FEBRUARY 2010LABOUR TRENDS IN THE BRITISH COLUMBIA TECHNOLOGY SECTOR
This document is intended to provide highlights of the 2010 TechTalentBC study. For more in-depth information, or a detailed member-briefing, please contact Cindy Pearson, Vice- President and COO of the BCTIA at 604-602-5234 or email@example.com
TABLE OF CONTENTSTable of Contents .......................................................................................................... 3Highlights ...................................................................................................................... 4 Observations.......................................................................................................... 11 Recommendations................................................................................................. 14Labour Demand Forecast ............................................................................................ 15 Headcount Overview ............................................................................................. 15 Management Positions .......................................................................................... 16 Marketing, Sales, Business Development and Customer Service and Support ..... 17 Sole Entrepreneurs ................................................................................................ 22Appendix I: Project Methodology ................................................................................ 26Appendix II: TechTalentBC Labour Demand Profile ..................................................... 29BC Technology Industry ............................................................................................... 32Acknowledgements ..................................................................................................... 33 3
Highlights TechTalentBC 2010 HIGHLIGHTS Following a tough economic year where flat was often referred to as the new growth, British Columbia technology companies tend to be optimistic about their prospects for 2010 and beyond, signalling an economic recovery and including the prospects of returning to a labour shortage by 2011. The conclusions herein highlight a number of the findings of the third wave of the BCTIA’s TechTalentBC Labour Demand Study. The study is a follow-up to two previous waves released in 2007 and 2008. These waves forecasted significant growth in headcount for the BC technology industry in the face of a labour shortage as the industry achieved peak employment in 2008. While the BC technology industry was impacted by the economic downturn in 2009 and one-third (36%) of respondent companies reduced their headcount, another one-third (34%) grew their team between Sept 1, 2008 and Sept 1, 2009. Another one-third (30%) stated no change in their headcount in the same period. In the face of the worst industry downturn since the technology bubble burst in 2001-2002, the BC technology industry reduced its total headcount by approximately 6%, or about 4700 jobs. Encouragingly, respondent companies tend to believe the worst is now over and collectively expect to grow their headcount by 6% in 2010, bringing the industry back to its previous employment peak by the end of 2010 or early 2011. The 2010 TechTalentBC study involved an online survey of technology companies4 across BC using the broad definition for the technology sector as outlined by the Province of BC through BC Stats. With the 2007 and 2008 studies providing a baseline, the study includes sample for the entire BC technology industry except for the Motion Picture and Post-Production sector. The survey was subsequently followed by in-depth interviews with senior executives and HR professionals across a breadth of BC technology companies. For further discussion on the study methodology, please see Appendix I: Project Methodology
Headcount Tracking and Projections: BC Technology Industry2008 Peak 100000 90000 80000 70000 60000 50000Bubble Peak 40000 30000 20000 10000 0 Industry Tracking - BC Stats TechTalentBC Estimates Growth Projections With a base of approximately 78,500 employees in 2008 (not including the Motion Picture sector), the BC technology industry was at a new peak for labour demand in BC, over 10,000 jobs or 14.8% higher than the peak of the technology bubble in 2001. Pent-up labour demand at emerging technology companies in BC helped to absorb much of the employment loss of other companies in decline. With a return to growth in 2010, the BC technology industry is poised to re-attain its previous peak level and proceed to achieve new peak labour demand in years to come. The projections for beyond 2010 (seen above) are based on conservative calculations that assume the BC technology industry maintains a 3.95% Compounded Annual Growth Rate (CAGR) for its headcount – in line with the CAGR experienced between the technology bust (2002) and 2008. Job Categories with Greatest Demand (Absolute Growth) Designed to collect employee headcounts from participating companies, the TechTalentBC Labour Demand profile focuses on current-year headcounts by labour category, as well as expected headcounts one year hence. Changes to the anticipated employee counts and skills mix provide the foundation for understanding near-term BC labour trends. 5
