Our Guest Columnist today is Ian Cavanagh, Chief Executive Officer of Ambir Co., founding Chairman of the NB IT Council and Member of the New Brunswick Business Council. Ian is also a mentor with Launch36. This article has appeared already on the Ambir website and in the Telegraph Journal of Saint John.
As we head towards the end of another year, ongoing economic uncertainty faces both businesses and governments around the globe. We are reminded daily of the challenging fiscal climate we are experiencing here in New Brunswick. The picture that gets painted is a bleak one, lacking the hopeful tone necessary to inspire and motivate us to overcome this current economic situation.
More often than not, the finger of blame gets pointed squarely at the government (both current and former). I believe that this is patently unfair. Does government have a role to play in helping to address matters? Absolutely yes. But I would like to offer a perspective that demonstrates how government has meaningfully contributed to the success of the local IT sector, and how this is positively contributing to our local economy. I want to paint a picture of what we can build here by choosing to be ambitious and bold in our thinking and action.
The provincial government, by responsibly purchasing IT products and services from locally founded, owned and managed IT companies, has created true long term economic value. This has created a vibrant IT sector and a strong base of small companies that are driving economic growth.
How? In simple terms it follows this formula … government buys products or services from local IT companies … they have a choice to buy local or not, just as you or I do when it comes to shopping for our produce at the grocery store. That government spending creates knowledge and expertise that we can use to improve the performance of other sectors of the economy. It also creates the export potential to bring new revenue and jobs to New Brunswick. Because local IT firms work, live and play in New Brunswick, more of their tax dollars and discretionary spending happen here. That money, in turn, helps us pay for schools, hospitals and contributes to the economy in many other ways. The impact of the IT sector on the Provincial economy, including indirect spending, was $1.5 Billion in 2010, a full 5% of New Brunswick’s GDP.
When buying from local IT companies the costs are almost always lower. That is good for government and the local private sector too. But the absolute lowest cost is not where the majority of the economic potential exists. It exists in the opportunity for local IT companies to grow beyond our borders. And to be clear, local IT companies aren’t gifted these opportunities. They compete, with one another and against large multinational companies, to earn the business in a fair and transparent manner. And they win, not because they are local, but because they have significant experience and are world class in what they do. .
The bottom line is that many locally owned IT companies have been able to start and grow their businesses through the support of local customers (both public and private sector) that provides a critical base upon which they can grow. With the right strategy, and ongoing support of these companies, we have the potential to create large, successful and global IT companies in New Brunswick. Other provinces have done this in the past. We only need to look a mere 500 kilometres to our west to see what has been created in Quebec over the past 30 years. And we have the same potential to build world leading IT companies right here! But only if we coordinate local economic activity in the context of a broader economic development strategy.
Ambir was founded in New Brunswick, initially as a result of securing IT Consulting contracts with the private sector, and then subsequently with the public sector. Over the past 8 years, we have grown to become one of the leaders in the IT sector in Atlantic Canada. We have created high value jobs here, our employees live and work here, we invest in our people here through ongoing training, we pay our corporate taxes here, we keep our company profits here to reinvest back into other local businesses here (offices in our downtown cores, local suppliers, new technology companies, etc.), we invest in our industry here as proud supporters of the NBIT Council, PropelICT, NB Women in IT, KITF, etc., we invest in developing young IT professionals here through mentorship and we recruit and hire new graduates here from our post secondary educational institutions. We care deeply for the communities in which we live. Our company and our employees support food banks, shelters, charity auctions, dinners, fundraisers, youth sports teams and other worthy causes. Ambir is just one example of the local IT companies in New Brunswick who contribute in this manner … others include Accreon, BulletProof , Mariner, PQA, SwiftRadius, TKS and many more. And as a result, companies like ours and many of the others have been recognized publically as some the best places to work in all of Atlantic Canada.
But here is the kicker. The greatest impact that we can have on our local economy does not relate to the local business opportunities. The value to New Brunswick is in our local IT companies becoming exporters to the world. Almost all local IT companies, Ambir included, are now winning work outside of the Province (and in many cases outside of the country). This is has a net positive impact on our local economy. The work is done here. The taxes are paid here. The profits and subsequent investments remain here. In some cases, local companies get acquired (like Radian6 & Q1 Labs) and when that happens, the wealth that is created stays here.
In Ambir’s case, we parlayed the experience our consultants gained through working with the New Brunswick Department of Health, into a significant strategic relationship with a US based retail pharmaceutical software company. This one US client now constitutes the fastest growing portion of Ambir’s revenue and as a result, enables us to hire more IT professionals here in New Brunswick. This is the type of activity that contributes most meaningfully to the growth of the local economy. However, our business in New Brunswick and across Atlantic Canada is critically important to us, as it constitutes a solid base upon which we will further build our export and import business.
Our ability to realize these types of export opportunities is directly related to the type of work that we have, and continue to do, with the provincial government departments and local private sector clients.
This is a story that must be told. In an era where governments and large private sector clients are looking for efficiencies (as they rightfully should) and are considering all options, they also must be mindful of the entire economic value chain. The government, in particular, must use all of its power to create employment and growth within locally owned businesses who are passionate about the region. Almost 90% of the Information and Communications Technology companies in NB are 50 employees or smaller. The opportunity to do business with the government has contributed to their growth as companies. So thanks to our provincial government and our local clients here for being part of an ecosystem that is working. It takes leadership and foresight and you deserve a pat on the back for helping to develop and sustain one of the most important sectors for our economic future.
The public needs to know we have a thriving IT sector that continues to grow and prosper here in New Brunswick and is exporting our knowledge and expertise to the world! In the end, is this the answer to all of our fiscal woes? Of course not … but it is most certainly part of the solution!
