Canada’s Information Technology and Communications Industry: Industrial Outlook Spring 2006

After enjoying a banner year last year, Canada’s information technology and communications sector will grow more slowly over the next several years.

New technologies are helping the telecom industry lower its cost base and generate new products, but they are also eroding the market for the industry’s largest product—traditional voice services. And although the computer and electronic product manufacturing industry has rebounded strongly over the past two years, capacity constraints and higher costs in Canada mean that most new capacity will be added overseas. Meanwhile, market saturation and product maturity will limit growth in the computer systems design industry.

Still, investment spending on information technology equipment and services will remain robust, helping overall sector profits rise by 8.4 per cent to a record $6.6 billion this year and another 11 per cent in 2007. Profit growth will more subdued between 2008 and 2010, mainly because of weak price appreciation.