Greater Montréal's Thriving IT Services Sector - Montréal International
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Greater Montréal’s Thriving IT Services Sector
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Greater Montréal: A Deep and Growing Pool Attractive Operating Costs Montréal International’s
A Leading Tech Hub of Highly Qualified Talent and Incentives Personalized, Free and
p.03 p.11 p.18 Confidential Services
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Greater Montréal:
A Leading Tech Hub
Downtown Montréal © Henry MacDonald
Top reasons to invest in Greater Montréal's IT Services
179,000+ tech workers and Best student city in the A world leader in high
5,000 companies in Greater Americas and Canada’s value-added sectors
Montréal university capital
72,000+ workers The metropolitan area The lowest operating costs
in software development with the most bilingual in Canada and the U.S.
in Greater Montréal and trilingual population for a software development
in Canada company
15,000+ university students Immigration streams Incentives: up to 30%
enrolled in IT related to attract top of eligible expenses
programs and the highest international talent and salaries
number of graduates in tech
in Canada
4
Many global players recently decided to invest in Greater Montréal
Jan. 2017
March 2015 Nov. 2016 Dec. 2017 June 2018 May 2019 Feb. 2020
March 2017
June 2016 Dec. 2016 July 2017 Oct. 2018 Oct. 2019
Feb. 2018
Nov. 2018
Other foreign companies flourishing in Greater Montréal
5
Several successful innovation centres are based in Montréal
With two locations - both in the heart of the city, The Microsoft Research Montréal lab plays a
SAP Labs Montreal specializes in customer- fundamental role in the state-of-the-art AI
focused product innovations including the research. Located in Montréal, the lab fosters
Customer Engagement and Commerce portfolio, open collaborations with partners throughout
like SAP Hybris. SAP Labs Montreal is also a industry and academic institutions in the city
vital customer and partner support centre. and around the world.
IBM Client Innovation Centre (CIC) in Montréal Ericsson's R&D and Services Centre in
delivers competitive application development and Montréal has 1,000 professionals working on
support services to private and public clients. advanced and next-generation wireless
CIC Montréal is part of IBM’s global network of systems across the world. It also opened a
IBM Client Innovation Centres. Global AI Accelerator (GAIA) innovation hub
in Montréal.
Since 2019, the leading Japanese information Canada’s largest IT services provider, CGI
and communication technology company, is serves customers in more than 40 countries
serving the city of Montréal to develop and and has its main innovation hub based in
implement AI solutions. Montréal.
One of the world’s leading AI company, Element European leader in engineering and
AI is a local startup that employs more than 400 technology consulting, Alten chose Montréal
people and that has its main teams working on to open its Canadian HQ to serve their North
fundamental and applied research in Montréal. American clients and open an innovation
centre.
6
A thriving economy that drives business opportunities
Finance
and Manufacturing
insurance
Telecom
Public
and
sector
entertainment
7
A booming startup ecosystem
▪ Canada is the most attractive country in the world
for entrepreneurs according to the OECD.
▪ US$1.7 B+ in VC investments since 2018
in Montréal.
▪ Six of the eight most active VCs in Canada
in 2019 are based in Greater Montréal.
▪ 30+ incubators/accelerators
▪ 45+ coworking spaces
Source: OECD Indicators of Talent Attractiveness, 2019; ”Global Ecosystem
Report” 2018; “Montréal Startup Ecosystem Report”, Credo, 2016; “Midterm
Report” – Smart City, February 2017; Canadian Report “Money Tree”, PwC 8
Crew Collectif & Café © Susan Moss Canada | CB Insights, 2019.
A supportive ecosystem
Cluster Organizations Research Institutes R&D Financing
Greater Montréal Québec’s AI Facilitating
technology cluster Institute the creation of
partnerships and
Organization Institute for Data the financing of IT
aimed at pooling Valorization R&D projects
talent and
expertise in Center for Applied Funding research
cybersecurity Research and IT projects and
in Québec Expertise connecting
industry and
HR Committee academia.
dedicated to IT
recruitment
professionals
9
Major public investments to
support innovation
Public investment in AI:
$875M • Allocations from the Canada First Research
Excellence Fund (2016)
• Creation of a Québec AI cluster (2017)
• scale ai supercluster (2018, 2019)
• Accelerate the adoption of AI in Québec
(2019)
Over the next five years for Canada’s 5G
$400M public-private ENCQOR project network to
unlock the technological promise of 5G (2018)
The Smart Cities Challenge 2019 winner for
$50M its proposal to improve mobility and access to
food (2019)
Over the next three years to support
$17M innovation in cybersecurity in Québec
(2019)
10
Aerial view of Montréal skyline02
A Deep and Growing
Pool of Highly Qualified
Talent
Square Victoria © Montréal International179,000+ tech workers in Greater Montréal ▪ Greater Montréal boasts a highly qualified workforce ▪ 18.2% increase in tech jobs in Greater Montréal (2014-2018) ▪ Low turnover rate: 11% for the tech industry Source: Montréal International’s estimate based on 2018 TECHNOCompétences’ Labour Diagnostic in ICT in Québec; Statistics Canada, Labour Force Survey 12 (LFS), 2018.
