The coming few months will be critical for Canada’s economy. A nation’s most innovative and high-flying firms are often at the edge of financial success or failure and an event like the COVID-19 crunch is going to put the future of many firms at real risk.
Here in Ottawa, we’ve seen similar cycles before. The city helped to build world-class success stories such as Nortel, Newbridge and Cognos. We were making a splash. But the crash of 2001 and the financial crisis of 2008 hit the industry hard. In many cases, the final result was selling to foreign owners – an all-too-familiar exit strategy.
In recent years, we've once again built a talent pool that's the envy of the world. And then, along came COVID-19. We are once again going to see death by acquisition and attrition. History has shown the spoils in business go to those with deep pockets.
COVID-19’s impact is already being felt. The scientists and engineers trained and educated in Canada and working in tech are already being offered jobs.
The Canadian Advanced Technology Alliance (CATA) has received an inquiry from a foreign company that is looking for a deal on a tech firm. It’s also received information that some firms have already been sold.
It’s harder and harder to replace lost companies and skilled workers because of the rising global demand for talent. Consulting firm Korn Ferry recently predicted a worldwide shortage of 1.1 skilled ICT workers – a figure it expects to rise to a staggering 4.3 million by 2030. Our schools cannot produce enough skilled grads for all the jobs out there. COVID-19 won’t permanently change that competition – it will only pause it.
There are currently 12,000 smallish knowledge-based companies in Canada that are prime takeover targets for foreign-owned companies. Canada’s tech startups employ some 85,000 people and have the talent, agility and energy to lead us out of this downturn (not to mention finding COVID-19 cures, treatments and testing solutions).
Unless we move decisively, Canadians will lose years of innovation and billions of our tax dollars that were invested in these firms.
A global survey by Startup Genome found that 42 per cent of global startups will shut down within three months if nothing changes; some 58 per cent have already let staff go. This is a pretty clear indication of where we are headed.
What can be done?
The federal government is trying to help. We applaud its measures, which include the wage subsidy program, business loans, money for IRAP, changes to SR&ED and a new policy to more closely review any foreign takeovers of our top innovative firms.
But this does not reach all those 12,000 innovative firms. The Canadian Advanced Technology Alliance believes there is a huge need for speed to get assistance out. To prevent the corporate losses that would threaten our collective future, please sign CATA’s petition on change.org.
The world is entering its fourth industrial revolution, often called Industry 4.0. The future is up for grabs. Will Canada be a high flyer again and grab a spot at the forefront of the new economy?
David Perry is managing partner of tech recruiting company Perry-Martel International as well as a board member at the Canadian Advanced Technology Alliance.