Tech adds $1B to Regional Economy

[Retrosnap]

http://www.castanet.net/edition/news-story-130176-1-.htm#130176

High tech equals big bucks in the Okanagan.

A just-released study commissioned by technology incubator Accelerate Okanagan shows the Valley’s technology sector contributed a whopping $1 billion to the regional economy in 2013.

The third-party economic impact report also showed a direct impact of $797 million in revenues generated by tech companies, as well as an indirect impact of $223 million created by businesses that supply inputs to the technology sector.

Accelerate Okanagan CEO Pilar Portela says the study shows the Okanagan is one of the best places in Canada to start or invest in a tech business.

Local success stories include Bardell Entertainment and WTFast.

Bardell relocated to Kelowna in 2012 with eight staff members and has since grown to 50 employees.

Portela says the gaming production studio is expected to expand again to 120 staff by the end of this year.

WTFast was launched locally in 2009 and has grown from nothing to $2 million in annual sales after launching globally in 2012. The company provides network software for faster gaming.

Portela sees no end in sight.

“The Okanagan tech sector is a real hotspot… it’s not stopping at all,” she says.

“Startups and tech companies in the Okanagan have great access to vital resources. With over 6,500 highly skilled tech workers, an international airport that offers non-stop flights to 64 destinations, and easy access to vital business support programs and services, the Okanagan is a thriving entrepreneurial community that offers everything today’s startups need for success.”

According to the survey, the Okanagan is home to 558 technology businesses with a collective workforce of 6,551 employees. The average business has 10 employees (eight full-time and two part-time) and works with two independent contractors.

It’s estimated there are 1,920 self-employed technology workers in the Valley.

Technology employees tend to be slightly younger than those in other local industries, with 38 per cent of them under the age of 35.

Portela says the industry is also attracting more women, whereas it has historically been a male-dominated sector. The study shows one quarter of local tech employees are female, and that is expected to increase over the next few years.

The full 22-page report is available here.

Accelerate Okanagan is a tech-focused not-for-profit with the mission to increase the number of technology companies in the Valley.

A couple of points I find curious...

From Pg 3 of the Report

Overall, the Okanagan high tech sector is diverse, growing and makes a significant contribution to the local economy. However, the sector faces some challenges as it strives to grow, particularly in meeting the demand for skilled workers

This is an interesting problem given the quote below from Pg 6 of the report. Based on a 40 hour week, this average wage is $36/hr.

Aggregate wages and salaries increased by 7.7% in 2012, with high tech employees earning an average of $1,440 per week (substantially higher than the provincial average of $870).

This was in reference to the BC Tech economy. Also interesting that the report did not talk about local wages.

Finally, the reports answers this question on Pg 22 of the report

Regarding the primary challenges of being located in the Okanagan, about a third said it was the small local talent pool, as they have difficulties in finding qualified staff and/or attracting employees from other areas (lower pay and real estate costs were named as reasons for this).

If you think Kelowna is expensive, try Vancouver. Are they having problems attracting talent? Perhaps part of the problem lies with the lower wages.

I work in high tech in Kelowna, and I can say that my pay is probably high for Kelowna, but lower than the BC average quoted at the top of the article.

Overall, I think this is an interesting report on the state of the industry in Kelowna, but I'm not sure it accurately reflects the reality. I have difficulty believing that it contributes $1B to the regional economy for example.

What are your thoughts?

Discuss...

[Joe Public]

What do I think?

I think that the Okanagan is an excellent place to develop high tech operations.

I think that the wages need to go up for everyone that works here, not just high tech workers.

I think that $1B is a figment of someones imagination.

[techrtr]

I thought it was funny. I worked directly in the high tech sector in the Okanagan for many years. There's a lot of smoke and mirrors and the industry here is not nearly as big as people with a vested interest make it out to be. There are a lot of mom and pop operations with one or two employees and they don't create new jobs. Plus, it's difficult to get people to move here when they can make way more money in places like Vancouver, Calgary, or Toronto and the cost of living here is so high. The best people don't stick around Kelowna - they move to high tech hot beds where they can make real money. We would post jobs and the only people who would apply were locals who didn't have the skills or experience levels that we needed. People from out of town wouldn't apply because they weren't willing to take a 30% salary cut to move here. Until employers in Kelowna stop penalizing employees with this ridiculous "sunshine tax," the high tech sector will be hamstrung.

