In the face of the global economic recession, the majority of ranked companies on this year’s Deloitte Technology Fast 50 list avoided cutting staff and R&D budgets.
While the companies on this year’s list, which complies Canada’s 50 leading tech companies based on five-year revenue growth rates, were not immune to the recession, all of them were able to grow significantly more than many forecasters might have expected.
“There was a very nasty drop (in average growth rate) by virtue of the recession, but it did not go down as far as we thought it was going to,” said John Ruffolo, national leader of Deloitte’s technology, media and telecommunications industry group. Last year’s average growth rate was 2,456 per cent, while this year that number dropped to 1,993 per cent.
The key for these top companies, Ruffolo said, was the fact they stayed on their strategic roadmaps and didn’t scale back on key investments such as people and R&D. Less than 10 per cent of ranked companies cut staff, and only 16 per cent made cuts to R&D during the slumping economy.
Topping this year’s list was Montreal-based oil and gas process equipment firm ProSep Inc., which posted an 18,070 per cent five-year revenue growth. Jacques Drouin, president and CEO at ProSep, said his company’s success was dependent upon the growing energy sector and being able to avoid cutting from its key areas.
“We’re a people-driven business, so if you look at the composition of our employees, it’s mainly process engineers,” he said, adding that making cuts could never be an option if the company wanted to succeed post-recession.
In terms of R&D, Drouin pointed to the growing demand for more sophisticated process equipment in both the oil and gas and the water treatment industry.
Rounding out Deloitte’s top five were Toronto-based Dominion Voting Systems Corp., Ottawa’s Level Platforms Inc., London, Ont.-based CarProof, and Toronto-based Impact Mobile Inc.
While most of those companies are concentrated in Ontario, the rest of the list demonstrates a lot more regional diversity, Ruffolo said. In total, almost half of the ranked companies reside outside of Ontario and across provinces such as British Columbia, Quebec and Alberta.
The emergence of more wireless and digital media companies on the list, such as companies specializing in 3D imaging, interactive video platforms, IP address management, is a trend that Ruffolo expects to continue in a future Fast 50 list.
“If you were to look at this list 10 years ago, it would be all enterprise software companies on here,” he said. “When you look at (this year’s) top 10, there’s no enterprise software companies. What you’re seeing is more of a mixed bag, niche-type solutions.”
This country-wide spread, coupled with the emergence of more niche businesses, can position technology as a truly national industry, Ruffolo said. While Canada has worked to save the auto manufacturers, he said, the country has done little outside of providing R&D tax credits.
While initiatives such as the Scientific Research and Experimental Development (SR&ED) tax credit program played a significant role for many of the Fast 50 companies, Ruffolo said, the government still has a lot of room to improvement to help with capital investments.
“They’re really short in helping support sales and marketing, particularly for companies that sell globally,” he said, adding that with the lack of venture capital and other related financing, the federal government should have done far more in trying to support the technology sector with its stimulus money program.