Why one in every ten Vancouver jobs is in the tech industry

This month, Invest Vancouver — Metro Vancouver’s regional economic development service — released its weighty new report, The Metro Vancouver Region’s High-Tech Engine: Boosting the Economic Landscape. Over 44 pages, the document examines key trends in tech talent, how global companies make decisions to scale here, and the transformative power of AI in the sector. A large portion of the report evaluates how Vancouver’s unique selling points for investment stacks against other global tech hubs.

Over the next three weeks, we’ll be breaking down the most important parts of the dossier, and offering our own analysis of Invest Vancouver’s data. Want to read part two and three of our report analysis? Become a member now:

• Part two: The cost of business in Vancouver is cheaper than you think

Is Metro Vancouver really a growing, world-class tech hub?

Cheerleaders of the industry like to evangelize Metro Vancouver. As well as a great quality of life, they say, the region boasts a wealth of tech talent and leading-edge companies, especially in creative and digital industries. Hard numbers to back up those sentiments have so far been lacking – but Invest Vancouver’s data-driven research proves the theory.

To justify this, the organization’s research focuses on two key metrics. The first is the amount of people employed in the industry, and how quickly those numbers are rising. The second is how much — and into what verticals — money has been invested into the region. Doing so, the report suggests, offers compelling evidence of the region’s competitive advantages.

Vancouver’s tech industry is outpacing the broader economy

Metro Vancouver’s technology sector employed almost 125,000 people in 2021 (the most recent stats available for the report.) That represents an increase of 75 percent since 2009 — and shows that — in 2021 at least — nearly one in every ten jobs in the region (9.6 percent) was in the tech industry.

The sector also punches above its weight when comparing tech employees to British Columbia’s employment averages. While Greater Vancouver represented 48 percent of employment across all industries in 2021, it contributed 77 percent of the province’s tech workforce. That, Invest Vancouver says, shows that the provincial sector is highly concentrated in the Vancouver region.

Talent is driving growth in Metro Vancouver

One statistical model used in the report is shift-share analysis: an economic technique for spotting regional advantages and specializations by seeing how job numbers change. With this approach, Invest Vancouver dove into Metro Vancouver’s regional employment growth in 51 tech occupations from 2009 to 2023. 

The shift-share analysis revealed a competitive effect in many jobs — meaning that Invest Vancouver was able to isolate how much of the increase is due to Vancouver’s competitive advantage in tech talent. Of particular note, the investigation showed a large competitive effect in many tech roles, including software engineers and designers, software developers and programmers, and computer systems developers. The same was true in the life sciences industries, which also connected to the natural resource industries in the province (specifically geological engineers and mining engineers).

Overall, the analysis proves the importance of the region’s specialized tech workforce. It shows concentrations of talent in the region, including clustering in the industries that rely on those jobs. And tech clusters, as the report later shows, are key to bringing new investment into the region.

Investment in many tech verticals

Speaking of investment — Invest Vancouver’s report took a deep dive into Pitchbook’s data on every tech-related funding announcement in the region. The result? Stats that prove that investors are pursuing deals in multiple tech specializations. 

In this chart, Invest Vancouver assigned each firm to a single industry vertical that most closely matched their primary activity, and displayed the top 20. The size of the box corresponds to the value of deals in that vertical (larger boxes, obviously, indicate more investment, though the size is an approximation). Cleantech; technology, media, and telecomms (including many digital media and entertainment firms); life sciences; SaaS; and cybersecurity represented the top five areas for investment from 2018 through 2023.

The report further broke down the numbers into “target industry” — or, more specifically, the industries that these companies aim to serve. (The “retail” category, for instance, shows the value of investments in firms providing software or other tech solutions to businesses in the retail space):

The key takeaway? Aside from acknowledging the hefty USD $31.5 billion that’s entered the region over the past five years, Invest Vancouver’s research shows that the district boasts a number of specializations, which is a good indicator of the overall health and resilience of the local tech ecosystem.

There’s been more investment in the region than you think

But wait! Invest Vancouver’s report says that the USD $31.5 billion figure understates the total investment activity into Metro Vancouver, because it doesn’t include the money spent in the region by the multinational companies headquartered here.

The district is home to a number of global businesses, including cybersecurity giant Fortinet, Disney’s Industrial Light and Magic, and Intel. All three have held a large presence in the region for many years, and have expanded their workforce and office space multiple times. Electronic Arts, too — one of the largest interactive entertainment companies in the world — added two new buildings to its Burnaby campus in 2021 to accommodate an additional 500 workers.

Seattle-headquartered Microsoft has a particularly large presence in Vancouver, and president Brad Smith recently told Vancouver Tech Journal that he views the company’s presence here as important for the community. That builds on a history of doubling-down on the region, as the company grew its cloud services in the region in 2020, added 500 technical positions in 2021, announced 2022 plans for a new 20-storey office building in downtown, and — as Vancouver Tech Journal reported — may have begun relocating AI workers from China to Vancouver. 

How Vancouver could lose its competitive edge

It’s not all sunshine and rainbows in the report, though. Invest Vancouver highlighted eight areas where the region could lose its competitive advantage. Some are not specific to the tech sector — cost of living, anyone? — so these are the three we found the most pressing for the industry.

Talent supply could limit growth. Tech talent is Greater Vancouver’s secret sauce, and its ability to produce high-quality graduates and attract international workers through its quality of life helps sustain and grow the industry. (Jobs, economic development, and innovation minister Brenda Bailey, for instance, says talent is the B.C. ecosystem’s “greatest strength.”) But continued growth in the industry will depend on the sufficient supply of suitable talent. Since many firms in the tech sector require the same or similar skills, there is competition for workers in the region — meaning that growth in one vertical may come at the expense of another. Plus, with remote work continuing to be an incentive post-pandemic, Vancouver employees must compete with global firms offering higher salaries.

Industrial land is scarce and expensive. The economics look very different for established firms with their own facilities and new companies looking for space. This is particularly true for companies that rely on manufacturing. Newer businesses are more likely to conduct research, design, and development work in the region, while physically producing their goods at scale elsewhere. Despite Ken Sim’s promise to establish a Tech Land Reserve to solve this issue, and the motions passed early last year to do so, it’s unclear what progress has been made. 

Firms struggle to scale up. Anecdotally, the inability for Vancouver companies to scale in the region has been a big reason that businesses like Slack or Koho — which began in the city — moved their headquarters elsewhere. Invest Vancouver provides the stats to match. In the Metro region in 2021, only 2.6 percent of tech firms employed 100 people or more, and just 20 firms employed 500 people or more. Building large firms — or “anchor companies” — can help bolster the industry as a whole, as they tend to allocate greater resources to R&D, work more productively, offer higher salaries, and export more goods.

Want to read part two and three of our report analysis? Become a member now: