Does picking winners create more losers?

Why is Ontario handing $15 million to Sandvine to create just 75 jobs? According to the Ottawa Citizen, “Sandvine spokesman Rick Wadsworth says the company has trouble convincing itself to hire people in Ontario.”

“Sandvine, like any global high-tech company, has to choose the best regions to do our development work,” he said Friday by email. “Our natural predisposition is to do that work in Ontario, but there are other parts of the world where Sandvine currently operates that also have qualified candidates and much lower cost. The Jobs and Prosperity Fund took a difficult decision about where to locate future jobs and helped gap some of the cost difference, but not all of it.”

Sandvine is right. Like any other high-tech company, Sandvine has to choose where it hires people to do its development work. And apparently, Ontario’s high tech development talent needs a $200,000 per job subsidy in order to be competitive with other parts of the world, despite the company sitting on $140 million in cash. That is the message that is being sent to the marketplace by the government handout.

The Toronto Star quoted Ontario’s Economic Development Minister Brad Duguid: “Look, we’re competing in a fiercely competitive global economy… The days when you could just sort of spread out through a tax credit to everybody a little bit of help to help businesses rise — and not be investing in your fast runners — are gone”.

And that is a message that should concern policy makers looking at boosting Canada’s innovation economy.

What are the implications for other high tech jobs? For start-ups and the majority of employers that aren’t identified as “fast runners”.

Ontario is trying to create more innovation clusters. Sandvine, with lots of cash in the bank, together with the province, is saying that Ontario development talent is too expensive and needs to be subsidized to the tune of $200,000 per job to be competitive. That should be a concern to all entrepreneurs.

Companies that are looking to recruit the best talent are now competing against another firm that gets $200,000 to outbid them. That drives the cost of talent even higher.

Last week, I referred to the National Digital Talent Strategy that has been launched by ICTC. The 2016 Canadian Telecom Summit includes a session looking at “Strengthening Canada’s Digital Advantage in a Hyper-connected Global Economy”, moderated by ICTC CEO, Namir Anani.

Do government funded job subsidies help or hurt the innovation ecosystem? Does the short-term benefit for one industry participant come at a cost to others?

The Canadian Telecom Summit takes place this year from June 6-8 in Toronto. Have you registered yet??

Scroll to Top