Ones to watch

Compensation has an outsized impact on the ability to attract and retain in-demand talent that fuels Canadian competitiveness.

• Median salary increases of 3.5%.
• Fintech and Hardware Design, Development and Manufacturing sectors experienced significantly higher.
• Organizations are forecasting average headcount growth of 13% and salary increase budgets of 3.6%.

These findings suggest the tech sector is finding its equilibrium after years of rapid growth and adjustment. Organizations that succeed will be those that thoughtfully combine competitive compensation with meaningful benefits and flexible work arrangements.

Produced annually, this report gathers third-party data from many different sources. The title this year is Canada’s growth engine is stalling.

• Canada ranked 4th in early-stage entrepreneurship based on the Global Entrepreneurship Monitor’s assessment of total entrepreneurial activity.
• Business spending on R&D is 1.07% of GDP, based on 2024 data.
• Canada is ranked 14th on the Global Innovation Index.

Without stronger innovation, investment and firm growth, Canada risks continued declines in real GDP per capita and an eroding tax base to fund health care, infrastructure and retirement income as the population ages. Closing the gap requires structural change: more incentives for R&D and competition, greater support for scaling firms, and policies that better connect Canada’s education and training systems to high-value employment opportunities.

In 2024, Canada started to phase out full expensing for machinery and the accelerated investment incentive for buildings and adopted a digital services tax. By increasing its capital gains inclusion rate from half to two-thirds, Canada also hiked its top capital gains rate from 26.7 to 35.8 percent.

ICTC is a specialist in gathering labour market data for the technology community. This report delves into productivity and employment trends that directly relate to productivity.

• The ICT sector’s productivity is 45% above the national average.
• Companies in Canada’s digital economy report stronger revenue and greater confidence in future growth compared to firms in the general economy.
• ICT sector employers report looking for mid-level and senior staff with specialized skills and experience.

In-demand ICT roles: software engineers data scientists
computer and information systems managers
cybersecurity specialists

The digital economy has continued to experience growth, and the rate has returned to pre-pandemic levels. Businesses in the digital economy have experienced better outcomes in terms of growth and productivity than the general economy.

Software is only one aspect of the tech sector, but it represents the playing field where a lot of startups compete with rivals in the US and beyond.

• There was a 25% increase in venture capital activity in 2024, fuelled by rounds involving firms such as Clio, Hostaway and Cohere.
• The number of deals announced in 2024 fell below 2023 levels, but the average deal size has significantly increased, with a 10% to 15% rise in qualified deal flow across both venture and growth stages.
• Total VC funding fell to $2.3b in 2024, a 21% decline from the prior year, and nearly 70% of capital concentrated across only three funds.

Amid global market stabilization and evolving US trade policies, Canadian tech companies emerged stronger… [there is] renewed optimism and an air of reacceleration as late-stage Canadian companies position themselves for M&A, secondaries and IPOs, potentially sparking a resurgence in liquidity and reinvestment cycles that could drive growth for years.