Software development and computer services, 2018

Released: 2020-05-08

Total operating revenue for software development and computer service industries reached $76.3 billion in 2018, up 10.6% from 2017. This industry's operating revenue has been growing—on average—twice as fast as the Canadian economy since 2013. Computer systems design and related service providers generated 75.8% of the industry's operating revenue in 2018.

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 businesses serve a wide market and customer base operating in a fast-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 $57.9 billion, up 9.8% from 2017. Ontario accounted for the largest share of operating revenue (34.3%), followed by Quebec (19.2%).

Similar to previous years, 39.8% of this industry's sales came from information technology (IT) technical consulting services.

Operating revenue in this industry has grown by more than 50% since 2012. This growth has accelerated in the last four years, in particular as demand for individualized software has continued to increase. This is attributable to more businesses and individuals embracing cloud technologies and mobile applications.

Businesses in Canada represented the largest share of the client base (62.7%) for this industry, followed by clients outside Canada (25.4%).

Operating expenses increased by 8.4% to $51.1 billion in 2018, likely because of the high demand for top talent in this industry. Salaries, wages, commissions and benefits contributed the most (44.4%) to expenses.

The operating profit margin increased from 10.6% in 2017 to 11.8% in 2018.

Software publishers

Software publishers saw their operating revenue increase 16.4% to $12.3 billion in 2018—the fastest growth of these three industries. Application software (36.5%) generated the largest share of sales. The largest increase in revenue came from website design and development services, which accounted for 5.8% of total revenue.

There were significant changes in this industry, as the market continued to expand and technologies started becoming more integrated. The integration of artificial intelligence (AI) into cloud storage has led to significant benefits in both technologies. As these technologies improve, they are allowing for more robust programs to be developed in industries such as mining, forestry and agriculture, leading to strong demand for these services.

Most sales in 2018 were made to clients outside Canada (50.2%), followed by businesses in Canada (42.3%).

Operating expenses grew by 17.4% to $11.7 billion in 2018. Salaries, wages, commissions and benefits contributed the most (47.2%) to operating expenses.

The operating profit margin decreased from 5.5% in 2017 to 4.7% in 2018.

Data processing, hosting and related services

The data processing, hosting and related services industry generated $6.2 billion in operating revenue in 2018, up 7.1% from 2017.

Because of the ongoing expansion of data hosting in Quebec, this industry group has managed to report consistent growth to meet the rising demand for data processing, cloud storage and AI technologies.

In 2018, hosting and IT infrastructure provisioning services (54.4%) accounted for the largest share of sales revenue, followed by information and document transformation services (30.5%). The main clients were businesses in Canada, which accounted for 63.3% of total sales.

E-commerce represented 56.3% of total sales in 2018, up from 52.7% in 2017.

Operating expenses increased more slowly than revenue, reaching $5.2 billion in 2018. As a result, the industry's operating profit margin rose to 15.7%, compared with 13.3% in 2017.

Contact information

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