Island life has business challenges, but revenue in Victoria’s tech sector has doubled since 2000

Every week Techvibes republishes an article from Business in Vancouver.

This article was originally published in issue #1055 – Jan. 12 – 18, 2010.

Victoria’s leading technology industry association is taking stock of the sector in a bid to better promote its economic impact locally and abroad.

A report released in late November reveals that technology continues to be the city’s largest revenue generator, outpacing tourism, which traditionally held that title.

Technology first surpassed the city’s tourism sector in 2007, when an independent study found that technology-driven businesses annually generated $1.6 billion in revenue.

The latest report, which was commissioned by the Victoria Advanced Technology Council (Viatec) and prepared by a University of British Columbia PhD student, found that city’s technology sector continues to grow, generating 2008 revenue of $1.95 billion.

Revenue in Victoria’s technology sector has roughly doubled since 2000.

“That said, it still remains a highly hidden industry – and we’re trying to change that,” said Dan Gunn, Viatec’s executive director.

Tourism remains the city’s largest employer (40,000 employees). The technology sector employs 13,000.

Gunn said Victoria’s tech sector was more resilient than most during the recession because many of its companies’ focus on micro-niche markets, which range between $50 million and $100 million.

Because the markets are so small, many of Victoria’s technology companies are market leaders.

“So even during the recession, a lot of those [companies’] products remained in demand,” said Gunn. “They’re not like discretionary consumer items that can drop off rapidly and quickly.”

However, he noted that the downturn hit information and communication technology (ICT) businesses in Victoria particularly hard because many rely heavily on provincial government contracts.

The provincial government reduced spending across the board last year.

“So companies that had the provincial government as their primary or single customer were hit hardest,” said Gunn.

Viatec’s next steps are to conduct a compensation survey to help executives and human resource consultants gauge how wages in Victoria’s tech sector compare with those in other jurisdiction.

As well, Viatec plans to travel to cities such as Calgary and San Francisco to study how Victoria could attract more technology workers.

“Victoria’s tech sector two years ago was growing so fast that the No. 1 challenge was related to recruitment,” said Gunn.

“That wasn’t unique to our city, but we want to be better prepared for when that happens again.”

Manufacturing remains one of the Island’s weak performers. While Carmanah Technologies Corp. (TSX: CMH) and Schneider Electric Canada anchor the city’s technology sector, their manufacturing is done in other jurisdictions.

That’s mainly because of the logistical challenges the city faces being on an island, said Gunn.

“Manufacturing on the Island is probably not the best long-term move for a company that wants to grow significantly.”

However, being on an island also has its advantages.

NEPTUNE Canada, a major ocean observatory that’s attracting attention from the international scientific community, launched on the island in December.

As well, the Institute of Ocean Sciences located west of Sidney has spun off a number of successful companies, including ASL Environmental Sciences, Applied Microsystems Ltd. and AXYS Technologies Inc.  

Said Gunn: “All these companies grew from the fact that we’re surrounded by water and found a way to turn that into a commercial opportunity.”