Expected demand for new positions is highest in the following categories over the next twelve months. Note that while some positions (such as executive management) have a smaller projected relative growth, their absolute growth is still quite considerable given a relatively large base. T OP 10 J OB CATEGORIES Job Category Growth (%) Growth (#) Software Engineer (Total) 11.3% 235 Technician/Technologist (Total) 17.2% 207 Project Managers 22.7% 183 Executive Management 6.8% 112 Senior Sales and Sales 195 Management Analyst (Total) 18.4% 85 Marketing Management 26.5% 73 Mechanical Engineer (Total) 16.1% 68 HW/SW Testing (Total) 13.7% 67 Product Managers 20.3% 64 TOP 10 JOB CATEGORIES TOTAL 1054 In total, the top ten job categories account for about 22% of the job growth, a substantial change from 2008 when the top 10 job categories accounted for more than 40% of the potential new jobs. This is a reflection that companies are looking to build their companies ‘across the board’, likely reflecting similar styles of cuts reported during 2008- 2009. The majority of job growth within the Software Engineer category is at the Intermediate level for respondent companies. Curiously, one area where the respondents expect negative job growth is with Senior Software engineers. Project Managers continue to be a popular job category in 2010 reflecting an expectation to revamp research and development and customer implementation projects. From discussions with respondents, this job category currently appears to have a solid supply of this category as many of these positions became redundant during the downturn and R&D and implementations slowed. Senior Sales and Marketing continue to be in high demand, particularly as companies report having a very strong focus on profitability and sales coming-out of the downturn.6
T OP 10 J OB CATEGORIES : COMPARISON 2010 VS . 2008 2010 Rank 2008 Rank 1 Software Engineer (Total) 1 2 Technician/Technologist (Total) 10 3 Project Managers 3 4 Executive Management 8 5 Senior Sales and Sales Management 15 6 Analyst (Total) 40 7 Marketing Management 37 8 Mechanical Engineer (Total) 26 9 HW/SW Testing (Total) 22 10 Product Managers 9 Top ten job categories are general similar between the 2008 and the 2010 studies, albeit the order has changed for many positions. New positions of note include Mechanical Engineers and H/SW Testing positions. Technical and General Customer Support positions also tend to have declined in relative demand from 2008.Sole EntrepreneursAccording to BC Stats (Profile of the BC Technology Sector, 2008), in 2007 therewere more than 12,800 companies with no employees (sole entrepreneurs)working in BC’s technology industry, compared to approximately 7,000companies that have headcounts. While sole entrepreneurs by definition, over 60% of these individuals sub-contract other similar contractors helping to create in effect small businesses. Over 16% of sole entrepreneurs report contracting 3 to 5 other FTE’s annually. Sole entrepreneurs tend to be a spawning ground for larger companies too. Over 35% of sole entrepreneurs in the study expect to hire full- time employees within the next 24 months. 7
Barriers to Recruitment To understand the issues holding back recruitment, in 2008 and 2010 the TechTalentBC study asked companies what they felt the greatest barriers to recruiting in BC. Q. In your experience, what are the key barriers to recruitment in BC? (Please select up to three) Higher cost of living Lack of available talent Price of talent Lack of local talent Cost of recruitment No significant obstacles Perceived lack of opportunities for… Lack of recognition of BC as a center for… Difficulty obtaining work permits or… Other Lack of employment opportunities for… Lack of graduate students from BC… 0 100 200 300 Index 2010 Index 2008 While the general barriers to recruiting talent in BC remain largely the same between 2008 and 2010, there have been some noticeable shifts reflecting the changing market. Where in 2008, the lack of available talent was the most often cited barrier to recruitment it has shifted to second place having been overtaken by the higher cost of living (or perceived higher cost) that comes with living in BC.8
Most Essential Positions to Hire In recognition of the importance of sales and revenue, particularly in light of the recent economic conditions, the most essential jobs that companies in BC are trying to fill are sales-related and specifically senior sales people. As seen by the first and second positions in the most essential positions table below. Generally, the top essential positions listed by companies under this question tend to align with the Top 10 job categories listed in the labour demand profile. Q. What is the job title of the single most important job position your company is trying to fill today, or will attempt to fill next? Sales Sales - Senior Web / Interface Developers Technician / Technologist Engineer / Developer - Software OtherEngineering/Development - Senior Engineer - Specialized Project Management Business Development Web / Interface Designer Marketing Finance & Admin Executive Management 0 100 200 300 400 500 600 700 Sponsorship of Co-operative Education and Interns To understand if and how BC technology companies might be extending their talent reach using BC’s academic resources, the TechTalentBC study has incorporated questions regarding the sponsorship of research, participation in co-operative education programs and the utilization of graduate interns. While the response rate for this section is generally low (39 respondents in 2008), responses were similar for 2010, While spending on co-operative education positions (high school, college and undergraduate) slipped modestly, spending on internships saw a significant drop. 9 35 companies indicated that they sponsored co-op students between Sept 1, 2008 and Sept 1, 2009, with the number of positions sponsored
