Strong growth in operating revenue, software development and computer service industries, 2019

Released: 2021-03-04

Total operating revenue for software development and computer service industries reached $87.3 billion in 2019, up 14.2% from 2018. The operating revenue of these industries has been growing significantly faster than the Canadian economy since 2013, and these industries were the largest professional services employer in 2019.

According to Statistics Canada's Survey of Digital Technology and Internet Use, 80.2% of Canadian businesses relied on at least one type of information and communications technology in 2019 to operate, such as company-wide computer networks (50.7%) or cloud computing (38.9%). Computer systems design and related service providers generated 73.4% of the industries' operating revenue in 2019, compared with 75.8% in 2018; this is mostly attributable to the strong growth in operating revenue of the software publishers industry.

Software development and computer service industries include businesses in the computer systems design and related services industry; the software publishers industry; and the data processing, hosting and related services industry.

These industries serve a wide market and an expanding customer base that operates in a quickly evolving, technology-driven economy in Canada and abroad.

Computer systems design and related services

Businesses in the computer systems design and related services industry reported total operating revenue of $64.1 billion, up 12.4% from 2018. The largest share of operating revenue came from Ontario (50.7%), followed by Quebec (24.6%).

Similar to previous years, 39.4% of the industry's sales came from information technology technical consulting services.

Operating revenue in this industry has grown by more than 29% since 2016. Businesses in Canada (65.6%) represented the largest share of its client base, followed by clients outside Canada (23.8%).

Operating expenses increased by 12.3% to $57.0 billion in 2019. Salaries, wages, commissions and benefits continued to be the largest expense, contributing 45.4% of total expenses. This was followed by cost of goods sold, at 12.3%.

The operating profit margin (11.1%) in 2019 was up marginally compared with the previous year (11.0%).

Software publishers

Software publishers saw their operating revenue increase by 18.7% to $15.3 billion in 2019. Application software (31.8%) generated the largest share of sales. The largest increase in revenue came from website design and development services, which accounted for 11.4% of total revenue—an increase of 4.3% from the previous year.

There were significant changes in this industry as the market continued to expand and technologies became more integrated. Consumers have also been using more e-commerce than in previous years, with e-commerce sales accounting for 45.7% of all sales in 2019.

Most sales in 2019 were made to clients outside Canada (54.6%), followed by businesses in Canada (39.8%).

Operating expenses grew by 12.8% to $13.8 billion in 2019. Salaries, wages, commissions and benefits (49.4%) contributed the most to operating expenses.

The operating profit margin increased from 4.6% in 2018 to 9.4% in 2019.

Data processing, hosting and related services

The data processing, hosting and related services industry generated $7.9 billion in operating revenue in 2019, up 22.0% from 2018. This is due to rising demand for data processing, cloud storage and artificial intelligence technologies, and the ongoing expansion of data hosting in Quebec and Ontario.

In 2019, hosting and information technology infrastructure provisioning services (60.1%) accounted for the largest share of sales revenue, followed by information and document transformation services (31.0%). The main clients were businesses in Canada, which accounted for 61.5% of total sales, while exports increased to 35.3% of total sales.

E-commerce represented 57.6% of total sales in 2019, up from 52.3% in 2018 as a result of increasing growth from cloud-based companies throughout Canada.

Operating expenses grew more quickly than operating revenue, reaching $7.1 billion in 2019. As a result, the industry's operating profit margin decreased to 10.6%, compared with 13.4% in 2018.

The COVID-19 pandemic

Informatics professional services expanded during the COVID-19 pandemic as they helped other industries continue to operate and adapt to a more digital business environment. They also faced fewer difficulties adapting their operating business models to the new reality. The software development and computer service industries benefit from the emerging use by businesses of advanced types of software and hardware using artificial intelligence and other technologies. In fact, the computer systems design and related services industry is one of the few professional service industries in Canada that added workers to payrolls in 2020. The annual survey for 2020 will provide details about dynamic changes brought on by the pandemic and other emerging technological trends.

Contact information

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