Christyn Cianfarani, CEO of the Canadian Association of Defence and Security Industries, says she’s surprised how little Ottawa buys from Canadian cybersecurity providers after looking at a new federal government study of the sector.
“It’s a bit of a shock,” Cianfarani said Wednesday after calculating that in 2018 the federal government accounted for only eight per cent of the $2.9 billion sales of 344 companies offering cybersecurity-related products and services. “I would have expected the number to be 50 per cent. To see something like eight per cent is kind of shocking. When you talk about national security, typically you want that done by Canadians that at some level have passed through some kind of screening filter.”
Canadian firms don’t make every cybersecurity product, Cianfarani acknowledged, but she feels the government should be buying more locally. In the latest Speech from the Throne, the Liberal government said it will encourage more federal employees to work from home, Cianfarani noted. “We take that to mean there will be investments at some point in IT solutions in infrastructure and networks, which have to be secured … And when they earmark money they will look at the study and say, ‘Who in Canada does this? Who in Canada should we be buying from first and foremost?'”
Second, the government should increase opportunities for purchasing cybersecurity goods and services from Canadian firms for its ongoing spending. And third, Canada should talk to its partners in the Five Eyes security co-operative (the U.S., the U.K., Australia and New Zealand) for insight into products and services they should consider buying.
She was commenting on a survey of the Canadian cybersecurity industry in 2018 released late last month by the Department of Industry, Science and Economic Development (ISED).
Asked for comment, the department said the government is committed to supporting advanced cyber research, digital innovation, and cyber skills and knowledge as part of the 2018 National Cyber Security Strategy.
“ISED supports Canada’s cybersecurity industry through the application of the Industrial and Technological Benefits Policy. Through the ITB Policy, we leverage billions of dollars in federal government spending to motivate investment in the Canadian cyber industry to ensure that Canadian cyber capabilities remain cutting-edge and globally-competitive. The Government of Canada is the largest customer of Canadian cybersecurity solutions.
“Additionally, to emphasize the need for innovation and skills development in the cyber industry, where market analysis proves appropriate, the ITB Policy’s Value Proposition is used to leverage investments in both R&D and skills development/training.”
The statement says that ISED launched the CyberSecure Canada program in 2019, a voluntary certification program to improve the cybersecurity baseline among Canadian small- and medium-sized enterprises, provide education and awareness about cybersecurity to all Canadians, and increase consumer confidence in the digital economy.
ISED supports the Standards Council of Canada in developing a National Standard for Cyber Security in Canada, the statement added. The standard will support the CyberSecure Canada program and will be “low burden, easily accessible, affordable, and sector neutral.”
The economic modelling used in the cybersecurity study comes from Statistics Canada numbers. Companies included sold individual or bundled cybersecurity-related infrastructure, penetration testing, encryption, consulting industrial control and training solutions. Goods and services produced or provided outside of Canada were omitted.
Overall, 63 per cent of industry sales went to Canadian firms or individuals, while 37 per cent was sold outside the country. Of that, 63 per cent, 13 per cent went to the federal government. So overall, the association figures, eight per cent of the total sales were by Ottawa.
ISED’s research department was asked to list the top 10 firms in the industry, but it would only refer to the number and size of firms included in the survey.
Women in high places
Among the more pleasant findings, Cianfarani said, was that in 2018 women accounted for 43 per cent of corporate-level positions. She thought it might be around five per cent.
“This is a $3 billion industry here,” she noted. “But around the world, it’s $1 billion, and the U.S. is one of the biggest consumers of cyber technology, and we’re an ally.” Cybersecurity is “an incredible growth market” and will only grow, particularly with more organizations requiring people to work from home, she said. The survey, she added, “shows we have this capacity in Canada,” and high-value jobs are tied to SMEs (small and medium enterprises).
“There’s a lot of talk about SMEs being the backbone of the economy, and the focus tends to be on restaurants and other consumer-related service businesses. But the reality is Industry 4.0 leans towards jobs in, for example, the cybersecurity market. These are the jobs with a highly-skilled workforce. That workforce generates a lot of disposable income and tax dollars.
“It has all the markers of what you look for in the economy of the future.”
Among the findings:
- Of the foreign sales by the sector, 72 per cent were by American customers, and of that the U.S. government accounted for two per cent.
- The study estimates the cybersecurity industry, directly and indirectly, contributed over $2.3 billion in gross domestic product (GDP) impact in 2018. That includes $1.2 billion for the industry alone, $550 million from suppliers to the industry and $595 million in customer spending by associated employees.
- The industry contributed 22,500 jobs to the economy either directly (10,800 jobs) and indirectly (5,950 jobs from suppliers), plus another 5,760 jobs that resulted from consumer spending by those two groups.
- Eighty-nine per cent of the 344 companies had 250 or fewer employees. More than 60 per cent of all employees did work relating to science, technology, engineering and mathematics (STEM).
- Just over half of the industry is located in Ontario.
- Together the 344 companies spent close to $260 million in research and development. Of that, only five per cent came from the government.