ranging from 1 to 15, and supported by a cumulative budget of $621,000. Only 13 companies mentioned that they sponsored graduate interns in the past 12 months, with a range extending from 1 to 2 intern positions (down from a max of 9 in 2008). The cumulative budget for these positions extended to only $168,000 as compared to $500,000 in 2008. Overall, 37 respondent companies stated that they have hired former co-op students and interns, illustrating that the programs can be a significant source for new talent. Building Existing Talent through Training A considerable majority of the respondent companies (80%) allocate a portion of their salary budget to support training for FTEs. While the majority of respondents (59%) allocate less than 2% of their salary budget for training, a few respondents (5%) allocate 5% or more of their salary budget for training purposes.10
OBSERVATIONSThe following are a number of observations from the 2010 TechTalentBC study, many ofwhich resulted from the in-depth follow-on interviews with CXO’s and senior HRmanagers.While several of these observations are talent-related, many apply broadly to generaltechnology company business strategy. As a knowledge-based industry, talent and thecorporate execution of strategy are closely linked.Cycles Happen As one respondent cited “Cycles Happen”. More importantly, they cited that the cycles appear to be shortening in duration with every oscillation. Companies need to be considering the full oscillation in their long-range planning. The relative recency of technology bubble and bust served as a key lesson for many technology companies and their executives, providing them with the experience with which to both prepare and respond.Talent and Capital In discussions with senior executives, the link between capital and talent was widely cited. Several companies mentioned that their inability to raise capital during the downturn affected their business plans, including pending business closures. As one respondent described the link between talent and capital: “while a good team may be able to find the capital it requires, with capital you can always find good people” While all companies cited cost containment measures in response to the economic downturn, those companies who were fortunate enough, or strategic enough, to raise capital during the previous boom were better positioned to weather the storm than those which had not. Several executives cited that while BC has some incentives for raising capital here, more needs to be done to ensure that the funds are available to provide technology companies with the runway that they require. The lack of capital compared to the amount required was particularly cited by respondents in the medical devices and biotech sectors often require magnitudes of greater funding than software companies.Markets and Prospects The industries served by an organization have a large impact on their prospects. For instance, those companies that service the domestic forestry industry cite that the downturn for their business started long before September 2008 and are less likely to foresee a turn-around with 2010. Similarly, companies servicing 11 the mining and oil and gas industries have had a tough 2009 and are conflicted as to what 2010 will bring as markets for these commodities continue to fluctuate.
For companies like these, the recent downturn had little additional impact as they had already implemented significant cost reductions including lay-offs prior to the study period. Several of the companies that service horizontal markets seemed to find it easier to grow during the downturn and are better positioned into the upswing. As one respondent cited, “there’s always an upmarket somewhere”. Many of the respondents who grew through 2009 reported shifting focus and resources into specific vertical segments of their market in order to grow. Focus on Sales and Profitability While the results of the Labour Demand Profile illustrate that companies are looking for a balance of technical and business talent, respondents cited that they have made a focused effort on driving revenue and reducing costs to achieve profitability. Productivity has Increased Several respondents cited that through either lay-offs or acquisition of talented resources laid-off from larger companies – or a combination of both – they have very strong, productive teams currently. For many of the smaller, emerging companies, the downturn was a boon to providing access to talent for which they normally wouldn’t have been able to acquire or afford as easily. BC has a Good Pool of Talent Respondents generally cited that they felt BC had a good pool of talent, albeit many recognized the need for additional experienced talent from outside of BC is required to augment our base. Respondents often cited the quality of academic and research institutions in BC as sources of talent. Commonly, respondents cited both an increase in quantity and quality in the BC labour market since the downturn. This has allowed many companies to increase their level of talent with skilled, experienced workers, many of whom have large company experience. The Quality of Life in BC is Important for Attraction and Retention As has been cited many times, BC is an attractive place to live and build knowledge-based businesses. BC’s attractiveness likely has a larger impact on retention of talent rather than attraction. Two respondents specifically cited that should their company exit through an acquisition, their staff would almost entirely stay in BC. While BC’s Quality of Life is an important attractor, a commonly cited detractor12 is the relatively high cost of living (or perceived cost of living) as compared to other jurisdictions, particularly other jurisdictions in Canada.