72,000+ workers in software development call Greater Montréal
home
670+ job titles taken into account to define Number of workers who have Fastest-growing skills among workers in
workers in software development* the skills below software development over the past 12
months
18,347
+37%
+36%
16,161
+33%
15,452
+30%
12,622
+30%
+27%
11,672
11 613
10 658
+24%
10,497
9 264
8,665
+15%
+15%
+15%
Number of Greater Montréal LinkedIn
Linux
JIRA
OOP
C++
JSON
PHP
C#
Git
AngularJS
SQL
MySQL
HTML
HTML
JavaScript
JavaScript
Java
Python
Node.js
Python
Java
profiles that list the titles above: 72,657
*Note: Excluding niche specialties such as video games, VFX and animation.
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Source: LinkedIn, Talent Insights, December 2, 2019.98% of workers in software development have a university degree,
of which 43% hold a Master’s degree or higher
Highest level of education among Main fields of study chosen Universities where
software development workers by software development workers software development
(100% = 72,657) workers earned their degrees
4%
2% 12 % 16%
10 %
35% 9%
51% 53 % 6%
43%
8%
6%
3% 4%
5% 7%
3% 6% 7%
7%
3%
Bachelor’s degree Computer Science Concordia University
Master’s degree Computer and Information Sciences McGill University
PhD Computer Software Engineering Université du Québec à Montréal
Other Electrical and Electronics Engineering Université de Montréal
Information Technology Polytechnique Montréal
Computer Engineering École de technologie supérieure
Accounting and Business/Management HEC Montréal
Mathematics Université de Sherbrooke
Other Other 14
Source: LinkedIn, Talent Insights, December 2, 2019.A large pool of university students enrolled in IT-related programs
University students University
IT-related programs enrolled in graduates,
2017-2018 2017
Computer Sciences 8,104 1,558
Electrical and Electronic
15,000+ Engineering
3,498 744
enrolled in Computer Engineering 2,002 374
IT-related programs
at universities located Mathematics 1,438 262
in Greater Montréal
Applied Mathematics 190 35
Probabilities and Statistics 130 27
Total 15,362 3,000
15
Source: Ministry of Education and Higher Education, 2019; compilation by Montréal International.The best student city
in the Americas and Canada's
university capital
▪ Canada’s university capital: 11 university
institutions and 60 colleges
▪ 320,000 post-secondary students, including
more than 200,000 university students
and 35,500 international university students
▪ $1+ billion in funding yearly dedicated
to university research
▪ Best student city in the Americas:
1 Montréal
Best student
2 Toronto
city in the
Americas 3 Boston
2019 QS Best
Student Cities 4 Vancouver
Rankings 5 New York
Source: QS Best Student Cities in the World, 2019; Ministry of Education,
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Leisure, and Sports, Québec, 2018; Research Infosource Inc., 2018. McTavish Street © Montréal InternationalMultiple international mobility programs to attract the best
international talents
Immigration Processing
1 - Obtain a LMIA* and CAQ** 2 – Work permit application Processing time
programs time
Have worked at least one year for the company before the
Intra-company 0 to 2
These procedures are not applicable in this case . transfer, be an executive or have specialized and
transfer weeks***
proprietary knowledge
Belong to one of the 60 professions recognized under 0 to 2
NAFTA These procedures are not applicable in this case .
NAFTA weeks***
Be 18 to 35 years old (may vary according to the country
of citizenship) and coming from one of the 35 countries
International and territories having signed an agreement with Canada. Up to
These procedures are not applicable in this case
Experience Canada 3 possible categories according to country agreements: 8 weeks
Working Holiday, Young Professionals and International
Co-op Internship
Exemption from the obligation to make efforts to hire and Submit the application to the visa office outside Canada or
Global Talent Approx. 0 to 2
recruit locally.12 professions are on the list of professions to Canada customs if the applicant is exempt from the
Stream 2 weeks weeks
eligible for this program. entry visa requirements.
Process offered exclusively to businesses in Quebec.
Submit the application to the visa office outside Canada or
Québec Simplified Exemption from the requirement to demonstrate that efforts to Approx.
to Canada customs if the applicant is exempt from the Canadian Visa Office
Process hire locally were unsuccessful. More than 200 professions are 12 weeks
entry visa requirements. (BVC) timelines
on the list of professions eligible for simplified processing.
