comes here, it seldom leaves.”

Roman Nemish has seen similar employment trends. Nemish is the president of Tektelic Communications, a Calgary-based company specializing in high-power and high-efficiency radio solutions for wireless networks. “It’s not difficult to attract people in the telecom industry to Alberta,” he says.

Collaborative spirit

A collaborative spirit has also greatly contributed to Alberta’s strengthening tech sector. “Alberta is still the most entrepreneurial province in the country,” Osing says. “We’re a Western-based province; we’re not fed by government; you pull yourself up by your own bootstraps, and you find a way to make a go of it. To do that, you have to depend on each other as entrepreneurs or private businessmen for access to a lot of resources that people in other provinces can access through government programs.”

There’s no disputing that Alberta’s tech sector has been overshadowed by the province’s much-ballyhooed beef and energy industries. However, savvy business leaders are tapping into the advantages of being so close to such lucrative industries.

“When the oil and gas companies were doing really well, the government was able to see a meaningful profit, which it’s now using to make Alberta a stronger location for investment,” Nemish says.

But profit parlayed into government subsidies isn’t the only way tech-related companies are piggybacking on Alberta’s energy, agriculture and oil sectors.

“People don’t realize it, but the oil patch is a very technical business,” Osing says. “Calgary is one of the centres of the universe for technology development as related to the resource industry.”

That’s not to suggest that Alberta’s tech sector doesn’t face major challenges. Although the province still enjoys a relatively low tax regime, the oil boom has driven up the price of residential and commercial real estate. According to a recent Royal LePage housing-price survey, the average price of a two-storey home has risen by 5.5 per cent, and prices for detached bungalows have increased by 4.6 per cent since 2009.

Insufficient venture capital

Another obstacle to the tech sector’s positive impact on Alberta’s economy is poor access to venture capital. While some provinces, Ontario for example, have labour and pension-sponsored funds, Osing says that “the single biggest factor that we lack in Alberta is a significant amount of venture capital or institution capital to invest in early-stage technologies here.”

Nemish agreed. “Compared to Eastern or Western Canada, there isn’t really a strong venture-capital community for high-tech companies. Ninety per cent of business in Alberta is focused on oil and gas, so venture capitalists see that as a much lower-risk investment than high tech. Besides, it’s much easier to invest in businesses you understand than ones you don’t.”

Business leaders have criticized the Alberta government for picking favourites when allocating scarce funds. “The government has to be careful not to be perceived as picking winners and losers (among high tech companies),” Nemish says. “It’s a very fine line.”

In the end though, sustaining Alberta’s ICT sector and its positive impact on the province’s economy may have as much to do with innovation, talent and venture capital as with gracefully embracing its second-string status. After all, says Herath, “the two main areas Alberta is known for are beef and oil. And that’s not going to change.”

Channels: True North Perspective, Sept. 16, Calgary Beacon, Sept. 17, 2010