Good People are Always Hard to Find A few respondents cited that they are already having difficulty sourcing the people that they require to grow. A couple of respondents cited that because of the leading-edge nature of their business, that they’ll never find people with the exact skills and experience that they require. These companies tend to cite hiring people with adequate skills, but who are a good fit, and training them on the specifics of their technology approach. Other leading-edge companies, particularly those in software, cited that because they work with modern technologies, it is extremely rare to find the senior people that they want who also have a proficient knowledge of their specific programming environment. For these companies, hiring trade-offs between technical skills and experience is inevitable.Community and Personal Networks are Important Several companies cited a reliance on their team members to provide referrals for new potential hires. The stronger the community and networks between people, the more effective this passive form of recruiting can be. While many companies did state that they pay a referral fee, or ‘bounty’ for referred hires, most felt that it was the social aspect of the favour for a contact, rather than the financial incentive, was the reason they received the referral. Most team members will only refer friends and colleague into a company where they see a good fit.The Pending Talent Crunch Will Surprise Many Despite the optimistic headcount projections provided by many respondents, the projection of the talent crunch re-emerging in late 2010 or early 2011 is a surprise to many respondents. 13
RECOMMENDATIONS 1. Employee Retention Strategies BC technology companies need to seriously consider strategies for retaining their employees as the market heats-up in 2010 and beyond. Retention strategies are particularly crucial for those companies that were fortunate enough to acquire high-end talent without the traditional wage premium during the downturn. 2. National and International Recruitment Programs The governments of Canada and BC, and the BC technology industry, need to re- institute attraction programs to encourage talented employees to locate in Canada. Talent could be from the Rest of Canada, or from international sources, or a combination of both. 3. Build Local Talent Brands Companies in BC looking to hire in the next 12 to 24 months should develop plans to build their local brand. Even if companies don’t sell into the BC marketplace, awareness in the local market is crucial to attracting top talent. 4. Undertake Supply-Side Research While the current TechTalentBC research looks at the demand side of the market, additional work needs to be undertaken to review the supply side of the market. Particularly, research is required to understand the dynamics that will determine the severity of the talent crunch including: Under-employment issues and opportunities for redress Prospects for internal advancement Retirement and Succession Plans Awareness and desirability of BC as a destination for talent 5. Reinstate BC High-Tech Sector Report The BC government has developed its own metrics for what constitutes the High-Tech Sector. In 2009, the BC Government suspended development of their annual tracking reports profiling the BC High-Technology Sector. At a minimum it is recommended that the government re-instate a modest tracking report to ensure that the Province stays on track in building a knowledge industry here in BC. 6. Continue to Focus on Talent and Capital Governments at all levels, with encouragement and assistance from the BCTIA, need to stay focused on both of the key elements of Talent and Capital in order14 to continue building an innovation economy here in BC.
LABOUR DEMAND FORECASTHEADCOUNT OVERVIEWTotal BC HeadcountIn line with the 2007 and 2008 studies, the 2010 TechTalentBC study asked respondentsto estimate the aggregate number of FTEs that they employed in BC on Sept 1, 2009 andto project the number they expected to employ by September 2010. The differencebetween the two is the growth (decline) for each category.Growth companies were split almost in thirds with 34% of companies expecting to addheadcount by Sept 2010, 30% stating no change, and only 36% declining. Expected Growth # of Companies % of Companies Expecting to Add FTEs 93 34% No Change 83 30% Expecting a Decrease in FTEs 100 36% Total Growth Estimate 2008 14,844 2009 14,264 (580) (-4%) (4709) 2010 (Expected) 15,844 1620 (11%) 4427 Overall, the 2010 TechTalentBC study indicates strong growth potential for BC’s technology sector, with headcount predicted to grow approximately 6% between September 1, 2009, and September 1, 2010. While more conservative growth estimates than previous years, it is still very significant. With a base of approximately 78,500 technology jobs (not including the approximately 6,000 employees in motion picture production and post-production), a growth of 6% extrapolates to approximately 4400 net new jobs in the industry. While the actual headcount prediction is typically an optimistic projection (companies tend to assume that they will hit their requisite milestone targets and be able to obtain the talent they require when they need it), it is an important indicator of confidence in both the prospects for individual companies and the industry as a whole. 15
MANAGEMENT POSITIONS To estimate the human resource needs at the management level, respondents were asked to indicate the number of managers employed on Sept 1, 2009 as well as the number of managers expected to be employed by the company by Sept 1, 2010. General Management Growth Comparison Growth 2010 (%) 2008 (%) 2010 (FTES) Executive Management 6.8% 8.8% 112 Marketing Managers 26.5% 26.2% 73 Sales Managers 21.9% 43.0% 88 Business Development Managers 9.0% 24 Project Managers 22.7% 38.0% 183 Program Managers 27.1% 19.4% 63 Product Managers 20.3% 44.0% 64 Technical Managers -3.2% 21.7% (48) GENERAL MANAGEMENT TOTAL 10.3% 23.1% 558 According to the results, all areas of management are expected to grow over the following year. Overall, total management headcount is projected to grow about 10% in the next twelve months, indicating that qualified managers will most likely represent a growing labour need. This aggregate demand is substantially less than the demand witnessed in the 2007 and 2008 studies, but still reflects solid, albeit conservative growth. The areas of highest growth are program managers (27%) and marketing managers (27%), followed by project managers (23%). Technical managers are surprisingly expected to have the negative headcount growth at (-3%). When extrapolated to actual FTE’s, we see the general management category adding 558 FTEs, or about one-ninth of the overall industry growth. Specialist Management Growth Comparison Growth 2010 (%) 2008 (%) 2010 (FTES) Regulatory/Clinical Affairs 4.1% 7.9% 5 Licensing Management 0.0% 7.2% - Intellectual Property 5.7% 60.3% 3 Management Supply Chain Management 4.1% 7.9% 27 SPECIALIST MANAGEMENT TOTAL 10.1% 18.9% 34 The specialist management categories show some of the lowest forecasted16 growth of all labour demand categories. Many of these functions are often out- sourced to professionals which makes this a fairly unsurprising result.