Another thing that I've noticed in Kelowna is a lot of employers have the sense that they can treat people like garbage. "You want a job in Kelowna, you'll play by our rules cause there's no place else for you to go."

[Catri]

I think this "story" should be filed under the same heading as the fairy tales we see regularly from OMREB in the local media. It's publicity for a local business group, not a news article.

[techrtr]

Kind of reminds me of the time the genius who used to be the Economic Development Commissioner here said that "Western Star shutting down wasn't that damaging to the local economy." People with the same level of expertise and intelligence are running a lot of the high tech companies in the Okanagan.

[Captain Awesome]

There are some great high tech companies in Kelowna, but you can't expect have the same pay in Kelowna as people do in Vancouver or San Fran. It will be awesome for Kelowna, but by Vancouver standards will be meh.

Not enough hight tech companies competing for local talent.

[Retrosnap]

There are some great high tech companies in Kelowna, but you can't expect have the same pay in Kelowna as people do in Vancouver or San Fran.

But that mindset is exactly part of the problem. You can't say in one breath that kelowna workers shouldn't expect competitive wages and then say in the other that w have trouble attracting talent. I agree that it may not be necessary to match Vancouver but we still need to be in the ballpark. I think it's very telling that the accelerate study did not mention the average wage for the Okanagan.

[Captain Awesome]

You can't say in one breath that kelowna workers shouldn't expect competitive wages and then say in the other that w have trouble attracting talent.

I just did. You can't expect high wages when we have no large high tech employers. We have smaller companies, but Vancouver has Amazon, Electronic Arts, Cisco, and Microsoft. And none of them will ever move to Okanagan because there's no talent here - all high tech schools are in bigger cities, so moving here will mean they won't be able to hire enough work force.

Larger tech companies raid entire graduation classes during graduation seasons trying to sign people up. They need people by bus loads year after year. Where would they get it in Okanagan? Nowhere. Even if they move here and triple their wages, do you really think they'll attract enough people here? No, you can't catch a boat load of fish in a small puddle. So, they stick to where the talent is - major cities, high tech culture, lots of grads, etc.

[Retrosnap]

You can't say in one breath that kelowna workers shouldn't expect competitive wages and then say in the other that w have trouble attracting talent.

I just did. You can't expect high wages when we have no large high tech employers. We have smaller companies, but Vancouver has Amazon, Electronic Arts, Cisco, and Microsoft. And none of them will ever move to Okanagan because there's no talent here - all high tech schools are in bigger cities, so moving here will mean they won't be able to hire enough work force.

Perhaps I should have worded differently. I think we're on the same page. The Amazon's, EA's, etc will not move to Kelowna...ever. But at the same time, tech companies in Kelowna are still competing with them for talent. If the hi tech community in Kelowna is complaining about attracting talent as they do in the report, then they have to do something about the rates of pay they are offering, which they also mention in the report. If Kelowna can't or won't become more competitive wage-wise, then the problem attracting talent will never go away. If this is truly a $1B industry regionally, it shouldn't be an issue to be more competitive, esp for the larger players in town.

[Captain Awesome]

If the hi tech community in Kelowna is complaining about attracting talent as they do in the report, then they have to do something about the rates of pay they are offering, which they also mention in the report. If Kelowna can't or won't become more competitive wage-wise, then the problem attracting talent will never go away.

I don't think lack of talent has much to do with wages. They'll never be able to compete with bigger players in major cities. Young people always move from small one-horse towns to bigger cities. Especially if they're passionate about technology. There's just nothing for them here. If I want to work on really exciting projects, I'll move to Vancouver never mind the fact that a local company just raised their wage for administering their small network (bleh).

[nextimeround]

There are lots of exciting bleeding edge things happening in the tech sector in Kelowna. What's more it offers a lifestyle that most technology workers are drawn to. Big tech companies are already here, you just don't think (or know) about them. Disney understood it and spent 3/4 of a billion dollars.

Technology needs a few things to grow: First is the need for progressive leaders that understand technology and embrace it's potential. That leads to investment in the infrastructure to support technology. You can't have a single power source into the area like West Kelowna, it's too risky. You can't have sub-standard fibre optic lines or complete control over fibre by incumbent Telcos. Last but not least you need a solid bed of SKILLED tech workers. Yes they will (and do) come to Kelowna. We need more and we need to support and encourage the incubators to build that bed.

It's not just people taking care of ma and pa shop networks, that's far from the truth. I don't know about the $1B claim but there is a LOT of money from tech that is in Kelowna believe it or not, your choice.