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Study shows positive results for IT industry growth

For Immediate Release                                                                       January 18, 2001

A report released today by Operation ONLINE Inc. shows positive results for the information technology (IT) industry in Newfoundland and Labrador. The �Newfoundland and Labrador Information Technology Sector Report Card 2000� was the third such study commissioned by Operation ONLINE.

The report confirms that impressive gains have been made in Newfoundland and Labrador�s IT industry over the past several years. Since 1995, the sector has emerged as an important component of the provincial economy, making a substantial contribution in terms of both revenue and employment, servicing the IT needs of the local/provincial market and exporting its products and services to international markets.

�It is clear from this report card that there is tremendous potential for growth in the information and communications technology sector in this province," said Industry Minister Brian Tobin. �The federal government is proud to be a partner with Operation ONLINE, the IT community and the provincial government in developing and seizing new opportunities that will keep this province on the leading edge of innovation.�

Sandra C. Kelly, Minister of Industry, Trade and Technology, who also participated, said: "This report card gives us a snapshot of where our IT industry is today and some of the areas that need improvement.  While this industry is not without its challenges, there were many positive findings in the report that are indicative of a mature sector that has many strengths, and a bright future."

Jack Botsford, President and CEO, Operation ONLINE, said: �Operation ONLINE is a unique venture between two levels of government and industry and we are very pleased to have contributed to the growth of the IT industry over the last several years.  Our approach has evolved with changes in the global IT sector landscape and we feel a continued focus on innovation is key.�

The report card indicates that annual revenues for the IT industry in the province are growing, and are estimated at  $157 million for 2000.  Comparatively, revenues for the information and communications technology (ICT) sector in 1998 were $668 million (which included IT industry revenue). Overall, the sector�s growth in this province has met or exceeded that experienced in the Maritime provinces and the rest of Canada.

While the percentage of profitable ICT firms in the Maritimes and the rest of Canada has been fairly consistent over the 1993 to 1998 period, Newfoundland and Labrador has increased its percentage of profitable firms significantly and is comparable to the Canadian average. Attracting investment capital remains a challenge for small companies in all sectors, and the report notes that it is a particular challenge for the IT industry in the province as it works to maintain the growth achieved in the past few years.

Operation ONLINE Inc. is a not-for-profit corporation established to advance growth in Newfoundland and Labrador�s information technology (IT) sector.  The organization�s activities involve partnering and business development, accessing national and international markets, promotion and awareness, building human resources and enabling other economic sectors through information technology.  Areas of particular focus include distance education, new media, telehealth and e-business.  More information can be found at www.online.nf.ca.  Operation ONLINE is supported by the Canada/Newfoundland Agreement on Economic Renewal.

For more information contact:

Lori Churchill
Communications Manager
Operation ONLINE Inc.
Tel: (709) 729-4230

Heidi Bonnell
Director of Communications
Office of the Minister of Industry
Industry Canada
Tel: (613) 995-9001

Jackie Simon
Director of Communications
Dept. of Industry, Trade and Technology
Tel: (709) 729-0050

 

                                                      BACKGROUNDER: 
                    
RELEASE OF THE NEWFOUNDLAND AND LABRADOR 
              
INFORMATION TECHNOLOGY SECTOR REPORT CARD 2000

The IT industry in Newfoundland and Labrador has grown significantly over the past decade.  There has been a steady increase in employment, averaging 25% per annum for the three-year period to March 2000.  This is well above the rate of employment growth for the province as a whole and almost double the employment increase for the national IT industry. The total number of IT workers in the IT industry in this province is estimated to be 1430, up from approximately 700 workers in 1995.  When looking at organizations enabled by technology, the report indicates that the total number of IT workers in the province is 4270.

According to the 2000 report card, a continuing area of concern is the number of trained IT workers who are leaving Newfoundland and Labrador to work elsewhere.  While it is apparent that relatively few IT workers leave the province once they have worked here, supporting the claim that the IT workforce in Newfoundland and Labrador is very stable, there is a concern with respect to retention of new graduates.  A large number leave the province to find work and are only attracted back by significant remuneration and job challenge.  Operation ONLINE, in cooperation with industry, continues to address this issue through a number of initiatives.

The report also indicates that there has been an increase in the number of companies in the province focused on IT.  There are currently 163 IT companies in the province. When the information and communications technology (ICT) sector is included, this number increases to 175.  This figure excludes high technology and biotechnology companies which, when combined, push the number of companies to over 200.  Although a core of larger companies appears to be emerging, there continues to be a high number of very small companies. The report notes that there is a need to attract additional companies to the province or develop new ones within the province in order to help anchor the industry.

The study notes that the Newfoundland and Labrador IT market is limited, and growth can only be sustained in the long-term if there is an emphasis on exports. Indeed, the number of companies that are deriving more than 50% of their revenue from exports has increased significantly over the past year, and there has been a 10% increase in the number of companies exporting. This increase has taken place mostly in the IT services area, with exports going mainly to the rest of Canada and the United States. 

Few changes to the pattern of research and development over the past year were detected. The report indicates that the IT industry in Newfoundland and Labrador must become more innovation-driven if the present growth rates are to be sustained.  Innovation facilitates exporting of products and services in a changing and highly competitive market. The report cautions that despite the current strong state of the industry and the contribution that IT is making to other sectors through the employment of IT specialists, there is no room for complacency.  On the contrary, there appears to be substantial room for growth and a need to continue to nurture this industry so that it can realize its full potential within the provincial economy.


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