MARKETING, SALES, BUSINESS DEVELOPMENT AND CUSTOMER SERVICEAND SUPPORTMarketingIn line with the 2008 study, which found the greatest demand for sales andmarketing positions, the 2010 study identified approximately 270 new marketingpositions over the next year. Again, this reflects a continued commitment toexpanding markets to drive revenue. Growth Comparison Growth 2010 (%) 2008 (%) 2010 (FTES) Marketing Managers 26.5% 26.2% 73 Product Managers 20.3% 44.0% 64 Marketing - Entry 30.4% 49.9% 39 Marketing - Intermediate 15.5% 51.9% 53 Marketing - Senior 19.5% 32.9% 40 MARKETING TOTAL 21.2% 39.4% 268 As can be seen in many of the labour demand categories in 2010, the projected growth is about half of that seen in the 2008 study. Sales and Business Development As a job category, Business Development was broken out from Sales for the first time in the 2010 study due to the difference in skillsets often required between the two positions. In total, 261 FTEs in sales and business development are required to grow the BC technology industry in 2010 with about 10% of those positions being business development jobs. Sales Managers and Senior Sales people have the highest FTE requirements with 88 and 108 jobs respectively needing to be filled in 2010. Growth Comparison Growth 2010 (%) 2008 (%) 2010 (FTES) Sales Managers 21.9% 43.0% 88 Business Development Managers 9.0% 24 Sales - Entry 31.8% 49.6% 34 Sales - Intermediate 2.2% 35.0% 8 Sales - Senior 30.0% 29.0% 108 SALES AND BUSINESS 17.7% 36.7% 261 17 DEVOLOPMENT TOTAL
Customer Service and Support Growth Comparison Growth 2010 (%) 2008 (%) 2010 (FTES) Customer Support (General) - 0.0% 32.7% - Entry Customer Support (General) - 1.8% 12.5% 8 Intermediate Customer Support (General) - 6.9% 11.9% 15 Senior TOTAL CUSTOMER SUPPORT 2.7% 15.9% 23 (GENERAL) Customer Support (Technical) - 64.0% 29.1% 60 Entry Customer Support (Technical - 8.2% 23.5% 26 Intermediate Customer Support (Technical) - 12.2% 14.6% 38 Senior TOTAL CUSTOMER SUPPORT 17.2% 22.9% 124 (TECHNICAL) CUSTOMER SERVICE AND 147 SUPPORT TOTAL One of the job categories that has the least demand overall in the 2010 study is customer service and support. It is down significantly from being a high-growth category in 2008. The exception to this lack of demand is entry-level technical support which is expected to add 60 jobs in 2010 with a demand rate that is over twice that of 2008.18
Growth Comparison Growth 2010 (%) 2008 (%) 2010 (FTES) Multimedia Developer - Entry 35.7% 20.7% 13 Multimedia Developer - 31.0% 50.0% 23 Intermediate Multimedia Developer - Senior -20.0% 44.4% (20) TOTAL MULTIMEDIA DEVELOPER 7.2% 44.0% 6 TECHNICAL DEVELOPMENT – 8.1% 30.8% 505 SOFTWARE, HARDWARE AND NETWORKS One-ninth of the overall headcount growth for 2010 is expected to come from technical development positions within Hardware, Software and Network development. This demand is not surprising given BC’s historical reliance on the Information, Communications and Telecommunications sectors as the backbone of its technology industry. Software Engineers, particularly Intermediate Software Engineers have the greatest expectation of growth (275 FTE’s) while surprisingly, Senior Software Engineers are anticipating a decrease in demand by a considerable 123 FTEs. Another surprising area of loss is Intermediate Systems and Operations professionals. This decrease in headcount may be due to an increasing reliance on hosted systems where many of these traditional in-house jobs are being managed by outsourcing professionals. As seen in the general management, demand remains high for Project Managers and Program Managers, particularly as companies begin to ramp-up their R&D efforts again in 2010.20
