Why U.S. Cybersecurity Firms Choose Canada

Philippe Ferland, Business Analyst, Invest in Canada

woman using tablet in server room

US cybersecurity firms have continuously chosen to invest in Canada and the reasons why are numerous. Canada currently ranks 6th in the world for cybersecurity venture capital deals1 and is the 6th most secure nation in terms of cybersecurity protection.  Many global companies are already recognizing Canada’s strengths as a cybersecurity hub, and a high number of deals and projects are flowing into the country from the US.

Given the increasing availability of broadband internet, the widespread adoption of remote work caused by COVID-19 and the advent of the Internet of Things (IoT), both day-to-day business operations and everyday life have become highly dependent on systems, networks and digital programs that require protection. 

With Canada’s cybersecurity industry expected to grow 66% between 2016 and 2021, the country stands as an excellent destination for investors looking to build and implement the cybersecurity protection services necessary for the future. 

Canada’s Position as a Global Cybersecurity Hub

The country’s low business costs, high-quality talent, encouraging R&D incentives and access to global markets drive continued investments into Canada’s thriving cyber industry. Some of the top US companies investing in Canada’s cybersecurity industry include HP (Hewlett-Packard), CiscoFireEye, IBM, and Raytheon

Most recently, MasterCard committed $510 million for a new global cybersecurity center in Vancouver, British Columbia that will act as an innovation hub for cybersecurity, artificial intelligence (AI), and IoT. 

However, IBM tops them all with its acquisition of Fredericton-based Q1 Labs, a deal estimated to be worth more than $600 million in 2009, one of the largest technology deals in Canadian history.

The Canadian government has been highly proactive over the last ten years in ensuring the country remains a global leader in cybersecurity. Since 2010, it has released two national cybersecurity strategies as well as a National Cybersecurity Action Plan to achieve its strategic objectives. In 2018, the federal government also committed $507 million towards cybersecurity initiatives over the next five years.

With these investments and the initiatives they will drive, Canada’s booming cybersecurity industry will continue to be a global leader well into the future.

Canada’s Value Proposition in Cybersecurity

Three main advantages present themselves in Canada for US cybersecurity investors: the quality and cost of its talent pool, its research and development incentives and institutions, and its innovation infrastructure.  

Cybersecurity clusters have emerged in many regions across Canada, each with unique advantages of its own.

Regional Cost Advantages

Cost competitiveness is a major point of attraction for US firms. Because the United States and Canada have similar typical salaries in local currency terms, the weaker Canadian dollar makes wages more affordable. On average, US firms save about 15 cents for every US dollar in business expenses by establishing themselves in one of Canada’s major cybersecurity hubs.

This is especially true in Fredericton, New Brunswick, the epicentre of Canada’s cybersecurity industry. The city boasts the lowest cost of doing business in both Canada and the US. The average tech talent wage is about $60,000 CAD2 per year, which is significantly more affordable than San Francisco, Boston, and Washington DC due to the lower cost of living in Fredericton compared to these American cities. For example, Fredericton is 38% more affordable than Washington DC for the same standard of living.

Ontario also presents many advantages to investors, including a growing consumer base as major banks in the province look to protect themselves from cybersecurity threats. The province’s large tech talent pool, significant R&D expenditures, industry support, current investment flows and access to global markets makes investing in cybersecurity services a potentially lucrative venture.

With these advantages, the value proposition for US investors is clear. Canada provides all the necessary talent and support for a successful cybersecurity business or headquarters to thrive, at a lower cost.

The Growing Canadian Cybersecurity Workforce

With more than 2.8 million STEM graduates and the OECD’s highest educated workforce, the depth and quality of Canada’s tech talent pool is undeniable.

There are over 70 post-secondary education institutions in Canada offering cybersecurity programs and certifications. Thanks to these institutions, Canada boasted 20,000 cybersecurity professionals employed across all industries in 2016. That number is set to grow 40% by 2021 with an average yearly growth rate of 7%.

To ensure talented young Canadians are graduating with the full complement of skills that firms are looking for, the federal government has created the Cybersecurity Component to the Student Work Placement Program. Businesses operating in Canada are eligible for a wage subsidy of 50% for each new standard work student placement (up to a maximum of $5,000 per placement), or 70% (up to a maximum of $7,000), for new placements created for under-represented students.

Provinces such as New Brunswick are also investing in long-term talent development by introducing digital technology and cybersecurity-focused training from elementary school to post-graduate studies. CyberNB, a non-profit focused on advancing Canada’s booming cybersecurity industry, has developed numerous educational and extracurricular programs for students of all ages across the country.

Together, these initiatives ensure the pool of cybersecurity talent grows to meet investor demands in the short- and long-term.

Institutions Supporting the Industry

Canada has a significant number of major research institutions, government agencies, and non-profit organizations producing cutting edge research, establishing industry partnerships, and promoting Canada’s cybersecurity industry to the world. These institutions include:  

CyberNB is the preeminent organization, fulfilling a crucial gap in Canada’s cybersecurity ecosystem as a single overarching organization working on behalf of all stakeholders. Since its inception, the non-profit has amassed an extensive national and international network of partners and collaborators in business, government and academia. Industry collaborators include IBM, Siemens and Kaspersky. Its Critical Infrastructure Protection network (CIPnet) offers regular government dialogues, access to thought leadership events, product development support and a talent recruitment pipeline.

Fulfilling a similar role, In-Sec-M is a non-profit organization that brings together business, research centers, academics, government actors and sectorial associations determined to address the most complex challenges in cybersecurity. Their work in the Ottawa-Gatineau cybersecurity industry, a growing ecosystem of over 90 companies, helps increase the cohesion and competitiveness of the Canadian cyber security industry, at the domestic and international levels.

The Place to Be for Cybersecurity

This year, Fredericton, NB received a $37 million investment for a “Cyber Centre” in Knowledge Park, which will be a centralized hub focused on guarding the country’s critical cyber infrastructure in the realms of defense systems, finance, transportation, hydroelectricity and water. Housing a critical infrastructure security operations center and a cybersecurity incubator and accelerator called CyberHatch, the Cyber Centre will act as a central hub for cybersecurity firms to collaborate on issues occurring locally, regionally and around the world.

With significant growth opportunities found in integrating IoT with critical infrastructure, ensuring the whole system remains secure will be key to unlocking the full operational efficiency IoT technology provides. As such, the Cyber Centre, as an area for further investments, provides the space, infrastructure, and support necessary for firms looking to address the inherent risks of IoT technology.

Exterior of CyberCentre Fredericton building
Photo provided by Ignite Fredericton, taken by Aaron McKenzie Fraser

 

Invest in Canada’s Cybersecurity Industry

Canada provides several significant advantages for cybersecurity firms looking to grow internationally. As demand for cybersecurity protection increases around the globe, Canada will remain a top location for cybersecurity investments well into the future.

Interested in building your cybersecurity headquarters, or growing your firm in Canada? Contact us to discuss your project now.