Recent moves by US tech giants Meta, Google and Amazon to significantly boost their presence and staffing levels in Canada have cemented the country’s status as a growing hub for tech talent.
While Canada’s tech boom may be good news for those who dream of working for these tech giants, it comes at a cost for local startups, who suddenly have to compete with overseas Goliaths for the best and brightest in the world. country.
“The more companies that are created and built, the more pressure there is,” said Jeremy Shaki, co-founder of Lighthouse Labs, a Toronto-based tech education company that offers coding and learning boot camps. other services for people looking to improve their level. careers.
Shaki says it’s no secret why big foreign tech companies are eager to set up shop in Canada; beyond gaining access to new clients, Canadian universities recruit skilled workers in the blink of an eye – and they often come at a fraction of what they would cost in places like Silicon Valley.
In late March, Meta (formerly known as Facebook) announced plans to hire up to 2,500 people in Toronto and other parts of Canada, while Google says it’s looking to triple its workforce here . Amazon wants to hire for some 600 tech jobs.
But in purely financial terms, these companies have the resources to outbid everyone else when it comes to finding the right fit, which can make things difficult for local businesses trying to compete.
More than money
Ron Spreeuwenberg faces this challenge every day. He is the CEO of HiMama, a software company founded in Toronto in 2013. HiMama manufactures software solutions for the childcare industry and employs approximately 180 people, more than half of whom were hired in the past two last years.
Now with 10,000 clients, the company has expanded its hiring base far beyond its Toronto headquarters, with staff across Canada and the United States.
Gone are the days when Canada was little more than a source of cheap coders, says Spreeuwenberg.
“I think we had a period where we were lucky, where we were able to find really high quality talent at lower pay rates,” he said in an interview. “But people discovered us and that made it difficult.”
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The biggest thing Spreeuwenberg says he hears over and over again from new recruits is that they want the opportunity to grow and develop their skills. “The main reason people choose a company or a position is what the company does and the opportunity for them, in terms of learning and development, and the challenge,” he said.
That said, he acknowledges that money helps. “We know we’re competing against companies…that can certainly afford a lot more compensation than we can.”
Spreeuwenberg says a major selling point for recruiting potential candidates to HiMama outside of Canada is the country itself, as is the opportunity to work towards the company’s goal of improving the development of childhood.
“These are very important to us and things that many of our employees care about deeply,” he said.
This desire to do a good job and help solve problems is a major theme at another Canadian startup, St. John’s-based Mysa. Founded as a Kickstarter project in 2016, the smart thermostat company has grown from just two employees at launch to more than 100 across Canada today, serving more than 150,000 customers.
Just as Shopify is synonymous with Ottawa and BlackBerry is synonymous with Waterloo, the 800-pound gorilla of the East Coast tech sector is Verafin, a St. John’s-based cybersecurity firm that made headlines last year when it was bought by the Nasdaq for nearly $3 billion.
Although not widely known in the rest of Canada, Verfin’s successes have shed light on the region’s booming tech sector, said Mysa co-founder Joshua Green.
That means it, too, faces the same compensation problem that other startups face: it’s hard to compete with big tech with deep pockets.
But just as HiMama appeals to people looking to live in Toronto, it’s able to deliver a similar pitch.
“That quality of life, of being able to work for a tech company while living in a place like Newfoundland and Labrador, isn’t appealing to everyone, but to a growing number of people,” Green said. .
“And the #1 reason I think people want to join us – our mission and the purpose of our existence as a company – is to fight climate change.”
Investment money is also flowing in
The HiMamas and Mysas of the world aren’t just attracting the attention of tech giants like Google, Meta, and Microsoft when it comes to hiring; they also attract US investment dollars.
HiMama recently secured $70 million in funding from Boston-based private equity firm Bain Capital – a sign of how low-key Canada’s tech ecosystem has become.
“There is a lot of interest from investors outside of Canada in Canadian companies because of the talent and quality of startups,” said Craig Leonard, partner at venture capital fund Graphite Ventures. .
“But also, they’re sometimes relatively cheaper than some of the companies that would be integrated, in some of the other ecosystems, [like] say, in the United States.”
According to a recent report of commercial real estate company CBRE, Toronto is the third-largest technology hub in North America. Ottawa and Vancouver also make the top twelve, well ahead of places like Austin, Texas, Portland, Washington and Chicago.
Although it might be hard to believe, there are more tech workers in Toronto than in Seattle, home to Amazon and Microsoft.
Not too long ago, lower wages would have been a major selling point for an American tech company looking to establish a beachhead in Canada. But the pandemic has changed some things, as the shift to virtual offices has allowed Canadian companies to attract talent from around the world.
“It also leveled wages and the ability for Canadian talent to go work for other companies,” Leonard said.
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For Dr. Alexandra Greenhill, CEO of Vancouver-based healthcare-focused artificial intelligence company Careteam Technologies Inc., a little healthy competition is good for everyone, improving businesses of all sizes, while boosting the next generation of startups.
“If we do this right, it could be a very positive thing for the country,” she said in an interview. “But if we don’t do it right, it can be a disaster.”
Greenhill said she recently lost a handful of great people to Amazon, after she moved into her Vancouver backyard and “offered two to three times the salary I offer my engineers” .
While she doesn’t blame anyone for leaving, she would like to see big rivals invest a bit more in training less experienced workers, instead of simply sucking up a local talent pool that has been painstakingly created over time.
“We can give them all kinds of perks and cool things to do and so on, but pure dollars are completely out of our league and drive up all the prices,” she said.
While Greenhill admits it’s an ongoing struggle, she’s optimistic about Canada’s tech future because she can see what’s possible when the right environment is created – one that encourages foreign companies. to enter and participate in the ecosystem, rather than just enjoying it.
She is on the board of directors of Canada’s Digital Technology Supercluster, a government initiative to accelerate Canada’s status as a digital hub. Greenhill says the initiative combines the carrot of government money to fund technology projects, with the stick that strings are attached to that money.
Specifically, foreign tech giants wishing to participate must also invest and establish themselves.
“They have a role to play in making the ecosystem a better and stronger place,” she said.
A rising tide lifts all boats
With government support, the supercluster initiative is playing a kind of convening role, Greenhill said, holding big tech “accountable to their commitments and challenging them to behave as good corporate citizens.”
And instead of seeing big tech as an adversary, it can help cross-pollinate the entire ecosystem. “They set up accelerators, they become mentors, they create joint projects with local businesses,” she said.
For the investment community, dollars and cents will always be a priority, but Graphite’s Leonard says the best outcome for Canada’s tech sector is one where there’s a lot of collaboration and competition.
“If you get that consistent investment…it creates a flywheel effect of flagship companies that then develop that talent,” he said. “They start companies, those companies exit, that talent goes back into the pool, along with the investment dollars.”
Without this collaboration and this long-term commitment, there will be no rising tide to raise all the boats.
“If we don’t do something, you can end up being a country that just exports talent,” Greenhill said.