With other technical positions, the most notable job category is that of the catch-all technicians and technologists which are projecting a solid growth of over 200 FTE’s. SOLE ENTREPRENEURS As part of 2010 Labour Demand study, several questions were asked of sole entrepreneurs to determine whether they are predominantly true entrepreneurs and contractors or ”contract employees” who spend the majority of their time with one employer and as such are essentially FTEs at these client companies. It is recognized that as knowledge professionals, the broad technology industry allows people to easily manage their own business, often from their own homes, providing a very flexible (and low carbon footprint) workforce. Contract Employees vs. Contractors Q. Which of the following best describes your business? (#) % % Change 2010 2010 2008 The Majority of My Time (60% Or More) 4 11.1 10.0% is Contracted to One Major Client My time is typically split between two 3 8.3% 0.0% major clients I Typically Work for Three or More 29 80.6 89.9% Clients Increase Decrease No Change In line with the 2008 study, the entrepreneurs who responded to this study tend to work for multiple clients, with most (81%) indicating that they work for three or more clients during the course of a typical year. Few individuals (11%) stated that they spend the majority of their time with one employer, while 9% stated that they typically spread their work between two major clients. Services Provided As seen in the chart below, the sole entrepreneur tasks run the gamut of business and professional positions, including many of the specialist positions cited earlier in the main labour demand profile. The jobs tend to be desk-bound, reflecting the innate ability to work from home with relatively minimal equipment required.22
Q. As a sole entrepreneur, what types of services do you typically provide? (Choose all that apply) Multimedia Design/Development Management Consulting Technical Writing Marketing and/or Public Relations Software Development Sales, Business or Channel… IT/Network Support Index Engineering Product Development or Product… Industrial Design Supply Chain ManagementIntellectual Property Management Game Design 0 50 100 150 200 Services Provided (#) % % Change 2010 2010 2008Multimedia Design/Development 9 13.2% 47.7% Marketing and/or Public Relations 6 8.8% 30.8% Technical Writing 8 11.8% 21.5% IT/Network Support 5 7.4% 20.0% Product Development or Product 4 5.9% 16.9% ManagementEngineering Services 5 7.4% 15.4% Management Consulting 9 13.2% 13.8% Sales, Business or Channel Development 5 7.4% 13.8% Intellectual Property Management 3 4.4% 9.2% Software Development 6 8.8% 7.7% Supply Chain Management 3 4.4% 1.5% Game Design 1 1.5% NEW in 2010 *Note: Figures may add up to more than 100% owing to multiple responses 23
Sole Entrepreneur Industries Reflecting the breadth of business and desktop-based role outlined above, its’ not surprising that sole entrepreneurs in BC’s technology industry provide a considerable plurality of the services to the digital media, ICT and Engineering Services sectors. Index: Sole Entrepreur X Industry Digital Media and Gaming Information and Communications… Engineering Services Other Wireless Technologies Sustainable/Environmental… Ocean and Marine Technologies 0 50 100 150 200 250 Sub-Contracting New to the 2010 study was questioning to understand how many other sole entrepreneurs each tends to work with (on an FTE basis). Surprisingly, over 60% of respondent sole entrepreneurs sub-contract to other contractors creating virtual companies with up to 5 FTE’s. Q. Do you currently sub-contract to other organizations or independent contractors? (Please select the most correct answer) Expected Hires (#) % % Change 2010 2010 2008 I do not currently sub-contract to others 12 38.7% NEW in 2010 I sub-contract 1 to 2 other FTEs annually 14 45.2% NEW in 2010 I sub-contract 3 to 5 other FTEs annually 5 16.1% NEW in 2010 Expectation to Hire Full-Time Employees While almost two-thirds of sole entrepreneurs are expecting to remain one- person companies over the next two years, many are planning to expand and hire one or two (19%) or three or more (16%) FTEs in the next 24 months. This24 reflects that many companies start as sole entrepreneurs and virtual companies before becoming formal companies with FTE’s.
