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Toronto Tech Boom

maestro

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The quality of the jobs here are a lot lower. The banks and insurance companies in Toronto have very large IT teams but pay them very low salaries in exchange for good benefits and work life balance. The high paying jobs in IT go to contractors who make $80+/hr. These are good middle class jobs. The more we have of these the better. The higher paid jobs here are not in IT but on the business side in senior management and higher like AVP/VP and higher.
Could you elaborate on good benefits and work life balance?
 

brianmac

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AI is a different kind of boom. Allows subject matter experts (mathematicians, scientists, actuaries, quants) to apply their skills to software. It's kind of cool that it works. We have a history of research on the topic and companies actively taking advantage of it. This lines up with fintech for sure, but there are well attended machine learning groups, smaller companies filling niches and others chasing bigger opportunities. There was a period of time where the local tech participated but didn't lead these market changes - mobile, big data for example. Montreal and Toronto both have a shot at playing a big role. It's exciting. Throw in I'm afraid of Americans, and this may turn out to be a real driver.
 

lead82

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Could you elaborate on good benefits and work life balance?
Work hours are 37.5hrs a week, real defined benefit pension plan, health benefits, ample vacation time. Very stable work.
 

jje1000

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I wonder what the nature of that job growth is- whether or not it's start-ups and companies here expanding, or just support and back-of-house work that services the rest of Toronto's economy/projects going on in the main offices. The latter could make sense considering the low wage costs and large talent pool in this city- and the comparatively difficult access to venture capital in Canada.


An article discussing the AI sector in Toronto- interesting that Toronto, Montreal and a couple of other Canadian cities are vying for a lead in the AI sector. Who might get the lead? Will there ever need to be a 'hub' for AI technology?
Today, the Telegraph begins a three-part series reporting from Toronto’s booming Artificial Intelligence sector where new technologies are being pioneered that will permanently change all of our lives
His former students have now been poached by Silicon Valley to lead AI research at the likes of Apple, Facebook and Google (which has also appointed him a vice president engineering fellow). In the coming months, he will take the helm of Toronto’s new $180m Vector Institute, which it is hoped will cement the city’s status as a world leader in AI.
Even the visionary admits he does not know where the AI revolution will take us next. “It is very hard to predict beyond five years in this area and things always turn out differently to what you expect,” he says.
http://www.telegraph.co.uk/technology/2017/08/26/godfather-ai-making-machines-clever-whether-robots-really-will/
 
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lead82

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There are lots of new start ups in Toronto that are growing. I work for one and in a year it has grown from 3 to 30 people. This is not just some back office work (although some might be), but primarily the new companies are trying to disrupt the market somehow. These are the next businesses that we haven't heard of yet.
 

jje1000

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Strategy plan for the Ontario Media Development Corporation for 2017-2018- this includes stuff like film, print and interactive digital media (games, etc.):
http://www.omdc.on.ca/Assets/Public+Posting/2017-18+Business+Plan.pdf

They note that around 17,000 people were employed by interactive digital media companies in 2011- but this report from 2016 notes around 16,900 employed- I wonder if that industry has actually grown at all?
https://trends.cmf-fmc.ca/media/uploads/reports/io_-_MSIIDMO_-_Final_Report_-_EN.pdf

A lot of Ontario's studios seem to be mostly smaller, indie studios- compare against Quebec which has more of the largest, big-budget studios.

Interesting note on the tax credit offered in Quebec:

“On the threshold where a company in the video game sector starts becoming commercially viable, it is a really important competitive advantage for us,” he said. “It’s especially an important tool for cash-flow reasons.”

Because of the way the credit is structured, Provost said, his company can obtain financing in advance to ensure it has the liquidity it needs toward the end of the development process, which can take several years.

“That’s not something that we can do, for example, in Ontario,” he said.

There, a comparable tax credit is only available after a project is completed — unlike in Quebec, where companies can apply for credits while they’re in the midst of development.