Submit the application to the visa office outside Canada or
Demonstrate that reasonable efforts have been made to hire Approx. Canadian Visa Office
Regular process locally 15 weeks
to Canada customs if the applicant is exempt from the
(BVC) timelines
entry visa requirements.
Notes:
*LMIA: Labour Market Impact Assessment.
** CAQ: Québec Acceptance Certificate.
***Priority processing within 14 days (in 80% of cases) only for a qualified position at level 0 or A according to the National Occupational Classification. 1703
Attractive Operating Costs
and Incentives
Mary Queen of the World Cathedral / Skyline of downtown © Tourisme MontréalOperating a business costs less in Greater Montréal than
in any other major metropolitan area in Canada and the U.S.
Operating costs index for software development
20 largest metropolitan areas in Canada and the U.S., 2019
196
181 182
168
155 29% cost
139 139 140 141
143 144 advantage
132 136 compared to the average
128 128
124 124
116
20 largest metropolitan
Index Montréal = 100 areas in Canada and
100 103 the U.S.
New York City
Miami
Detroit
Philadelphia
Denver
Tampa
Atlanta
Chicago
Houston
Boston
Seattle
Montréal
Toronto
Minneapolis
Washington D.C.
Phoenix
San Diego
Dallas
Los Angeles
San Francisco
Note: The annual operating cost calculations are based on labor and property costs in US$.
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Source: fDi Benchmark, 2019.Advantageous salaries for employers
Median annual salaries* (US$) for eight typical occupations in software development
Montréal with
E-Business tax
San
Montréal credit applied** Toronto Atlanta Chicago Boston Seattle New York
Francisco
(assuming 100%
eligibility)
Database Analyst $64,285 $45,182 $68,427 $87,541 $91,179 $98,328 $100,991 $100,409 $108,350
Programmer $65,314 $46,212 $69,506 $88,394 $92,052 $99,269 $101,958 $101,386 $109,381
Database Architect $71,123 $52,020 $75,513 $98,361 $101,615 $109,634 $112,538 $112,763 $121,041
Computer Engineer $71,847 $52,744 $76,252 $102,040 $105,071 $113,405 $116,351 $116,976 $125,300
Software Developer $73,112 $54,009 $77,545 $103,766 $106,654 $115,139 $118,094 $118,955 $127,270
Software Engineer $73,392 $54,789 $78,351 $103,289 $106,215 $114,658 $117,611 $118,408 $126,724
Main Software
$81,948 $60,179 $86,653 $118,846 $120,884 $130,635 $133,731 $136,277 $144,725
Developer
IT Consultant $79,370 $62,845 $84,100 $114,599 $117,303 $126,697 $129,850 $131,382 $140,176
Note: * Salaries based on five years of experience, Computer systems design services (NAICS 541512).
** E-Business tax credit reinforces a salary cap of CA$83,333, meaning that a maximum of CA$20,000 refundable and CA$5,000 non-refundable credit can be claimed per eligible
employee.
Currency exchange based on the monthly average of January 2020: US$1.00 = CA$1.3087.
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Source: Economic Research Institute, Inc., February 2020.Low mandatory benefit costs for employers
Examples of mandatory benefit costs for employers, 2019
Gross annual salary* $50,000 $100,000 $125,000
Québec Public Pension Plan
$2,775.00 $2,991.45 $2,991.45
(employee: 5.55%; employer: 5.55%, max. $2,991.45)
Québec Parental Insurance Plan
$368.00 $563.04 $563.04
(employee: 0.526%, employer: 0.736%, max. sal. of $76,500)
Employment Insurance
$875.00 $929.25 $929.25
(employee: 1.25%, employer: 1.75%, max. sal. of $53,100.00)
Health Services Fund
$2,130.00 $4,260.00 $5,325.00
(1.25% if global salary total is less than $1M, max. 4.26%)
Commission des normes du travail (labour standards board)
$35.00 $53.55 $53.55
(0.07%, max. sal. of $76,500)
Commission de la santé et sécurité du travail
$235.00 $359.55 $359.55
(occupational health and safety board - 0.47% in service sector, max. sal. of $76,500)**
Québec Training Law 1%
$500.00 $1,000.00 $1,250.00
(1% of their total payroll in training for employers with total annual payroll over $2M)
Total benefit costs $6,918.00 $10,156.84 $11,471.84
Total cost $56,918.00 $110,156.84 $136,471.84
Total benefits in % of gross annual salary 13.84% 10.16% 9.18%
Note: *Paid vacation represents a minimum of 4% of salary and is included in gross salary. Some rates apply up to a maximum insurable revenue.
