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| Top 300 Intro |
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By Adnan Rahman and Wayne Gudbranson
It was a year of change both in Canada and internationally. In 2006 our nation elected a new party into parliament, and war continued to affect the state of the world and the economy. With business processes costing more each year, companies have started to look toward India and China and also to Canada to help accomplish major business objectives. The year was another successful one for the Canadian IT sector, proving there is a continuing upward trend amongst the nation’s top IT companies. Industry Canada reports that since 2001, the Canadian economy has grown by 14 per cent, while the ICT sector’s GDP increased by 27 per cent—proving Canadian IT companies, as a whole, have been performing strongly throughout this period.
The Branham300 saw changes resulting from mergers and acquisitions, new technological trends and new participants, while the many large players that traditionally top the list maintained their strong performances. This year’s entrants to the Branham Top 250, composed of 48 per cent private and 52 per cent public companies, produced total revenues of $65.4 billion—a 10.72 per cent increase over last year’s total of $59.065 billion. The average revenue growth rate for a single company on the Top 250 dropped to 25.66 per cent this year from last year’s solid 33.75 per cent, which can be attributed to the handful of significantly higher revenue growth rates seen last year. However, this did not affect the strong cumulative revenue performance seen in this year’s edition.
Cross - country results
From a geographic perspective, the composition of the Top 250 is similar to that of last year. Ontario companies make up 55.6 per cent of the list (on par with 55.8 per cent last year), while the percentages of British Columbia and Quebec companies have risen (last year they accounted for 14.5 per cent and 14.1 per cent, respectively). Alberta companies comprise 9.6 per cent of the list (down from 11.6 per cent last year).
When analyzing the revenue breakdown of the Top 250 by province, the results line up with the geographic breakdown. Of the total $65.4 billion in cumulative revenues for all Top 250 companies, Ontario companies represent 64.4 per cent, Quebec represents 18.9 per cent, B.C. represents 11.5 per cent and Alberta companies make up 2.6 per cent. While these numbers represent the percentage of total Top 250 revenues contributed by each province, the year-over-year revenue growth per province shows a different picture: Ontario saw an 8.68 per cent increase, Quebec produced almost 4 per cent more in revenues, B.C. had a 17.44 per cent increase and Alberta came out strong with almost 28 per cent year-overyear revenue growth. While Ontario and Quebec produced more revenue in total, it is evident companies in Alberta and British Columbia produced higher revenue growth rates.
When comparing the average revenue per company for each province, it is interesting to note Quebec produced higher revenue per company than Ontario, due to the strong revenue generation of the province’s top companies such as BCE and CGI Group. Hardware top per forming category The Top 250 is comprised of four major categories: Software (105 companies), Professional Services (65 companies), x Service Providers (34 companies) and IT Hardware and Infrastructure (46 companies). While software companies reflect the largest portion of the Top 250 companies, they contribute the least amount of total revenues, with a total of $4.1 billion. The xSP category saw the highest year-overyear growth in total revenues with 12.17 per cent growth, bringing 2006 total revenues to $21.2 billion. While the Software category did well with solid 11.41 per cent growth, the Professional Services category, with revenues of $7.4 billion, did not fare as well with only 5.52 per cent growth. However, it should be noted that certain infrastructure-related service companies are categorized in the IT Hardware and Infrastructure segment.
The IT Hardware and Infrastructure companies (the largest revenue-generating category with $32.58 billion) had year-overyear growth of 7.34 per cent. It is interesting to note that Industry Canada reported 4.2 per cent growth for computer equipment manufacturers in the third quarter of 2006—after a stagnant first two quarters of the year. Further evidence of slow growth is characterized by large IT Hardware companies like Nortel having only an estimated two per cent year-over-year growth. The top 10 Canadian IT companies stayed relatively the same when compared to last year’s list. Nortel, Celestica and BCE remain the top three, respectively. While these companies have presented smaller growth rates, there were some notable year-over-year revenue growths experienced by firms in the top 10 such as TELUS (13 per cent), Rogers Wireless Communications (18 per cent), ATI (10 per cent and making its final appearance on the Top 250) and, most notably, Research In Motion (with 54 per cent year-over-year revenue growth). While RIM’s revenue growth is not near its 2005 number of 127 per cent, it still showcases the continued worldwide demand for Canadian wireless products.
Significant Trends
Last year helped to shed light on some important trends such as Voice over Internet Protocol (VoIP), outsourcing andhealth care ICT. While these trends have definitely developed over the course of 2006, new trends and niches have gained prominence throughout the year, and we can expect to see both new and old companies catering to some aspects of many of these trends. Significant trends in 2006 (as well as those expected to have impact in 2007) include:
- adaptive security, to provide consolidated system management with the leveraging of information for compliance purposes
- platform and resource virtualization, to allow cost savings through simulation
- on-demand software/SaaS (software as a service), hosted software solutions that help reduce software maintenance costs while ensuring the most up-to-date products
- Unified Messaging and Communications that enable multiple communications media to be received at a single point of interaction.
In addition to these trends, the Internet has seen developments related to collaboration, while social networking sites and wikis have become popular, offering collaboration and social settings for Web users. Related technologies like RSS feeds, used to publish digital content, are also seeing further interest and development. The creation of the RSS Advisory Board is an example of this. Finally, the health care ICT sector is of great importance internationally and nationally now more than ever due to the requirements of the aging baby boomer generation.
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