Ottawa-Gatineau’s tech sector shrank by more than 10 per cent last month, Statistics Canada said Friday – an ominous sign for a local industry rattled by Shopify’s decision this week to cut a fifth of its workforce.
StatCan’s latest jobs market survey said the three-month rolling average number of workers employed in the information and communication technology sector in the National Capital Region was 52,400 in April, down from 58,400 in March.
The decline comes after the local tech sector had remained relatively stable for the past several months even as global giants such as Amazon, Google and Microsoft eliminated thousands of jobs amid rising economic uncertainty.
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Before April, the tech industry’s three-month rolling employment average had dipped below 56,000 only once since last summer – in February, when it sat at 55,800.
But layoff announcements have recently become more common in the Ottawa tech sector. While Shopify’s bombshell announcement Thursday that it is cutting 20 per cent of its workforce made headlines across North America, other locally based firms have also been terminating jobs.
Rewind Software, one of the city’s fastest-growing startups, laid off 37 of its 135 staffers in mid-March after the triple-digit annual sales gains it experienced earlier in the pandemic began to level off.
Another leading Ottawa software company, online health-care platform Fullscript, revealed in April it has reduced its head count from about 900 to 800 since last fall as part of a restructuring aimed at eliminating redundant positions and streamlining its management ranks.
Invest Ottawa CEO Michael Tremblay said factors such as rising interest rates have played a “very significant role” in triggering an economic slowdown that has hit the tech sector hard.
“At this point, the world is full of uncertainties,” he said in an interview on Thursday. “Tech is engaged in everything and not immune to those uncertainties.
“In many respects, if you look at a company like Shopify, it’ll be a reflection of what is happening to their target clients and their markets as much as it is about Shopify as a business. These are issues that are very difficult to navigate, but they’re part of the fabric of what our economy is made up of right now.”
Tremblay said that while the recent wave of layoffs is reminiscent of the dot-com bust of the early 2000s that ultimately led to the demise of Nortel and other Ottawa-based companies, he believes today’s tech sector is much better equipped to ride out the storm.
The longtime tech executive noted that the National Capital Region is now recognized as a global research and development hub in a diverse range of fields from artificial intelligence to biotechnology – a breadth of expertise it didn’t have two decades ago.
“Oftentimes markets that have that R&D footprint are the ones that are the most resilient, and this is why I feel very strongly that our region will fare well as things unfold in the next year,” Tremblay said.
The tech sector’s decline comes as total employment in the region held relatively steady last month.
The number of Ottawa-Gatineau residents with jobs fell slightly to 812,100 in April, compared with 812,500 in March. The region’s unemployment rate was 4.2 per cent last month, up from 4.1 per cent the previous month.
Meanwhile, the size of the labour force – which includes people actively looking for work – rose from 847,300 in March to 848,200 last month.
The participation rate – a key indicator that compares the size of the region’s labour force to the region’s population of working-age residents – fell slightly to 67.4 per cent, down one-tenth of a point from March.
Ottawa-Gatineau’s largest employer, the civil service, gained 600 jobs in April to surpass 189,000 workers. Other sectors making gains included education and health care, while the biggest losses occurred in accommodation and food services, which shed 8,800 jobs, and the retail sector, which declined by 3,000 jobs.
