HQ Vancouver: How BC attracts global tech companies
May 20, 2016
Vancouver is home to an undeniably world-class, and growing tech industry. Industry giants such as Microsoft and Amazon have recently set up home here, and the list of homegrown global organizations that have chosen to remain within BC is impressive. Yet, like most industries, Vancouver still falls short of its potential in housing the headquarters of tech organizations. So what can be done to improve this record?
This was the question posed to a panel of experts at the latest HQ Vancouver event, held at SFU’s Wosk Centre for Dialogue on May 19. Hosted by the Beedie School of Business, the event featured a panel discussion on how Vancouver is attracting the attention of global Information and Communications Technology (ICT) firms, and what the reasons are for homegrown companies choosing to remain in BC.
Chaired by Yuen Pau Woo, President of HQ Vancouver, the event featured guest speakers Kirsten Sutton, VP and Managing Director of SAP Labs Canada, Laurie Schultz, President and CEO of ACL, Edoardo De Martin, Director of Microsoft Canada Center of Excellence, and Greg Caws, President & CEO of BC Innovation Council (BCIC).
Opening, Pau referenced a recent report that had noted the paucity of global corporations’ head offices located within Vancouver. Research by global consulting firm McKinsey had revealed that in this area Vancouver is operating at one third of the level of similar cities, such as Seattle and Houston.
“If we were able to close that gap by half, the addition to our gross municipal product will be some five billion dollars,” said Woo. “The good news is that we are an attractive destination for head offices. The easiest part of my team’s job in delivering this message is telling them what we already have. We call this the TLC package: Talent, Location and Competitiveness.
Founded in Vancouver in 1974, auditing software provider ACL has expanded their business globally, operating in 140 countries with 14,000 customers, including 89 percent of Fortune 500 companies. Schultz said that Vancouver’s cultural footprint was influential in this success.
“At ACL we have 215 employees, within which there are 35 countries of origin – that cultural diversity is a great backdrop to build and sell solutions renowned around the world,” said Schultz. “I am incredibly proud to be a local company headquartered in Vancouver with access to a global market.”
SAP’s positioning in Vancouver arrived through a very different route. The company was founded in Germany, and during its global expansion it acquired a Vancouver-based start-up, Crystal Reports, which had previously been acquired on four occasions but on each occasion had remained within Vancouver.
“We want technology to be a vibrant industry in Vancouver, but also for our companies to stay here,” said Sutton. “Our job day in, day out, is to stay here. We want to build an ecosystem.”
In 2014, Microsoft announced a 90 million dollar investment in Vancouver that saw the development of a 142,000 square feet development centre in the heart of downtown. As a result, Vancouver now houses some of Microsoft’s most popular brands: household names such as Xbox One, Office, Gears of War, and MSN.
“We are building on the talent that already exists here – the diverse workforce that allows us to build better products for the world,” said De Martin. “Vancouver has a growing tech ecosystem and is positioned as a destination for innovation in Canada. The city is a vibrant international hub with world-class amenities. There is an opportunity to bring Vancouver up to the level of elsewhere in the world, and we want to be part of that success.”
Explaining the function of BCIC, Caws said that the organization’s focus had shifted to trying to help companies succeed in innovation and commercialization. He identified three overarching reasons for companies to do business in Vancouver: talent, which is cheaper to hire than in competitor cities; taxes, which are comparatively low; and time zone, with Vancouver conveniently overlapping the working hours of both Europe and Asia.
The panel did note disadvantages in the Vancouver economy, notably the lack of local senior management experienced in managing large tech organizations. In addition, comparatively lower wages and a higher cost of living – with the hot topic of skyrocketing housing prices repeatedly referenced – makes it difficult to attract talent.
In closing, Woo concluded that it would appear that Vancouver houses three types of global tech company: homegrown companies that grow to become globalized; homegrown companies that become globalized through being acquisitioned; and global firms that are attracted by the numerous benefits Vancouver can offer, such as local talent and a desirable location.
He also declared that thanks to this discussion, he may have to revise his trusted TLC model to a TLCRC model, in order to include two other factors that had played a prominent role in this discussion: Reputation, and Critical mass.
For more information on HQ Vancouver, visit hqvancouver.ca/