“I would say the tax credits in Ontario are a lot less favourable to independents than the ones in Quebec,” he said.
http://montrealgazette.com/business/local-business/hollywood-of-video-games-for-local-developers-quebec-tax-credit-provides-big-benefits

And yet in the OMDC survey in Ontario:

How can it continue to grow?

Access to public funding was the most significant challenge faced by IDM companies in Ontario, with many citing cash flow issues related to the structure and eligibility criteria of
grants and tax credits.

The next most significant barriers cited by respondents were: access to experienced talent
in Ontario; and access to business clients (e.g. publishers) . Together, these issues suggest
that the business environment within the Province of Ontario creates challenges with respect to finding employees and clients.
The 2016 Industry Profile:
http://www.omdc.on.ca/collaboration/research_and_industry_information/industry_profiles/IDM_Industry_Profile.htm

Some more reports here at the CMF:
https://trends.cmf-fmc.ca/research-reports
 
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WislaHD

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One thing I raised in the Amazon thread and I think is relevant here, is that Toronto really does have access to such a highly educated workforce.

In the immediate region alone, you have UofT and Waterloo, who are recognized as leaders in the field. Ryerson is not insignificant these days either, and York is also within the city.

Additionally, there are many reputable universities (Queens, Western, Wilfred Laurier, Carlton, Guelph, McMaster, UOIT) across Ontario whose graduates have no intention of staying in their host city. They intend to move post-graduation to where the jobs are located - and that is in Toronto.
 

TheTigerMaster

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One thing I raised in the Amazon thread and I think is relevant here, is that Toronto really does have access to such a highly educated workforce.

In the immediate region alone, you have UofT and Waterloo, who are recognized as leaders in the field. Ryerson is not insignificant these days either, and York is also within the city.

Additionally, there are many reputable universities (Queens, Western, Wilfred Laurier, Carlton, Guelph, McMaster, UOIT) across Ontario whose graduates have no intention of staying in their host city. They intend to move post-graduation to where the jobs are located - and that is in Toronto.
I selfishly want Amazon to come so I can have a high paying job in Toronto when I graduate!
 

AlvinofDiaspar

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From the Globe (behind paywall)

Tech firms drive office-space crunch in downtown Toronto


Microsoft, which has space in Toronto and a suburb, is looking for about 100,000 square feet or the equivalent of four floors of a building, according to people familiar with the matter. Microsoft said, given its growth, it is exploring options. As well, Google and IBM are looking for additional capacity. Google said it doesn't comment on rumours. IBM declined to comment.

In one year, tech has increased its footprint by 11 per cent, or 300,000 square feet, according to commercial real estate firm CBRE. Tech now occupies 2.9 million square feet or 4.2 per cent of office space in downtown Toronto, CBRE said. In comparison, banks and financial services companies take up about one-third of all office space in the downtown core.
AoD
 

TrickyRicky

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I just read the article Alvin posted. I think it is interesting because it gives some idea of the general size of the tech market within our general office market in Toronto. You can see that Tech still represent a very small niche in terms of the overall office supply but it also is having an outsized influence on present absorption rates.

This phenomenon of Tech office growth is not unique to Toronto. It basically represents the trend in pretty well every city in North America. I'm curious how different the scenario is here or if it is just a reflection of the general trend. What I mean is that there are two kinds of growth trends in business, there is expansion of the pie, and increasing market share within the pie. In Finance for instance we have seen the general industry expand over the last 10 years but remarkably we have also seen Toronto's share of the pie in Canada increase over that period. That is a pretty powerful combination and enough it seems to offset the countervailing trend of greater efficiency in office space use. We may be seeing both also occurring here in terms of tech.

The Tech boom we are seeing now is a great thing but as an investor I also see this office and growth boom as something to watch for in 2018 as a sign of potential hubris, a potential sign of overinvestment in the sector.
 
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