Q. Are you planning to hire any full-time employees within the next two years (24months)? (Please select the most correct answer)Expected Hires (#) % % Change 2010 2010 2008Not Planning to Hire Full-Time 20 64.5% 55.0% EmployeesOne to Two Full-Time Employees 6 19.4% 29.0% Three or More Full-Time Employees 5 16.1% 15.0% In summary, sole entrepreneurs provide a significant base of support for the technology industry in BC (14% of the total technology industry headcount), and offer a number of valuable near-sourced services to the broad BC technology industry. More importantly, they are a substantial funnel for growing new, larger enterprises in the sector. 25
APPENDIX I: PROJECT METHODOLOGY The 2010 study is the third wave of the BCTIA’s TechTalentBC Labour Demand study and for consistency and comparison potential followed a similar format to the 2007 and 2008 studies. The study uses the broad definition of the BC technology industry from BC Stats, save and except for the Motion Picture and Post-Production sector. Undertaken as a multi-modal research project, the primary mode was an online survey of CXO’s and senior HR professionals at BC’s technology companies. To assist respondents, a fax-back option was also provided facilitating offline data collection. Follow-on in-depth interviews were also undertaken with 15 CXO’s and senior HR professionals to provide additional depth and context to the quantitative data analysis and to confirm hypotheses’ herein. The quantitative survey was conducted from October 20 to November 4, 2009. An invitation to participate in the study was sent to 5,123 CXO and Senior HR contacts at 2995 companies across BC. Care was to taken to ensure respondents were selected from a cross-section of technology sectors, vertical markets serviced, and geographic regions across BC. Sample Validation To validate the sample, the respondent dataset was compared to industry statistics from BC Stats as published in their Profile of the British Columbia High Technology Sector-2008 Edition. While the respondent sample has a moderate skew towards more mature companies, with 276 organizational respondents (including 40 sole entrepreneurs), the data collected appears to be a representative reflection of the total technology community in BC. Sample Population Dec 31, 2007 Total number of respondents (with FTE’s) 236 6952 Total revenue (past 12 months) $4.8B $15.04B Total headcount 13,789 75,810 (Sep 1 2008) Average number of employees 58.4 10.9 Median number of employees 18 Average revenue $24.1M 2.16M Median revenue $1.4M Average company age 17 years Collectively, respondent companies with employees represent $4.8B in revenue and had 13,789 employees on September 1, 2008. Effectively, this means that the respondent26 companies (with FTE’s) account for approximately 32% of the industries revenue and 18% of the headcount.
The sample appears to be skewed slightly toward larger, more maturecompanies, which can be seen in the average age of respondent companies (17years), as well as their average size (58.4 employees), compared to the averageof 10.9 employees cited by BC Stats. However, 50% of respondent companiesreported having fewer than 18 employees (as seen by the median size),suggesting a good sample of smaller companies.As larger companies tend to grow more slowly than smaller companies, as wascited in the 2007 TechTalentBC study, and since they tended to have deepercuts, as is seen in the 2010 data, any extrapolation to the broader communityshould be a conservative reflection of growth.As such, the researcher and the BCTIA are comfortable extrapolating the data tothe broad BC technology industry.Concerns: Survivor Bias and Optimistic ProjectionsIn the 2007 and 2008 TechTalentBC studies it was recognized that companieswere probably over-optimistic in their headcount projections. Achievingheadcount projections typically requires that a company meet a number ofcorporate milestones including but not limited to financing, revenue growth andan ability to find the desired people required within the timeframe required.As stated in the 2007 and 2008 report, our previous hypothesis was thatcompany projections were probably optimistic by a factor of 2, although therehas previously been insufficient data to confirm the hypothesis. With the 2010study, there were 63 companies who had also provided input into the 2007wave. As such, we were able to confirm projected headcount for September 1,2008 with the actual headcount for that date. Where a growth of 13.7% waspredicted, only 4.5% growth was realized, likely in part to due to the tightness ofthe labour market at that time.Therefore, when extrapolating actual headcount expected in 2010, headcountnumber have been reduced by a factor of 2 to provide a more precise predictionof actual headcount growth.Survivor bias is also recognized as a weakness of the study’s methodology. Bynature, companies that have recently ceased operations are excluded from thesample as they cannot be reached. As such, companies whose headcount hasbeen reduced to zero are undercounted in the study. Survivor bias was ofparticular concern to the 2010 study due to the effects of the recent economicdownturn.To account for survivor bias, projections of the decrease in industry headcount in2009 have been multiplied by a factor of 1.46 to provide a comfortableconservatism to the estimate. This resulted in a gross-up from the reported 4.1% 27decrease in headcount experienced by respondent companies in the 2010sample to our projected industry-wide decrease of 6.0%.
