(The Vancouver Sun) Is B.C.'s tech sector about to hit a wall_ Supply

(The Vancouver Sun) Is B.C.’s tech sector about to hit a wall? Supply of top tier talent tight

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The breathless headlines trumpeting the expansion of B.C.’s tech sector miss an uncomfortable truth: We aren’t able to supply enough qualified graduates to populate fast-growing firms and startups.

Tech is growing at roughly double the pace of the rest of this province’s economy, more than seven per cent annually in the past couple of years, said Bill Tam, CEO of the BC Tech Association, or BC Tech.

The sector boasts more than 9,500 companies employing 90,000 people, with another 50,000-plus tech-related jobs in other industries such as mining, forestry and energy. B.C. Stats estimates sector revenue at $26 billion annually.

But it all hits a wall without the talent that growing firms need.

“Access to talent remains the biggest issue for most tech companies,” wrote KPMG researchers in the 2016 British Columbia Technology Report Card. “B.C. post-secondary institutions graduate fewer engineering and technology-related degrees, on a per capita basis, compared with other Canadian provinces.”

“I was at a dinner with a dozen of the larger tech companies represented and they alone could hire every graduate B.C. produces in a year,” said Tam. “We need to increase the capacity of post-secondary training quite substantially in the years to come, by thousands really.”

Let’s be more specific. BC Tech’s own growth goals call for the number of companies with 50 or more employees to double “as soon as possible,” which would require roughly 25,000 qualified workers.

“With the growth of so many companies and the arrival of so many larger players, there have been pinch points in the supply of talent and it hasn’t been enough to feed the entire community,” said Tam. “The fight for global dominance will require us to be that much better than other jurisdictions at producing and attracting the best talent that there is.”

Students at work in an SFU faculty of applied science engineering lab

Simon Fraser University recently added 440 new spaces for engineering students, which he dubbed “a start.”

B.C. is already feeling the effects of a tight labour supply.

Salaries of “intermediate technology professionals” are up almost six per cent over last year, according to the 2016 B.C. Tech Salary Survey.

“In 25 years of conducting the B.C. Tech Salary Survey we have not seen such large salary increases,” according to Allison Rutherford, executive director of the HR Tech Group. “This demonstrates what tech companies across the province are experiencing first hand: There is increasing competition for tech talent in B.C.”

Average earnings for tech sector employees are about 75 per cent higher than other industrial sectors, about $1,600 a week. It’s good news for workers when companies pay a premium to retain talent, but it may not be sustainable in the longer term.

Bill Tam, president and CEO of the B.C. Technology Industry Association, says the decision by SFU to add 440 engineering student space is an ‘exciting development’

“The pipeline could be fuller than it is,” said Tam “The SFU announcement is a very exciting development, because there is huge demand for mechanical and mechatronic skill sets, especially for manufacturing and clean tech industries.”

The provincial government spent $1.3 million on co-op education in 2016, $11 million in life sciences laboratories at UBC and offered grants to help post-secondary institutions match their programming to the needs of the tech sector. It has also taken steps to have foreign credentials recognized more quickly in B.C.

BC Tech’s growth strategy outlines investment in education as key for the growth of the tech industry, along with better access to investors.

“These companies need better access to capital, a full pipeline of technical and engineering talent and robust access to our own markets, through government procurement, which can really help companies in the early stages of development,” said Tam.

And the early stages are where a huge number of B.C. tech businesses are right now. More than 80 per cent of local tech firms employ fewer than 10 employees.

B.C. is graduating a growing number of startups into medium-sized businesses, though not at the rate of other jurisdictions. The number of firms with 10 to 49 employees grew about 18 per cent between 2012 and 2014.

Industry estimates of the failure rate for startup companies at anywhere from 90 per cent in the first 18 months to 50 per cent after five years. Either way, it’s tough to gain traction and survive.

“Our goal should be to grow bigger companies that will inspire startups to scale up and compete globally,” said Tam. “We’ve seen it with Hootsuite and Avigilon, Build Direct and Vision Critical. We need to keep proving it can be done in Vancouver.”

Vision Critical founder Andrew Reid survived the process, but not without taking a few lumps along the way. He has recently left the company to pursue his own startup, VC Labs.

What has changed in the 16 years since he started Vision Critical is the growth of a tech “ecosystem,” an environment in which young companies can dovetail their work to integrate with the platforms created by larger players.

“I think we have a nice mix now of small companies, medium-sized companies and big companies,” said Reid. “We are getting better and better at coming together. I see meetups put on by companies and industry groups that really foster exchange.”

Quite a few companies have broken through the 50-employee mark and those are homegrown companies that are finding their way and becoming truly global companies. Recently we’ve seen the arrival of Amazon, Sony, Animal Logic and other mid-sized companies such as Tableau.

“Now I’m seeing people jump from startups to bigger companies and people from bigger companies like Vision Critical jumping into a startup,” said Reid. “There’s a lot of people leveraging their expertise and then moving on to find new challenges. It cross-pollinates the whole industry with new ideas.”

“Just five years ago everyone was looking to go to California to find more money and more opportunity,” he said. “But now senior level talent and specialists are coming here. And even if it doesn’t work out at the first company, there are enough others that they know they will be able to leverage their skills sets without moving again.”

The global success of locally grown companies such as Electronic Arts and Schneider Electric, has captured the attention of the world’s tech community, too, including software heavyweight Microsoft.

Microsoft established its new Vancouver-based excellence centre in a small acreage of office space above the new Nordstrom store on Granville Street, with an employee base of about 500 and growing.

“There are several reasons why Vancouver made sense,” said Edoardo De Martin, director of Microsoft Vancouver. “B.C. universities are being recognized for their technical programs and the quality of their graduates.”

“Exceptional talent from the video game, animation and special effects industries is perfectly suited to virtual, augmented and mixed reality development,” he said.

Add to that, Vancouver’s multicultural makeup mirrors the global audience Microsoft targets its products to, he noted.

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