Backbone presents the Branham 300 ranking of top Canadian technology companies. The list, researched and compiled by The Branham Group, found that 2005 was a growth year for many segments of Canada’s tech marketplace

2005 was a tumultuous year, swinging from hurricanes to earthquakes and from Gomery to gun registry, but it was also a year that showed a continuous upward trend in the Canadian information technology (IT) sector. 
    Industry Canada statistics correlate with the results of the Branham300 companies: since 2001 the GDP of Canada’s high technology companies grew by 18 per cent, while the Canadian economy’s output climbed by 12.7 per cent. 
    Canada’s top IT companies produced approximately $5.5 billion more in revenue in 2005, compared to the results of the previous Branham300—a 10.31 per cent year-over-year increase. The growth in revenues can be attributed to the positive performance of many of our returning companies, as well as the addition of new organizations to the list; 192 companies from last year’s Top 250 are returning, while 58 are new.
    When examining this year’s Movers and Shakers list, it is apparent several companies had outstanding earnings in 2005. Finally, the average revenue growth rate experienced by a single Branham300 company in 2005 was 33.75 per cent, up slightly from 32.19 per cent last year. From these statistics, we can clearly see Canada’s IT sector is greatly contributing to the national economy.
    Mergers and acquisitions played a key role in changing the face of this year’s list, causing certain companies to refrain from participating. Some of the previous participants were acquired by foreign companies that would not allow the disclosure of financial information, while other firms were in the process of being acquired and could therefore not participate. Some of the most notable M&As include Brainhunter’s acquisition of AJJA Information Technology Consultants, Eastman Kodak’s acquisition of Creo, and Golden Gate Capital’s agreement to purchase Geac Computer. In addition, some of this year’s companies have started to realize revenues from 2004 acquisitions, creating higher revenues and subsequent growth figures. For example, Manitoba Telecom Service is now known as MTS Allstream and its revenues are based upon sales related to Internet and wireless phone service provision. Charon Systems, Nexxlink Technologies and CSB Systems have been rolled into what is now Bell Business Solutions. In addition to changes in company names, certain M&As have caused companies to shift their designation from being a Canadian to a multinational company. For example, Algorithmics and Cedara Software were both acquired by foreign companies. For details, please refer to the footnotes appendix, and to http://www.branham300.com or http://www.backbonemag.com/b300-05.
    From a geographic perspective, we see most companies are based in Ontario, although we have noticed a steady influx of companies from British Columbia and Alberta. Quebec and British Columbia produced almost identical percentages in this composition, while Prince Edward Island and Saskatchewan, combined, make up one per cent of the list. In an effort to create the best national picture, Branham Group contacted organizations and associations across Canada, in order to ensure companies from all provinces have a chance to be tracked. We also see many of the top performers are again companies that serve consumers, the xSP or x-Service Providers that offer Internet connection and wireless phone services. Reports released in 2005 indicate 59 per cent of Canadian households own at least one mobile telephone and 60 per cent have an Internet connection. Forty-three per cent have high-speed access. This shows technology continues to be an integral part of everyday life, and it is no surprise four of the top 10 companies are xSPs. 
    In relation to high-technology infrastructure, Canada just celebrated 20 years of wireless technology. During the legal battle that ensued in 2005, U.S. government users of RIM’s BlackBerry admitted communication and performance would be hindered if the product were taken away from them. This type of demand for wireless communication has made the sub-sector one of the primary contributors to the growth of the ICT manufacturing sector.

Significant trends

The top issues for Canadian IT companies in 2005 included Voice-over-Internet-Protocol (VoIP), outsourcing and healthcare ICT. VoIP is seeing a definite surge in popularity as it challenges the conventional means of telephone communication—especially when it comes to long-distance calls. As VoIP technologies continue to improve, issues surrounding them become opportunities for companies. For example, we already see companies offering related hardware and VoIP security products. Next, outsourcing unfortunately has become a term synonymous with job losses in North America as high technology companies look towards Asia for less expensive delivery models. Interestingly, Canada will play a large role in nearshore outsourcing in the years to come. With a growing workforce and cultural similarities to the U.S. and Europe, companies are looking to Canada as an option. 
    While industries from banking to retail have embraced ICT, healthcare has lagged behind. Several of the Branham300 companies are involved in healthcare ICT and this is especially important as we see a growing number of elderly people and increased need for interconnected systems. Companies like Imaging Dynamics are creating alternatives to X-ray film media. Branham found healthcare ICT is changing, driven by concerns about patient safety and escalating healthcare costs. “We have reached the tipping point in terms of eHealth deployment,” said Michael Martineau, project lead for Branham’s annual assessment of the state of eHealth in Canada. Martineau states the emphasis has shifted from ‘why eHealth?’ to ‘how do we implement eHealth?’ 
    Most of the Branham Top 10 companies have remained the same as last year, with a few position changes. Nortel Networks, Celestica and BCE remain the Top 3 Canadian IT companies just as they were last year. Rogers Wireless Communications has seen a jump from number six last year to number four, beating TELUS and CGI who are now in positions six and five respectively. ATI Technologies remains at seven, while Shaw Communications and Cognos (positions 10 and nine respectively) were overtaken by Research in Motion (number eight and a newcomer to the Top 10) after the wireless solution giant increased revenues by 127 per cent.

To see the complete Top 300 listing, click here