As TechTalentBC continues in future years, we expect further refinements in its ability to predict specific headcount demand. TechTalentBC Labour Demand Profile The core of the TechTalentBC study is the labour demand profile which asks companies to provide their current and projected headcounts by major business and technical job categories. These categories were defined in the 2006 Labour Demand study with assistance from the Information and Communications Technology Council. Respondents were asked to provide their headcounts by category as of September 1, 2008, September 1, 2009, and to provide their expected headcounts as of September 1, 2010. The aggregate difference between the two figures (adjusted for exuberance as cited in the previous section) provides the projected growth for each category. The labour demand profile is based on the profile from the 2007 and 2008 baseline studies, with the exception of refinements to separate Business Development professionals from Sales Professionals, to increase the granularity of the Quality Assurance job category and to clarify the Production Engineer and the Systems and Operations job categories. Despite the fact that many organizations have national and global workforces To keep the study focused, respondents were asked to only provide input on their BC-based employment. Specific results for the TechTalentBC Labour Demand Profile can be found in Appendix II: TechTalentBC Labour Demand Profile28
BC TECHNOLOGY INDUSTRY The following is an outline of the major industry sectors in BC and their relative strengths with respect to number of companies, number of employees and annual revenues. TECHNOLOGY SECTOR STATISTICS 6,000 companies INFORMATION & 46,000 employees COMMUNICATIONS $9 billion in revenue Hardware, Software, Telecommunications and IP over Everything 500 companies WIRELESS 6,000 employees Hardware, Software and Broadband Internet $2 billion in revenue 100 companies LIFE SCIENCES 2,600 employees Pharmaceuticals and Medical Devices $900 million in revenue 1100 companies NEW MEDIA 15,000 employees Interactive Multimedia, Gaming and E-Learning $2 billion in revenue 190 companies AEROSPACE 1,550 employees Engineering, Manufacturing and Training $450 million in revenue 1,390 companies CLEAN TECH 21,000 employees Hydrogen; Fuel Cells; Power Electronics; Energy Storage; Wind, Ocean and Solar Power; Environmental Technologies $2.8 billion in revenue Data compiled from Profile of the British Columbia High Technology Sector (2008), Wireless in BC (2007), New Media BC, Aerospace Industry Association of BC. Sectors contain overlapping data due to companies being listed in more than one sector. * Headquartered in BC G LOBAL C OMPANIES WITH A P RESENCE IN BC 3M Touch Systems HSBC Group Robert Bosch GmbH Alliant Techsystems IBM Sage Group Ballard Power Systems Inc.* Intel Schneider Electric Boeing MacDonald, Dettwiler and Scientific Atlanta – a Cisco Broadcom Corporation Associates Ltd. (MDA)* Company CDC Software Microsoft Corporation Sierra Wireless* Dolby Canada McKesson Corporation Seiko Epson Corporation Eastman Kodak Nokia SAP Electronic Arts Open Solutions Sophos Harman International Pixar TELUS* Industries Plug Power UTStarcom Honeywell Video Systems Phillips Lighting Vivendi Universal Walt Disney32
ACKNOWLEDGEMENTSTechTalentBC Labour Demand Study is an annual industry study designed toidentify the growth and hiring trends of British Columbia’s technology industry.SUPPORTING ORGANIZATIONS BC Ministry of Housing and Social Development, Employment and Labour Market Services– http://www.labourmarketservices.gov.bc.caKEY ORGANIZATIONS British Columbia Technology Industry Association – www.bctia.org The British Columbia Technology Industry Association (BCTIA) is a not-for- profit organization that represents the technology industry of British Columbia. As the voice of BCs technology industry, the BCTIA provides the leadership, connection, and action needed to foster the continued growth and success of the industry. Thomson & Associates – http://www.thomsonconsulting.ca Led by Steve Thomson, SL Thomson & Associates Consulting is a boutique research and consulting firm specializing in market intelligence and strategy consulting for high- tech organizations. Thomson & Associates employs a mix of quantitative, qualitative, and competitive intelligence research to drive actionable product and business development efforts. 33