'Brain drain' of tech grads could stunt sector's growth in capital, experts say

Ottawa skyline
Photo by Denis Tangney Jr.

Ottawa made the biggest year-over-year jump among 50 North American cities in a major tech talent survey released this week ​– but some industry observers fear the local sector could hit a ceiling if it doesn’t do more to attract and retain out-of-town talent and add more real estate for companies to grow.

Ottawa ranked 14th in real estate firm CBRE’s annual Scoring Tech Talent report released this week, good for third place among Canadian cities after Toronto (No. 4) and Vancouver (No. 12). San Francisco topped the list, followed by Washington, D.C., and Seattle.

Ottawa moved up five spots from last year – leapfrogging Montreal along the way – in the study that ranked cities based on 13 metrics, including tech job growth, education levels, office rents, population trends and housing costs. 

Invest Ottawa CEO Michael Tremblay said the latest rankings prove Ottawa is a powerful force to be reckoned with in the global tech scene.

“For a city of a million people to stand out like that, it’s a big deal,” he said. “There’s some big regions in there that we’re ahead of.”

Still, the report uncovered a few clouds on the horizon.

The survey found that between 2014 and 2018, Ottawa’s universities granted more than 7,300 degrees in tech-related fields that include computer engineering and information sciences, mathematics and statistics and other engineering disciplines.

L5 track a major asset

Yet the region’s net gain of just 1,100 tech-related jobs suggests the region suffered a “brain drain” of thousands of jobs over that stretch. Toronto, by contrast, had a net gain of more than 40,000 jobs created vs. degrees granted in the same period.

Tremblay said those numbers suggest the region has work to do to retain international students who come to Ottawa to prepare for careers in the STEM fields but take their talents elsewhere once they earn their credentials.

“We have to be very smart as a region on how to hold on to all that capability,” he said. “Without it, our ability to grow is stymied.”

Tremblay said Ottawa has a reputation as a world-class tech hub and “a very safe place” for foreign students. But he said organizations like his have to do a better job of convincing them to stick around and contribute to the local economy after they graduate.

Tremplay pointed to the region’s state-of-the-art L5 test track for self-driving vehicles as an example of an asset that could entice international talent to make their home in the capital.

“I think that the way to attract them to stay is to have a (foothold) in long-range markets,” he said. “The excitement that we have with things like our autonomous vehicle programming is a way to hold on to some of those students.”

CBRE Ottawa managing director Shawn Hamilton also suggested the city suffers from a lack of room for rapidly expanding tech companies to grow. 

Ottawa’s office vacancy rate of 6.3 per cent as of the fourth quarter of 2019 was third-lowest of all cities in the survey. Although the rate has ticked up slightly since then, office space remains at a premium in the capital, Hamilton said, adding that could be shackling the hiring ambitions of some local tech firms.

“I’ve been banging the drum trying to get people to build (more office space),” he said. “The good news in all of this is we haven’t hit our ceiling on being able to produce talent. Once we get space in the market that people can occupy to expand or establish their offices, what this tells me is that there’s a clear pipeline for talent. It’s sort of a concern but an opportunity at the same time.”

Meanwhile, Ottawa moved from second spot to No. 1 overall in the key metric of tech talent concentration, surpassing the San Francisco Bay area as the region with the highest percentage of workers employed in the tech sector at 11.3 per cent.

“That’s what creates your critical mass,” said Hamilton. “That really creates the nucleus from which you create a safe foundation that tech can grow.”  

Ottawa also scored well in rankings of metrics such as average office rents and wages. The average tech worker in the city earned US$68,674 in 2019 – just half the average salary in San Francisco – and CBRE’s survey determined that the capital was the fourth-most affordable city in which to run a tech business as of April, behind only Montreal, Toronto and Vancouver. 

The study’s authors also noted the report, which mostly used data compiled before the novel coronavirus pandemic and “does not reflect” its effects on the global economy. 

“Economic and labor market conditions changed substantially in early 2020 due to the impacts of COVID-19,” they wrote.

While the crisis has upended global markets, it also offers opportunities for new or emerging sectors and technologies to expand or take root, the authors contend. The study names fields such as e-commerce, artificial intelligence, cloud services, 5G networking, autonomous vehicles and advanced robotics as areas with “growth potential.”