Canadian Tech Market Will Perk Up In 2017 And 2018, But Still Lags Behind US Tech Market Growth Rates

Andrew Bartels
Vice President, Principal Analyst
July 27, 2017

Forrester has just published its annual Canadian tech market forecast for 2017-2018 (see “The Canadian Tech Market Outlook For 2017 To 2018”). We are forecasting growth of 3.9% in 2017 and 3.7% in 2018 for Canadian business and government spending on tech goods and services. These rates constitute an upward revision from our January forecast, and reflect our increased optimism for Canada’s tech market growth based on a series of positive macroeconomic developments that unfolded in the first half of 2017. Nevertheless, we believe the Canadian tech market’s struggle to exceed 4% growth is a sign of prevailing uncertainty regarding the country’s outlook, which is causing Canadian business to temper their spending.

Three developments in the Canadian tech market are highlighted in our latest forecast:

  1. Low oil prices, a weak currency, and uncertainty stemming from overheated housing markets will dampen overall Canadian tech spending. Strong employment numbers and better-than-expected performance in Canada’s manufacturing, wholesale, and retail sectors have sustained economic growth, and fueled expectations that real GDP growth will exceed 2% in 2017. But the aforementioned drivers of uncertainty, in conjunction with concerns about political instability south of the border, are causing tech decision-makers to be cautious with their budgets.
  2. Software, consulting, and outsourcing will lead growth, but only by single digits. Most segments of the Canadian tech market will see low growth in 2017. Software and services, however, will remain bright spots as Canadian businesses and governments follow the path of counterparts in other advanced economies and transform their customer engagement models and increase their adoption of cloud-based Business Technology (BT) solutions.
  3. Investments in Canadian data centers will accelerate cloud adoption. Amazon, Microsoft, and Google have all recently established or expanded data centers on Canadian soil, which will allow cloud clients to keep their data within the nation’s borders. This development will help mollify concerns over data sovereignty, and will prompt many Canadian CIOs to put a higher priority on cloud-based infrastructure modernization and SaaS-adoption.  That in turn will lead to more spending on BT solutions, many of which are cloud-based.
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