Annual Survey of Software Development and Computer Services

Three computer services industries, representing almost one-third of the information and communications technology (ICT) services sector, reported a sharp increase in revenues for 2004 following modest growth through 2002 and 2003. Unlike the ICT manufacturing sector, ICT services have continued to grow from levels recorded before the "technology meltdown" in 2000/01.

In 2004, computer systems design and related services, software publishing, and data processing, hosting and related services together saw operating revenues grow by 9% to $29.7 billion. These three industries are all covered by a single Statistics Canada survey.

Computer systems design and related services, the largest of the industries, enjoyed the highest growth in operating revenues, up by 10% from 2003. Operating expenses for this industry grew by a slightly higher rate, resulting in an operating profit margin of 5%, down marginally from 2003. The industry generated $950 million in profits in 2004.

Software publishers had a positive profit margin of 5% in 2004, up from a small operating loss the previous year. The turnaround was due to operating revenues growing by 8%, a rate similar to the growth in 2003, while operating expenses edged up.

Data processing lagged the other two industries with operating revenue growth of just 1%. However, thanks to a decline in operating expenses the industry's operating profit margin doubled to 8% in 2004 from 4% a year earlier.

The source of the operating revenue growth varied for the three industries. Computer systems design saw a 25% jump in sales to government customers, while software publishing saw government sales decline and sales to businesses increase by 14%. Also notable for software publishing was an estimated 45% share of sales resulting from exports — a minor increase from 2003, but maintaining a very high level of export intensity compared to other service industries. For data processing, increases in exports and sales to the consumer market slightly offset declines in sales to the business and government markets.

Ontario led the growth with a $1.4 billion or 10% increase in operating revenues, nearly all of which came from the computer systems design industry. British Columbia saw $671 million in growth, which was good for a 24% year-over-year increase. All three industries contributed to the growth in British Columbia, with software publishers contributing over half of the increase. Quebec (up $237 million, or 4%) and Alberta (up $131 million, or 5%) also saw significant overall growth despite declines in the data processing industry for both provinces. Manitoba bucked the national trend, with operating revenues declining in all three industries for a combined drop of $91 million or 14%.

Employment increased by 7% to 189,000 for the industries overall. Computer systems led with an 11% gain. Software publishing employment went up by 4%, with the highest gains coming in British Columbia. Data processing saw employment drop by 14%, equivalent to almost 2,300 jobs lost.

Available on CANSIM: table 354-0005.

Definitions, data sources and methods: survey number 2410.

Results from the 2004 Survey of Software Development and Computer Services are now available.

For more information, or to enquire about the concepts, methods and data quality of this release, contact, Allan MacLellan (613-951-0400; fax: 613-951-6696, allan.maclellan@statcan.gc.ca), Service Industries Division, or Jamie Carson (613-951-3407; fax: 613-951-6696; jamie.carson@statcan.gc.ca), Service Industries Division.