**The rate for the service sector (65110 - Bureau de courtage; bureau de services professionnels; bureau offrant des services de soutien administratif) is 0.47% but the rate for an
employer can vary from 0.23% to 18.87% depending on the sector.
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Source: Revenu Québec, 2019.Most affordable office rent
Average office space rent cost (US$/sq.ft./yr)
Selected metropolitan areas in North America, 2019
78.13
61.61 63.57
47.90
39.36
31.31 32.02 34.35
Toronto
Chicago
Atlanta
Boston
Seattle
Montréal
San Francisco
New York
▪ The average cost for class A office space in
Greater Montréal's central business district is two
times lower than New York and two and a half
times less than San Francisco
Currency exchange: CA$1 = US$0.76.
22
Source: Cushman & Wakefield, 2019. Aerial view of Montréal © Montréal InternationalEasy access to highly advantageous incentives
Major projects and Sector tax credits
innovations ▪ Up to 43% for film and video production
Grants, interest-free loans and other ▪ Up to 37.5% for multimedia production
supports available, such as ▪ Up to 30% for e-business development
competitive electricity rates of ▪ 24% for international financial centres
CA¢3.98/kWh for large power*
Many tax credits
are refundable
—a company could
receive the value of its tax
credit even if it has
no tax payable
Labour development Research and development
▪ 25% of costs to implement ▪ Up to 30% tax credit on R&D
training programs ▪ Tax holiday for foreign researchers
▪ 50% of costs to create an HR and experts
department
Note: * Rate LG: large power with minimum billing demand of 5,000 kW, transmission and distribution included, for 120-kV supply with 95% load factor, and including the Economic
23
Development Rate reduction (if eligible).E-Business tax credit could cover up to 30% of eligible salaries
SCENARIO ASSUMPTIONS1
Québec refundable tax credit for the ▪ Foreign-controlled private company
development of E-Business:
▪ 20 employees eligible @ $80,000/year
▪ Covers up to 30% of employee salaries, ▪ 100% of their work is related to eligible
including 24% refundable, up to activities under the E-Business
$25,000 per employee, per year
Your tax credit will be a maximum
of 30%
Payroll E-Business tax YES = $480,000
20 employees credit Do you
@ @ 30% have to pay
$80,000/year $1,600,000 * 30% taxes in Your tax credit will be a maximum of
= = Québec? 24%, as you are not eligible for the
$1,600,000 $480,000 NO supplemental 6% non-refundable
tax credit
$1,600,000 * 24%
Note: = $384,000
1. All values are in $CA.
2. The unused portion of the non-refundable tax credit can be carried back three years or forward 20 years.
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Source: Ministry of Finance of Québec, 2019; Montréal International’s analysis, 2019.R&D tax credits: 15% non-refundable from the government of
Canada and 14% refundable from Québec
SCENARIO Canada (Federal) Québec
Scientific Research and Experimental Development Qualifying salaries and wages $1,500,000 (A) $1,500,000 (D)
(SR&ED) tax incentive program
Other eligible expenses @ 55%2 $825,000 (B) -
Subcontractor3 $160,000 (C) $100,000 (E)
ASSUMPTIONS1 Exclusion on the first $225,000 of R&D
- $(225,000) (F)
expenditures4
▪ Private, foreign-controlled company, more than Deduction of the Québec R&D credit5 $(192,500) (G) -
$75M assets
$2,292,500 $1,375,000
Total qualifying expenditures
▪ 15 eligible employees @ $100,000/year (A) + (B) + (C) - (G) (D) + (E) - (F)
Refundable Québec credit @ 14% - $192,500 (G)
▪ 100% of their work is related to eligible activities
Non-refundable federal credit @ 15% $343,875 (H) -
▪ Subcontractor: $200,000 Total tax credit $536,375 (G) + (H)
Note:
1. This model takes into consideration recent changes made to certain tax credits (2012, 2014 and 2015) and is thus valid as of fiscal 2019.
2. Up to 55% of qualifying salaries and wages, federal only: expenditures should be related to R&D activities.
3. Only 80% of the amount paid to a subcontractor is eligible for a federal tax credit and 50% for Québec tax credit.
4. Québec only: For SMEs (less than $50M assets) there is an SR&ED tax credit exclusion on the first $50K of R&D spending. For large companies (more than $75M assets) and
companies under foreign control, the exclusion applies on the first $225K of R&D spending. This amount is deducted of the qualifying salaries and wages.
5. For the purposes of calculating the combined rate of the credit, the tax credit from the government of Québec is applied against the federal tax credit.
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Source: Ministry of Finance of Québec, 2019; PWC, 2019; Compilation: Montréal International, 2019.Combination of E-business and SR&ED tax credits
Refundable tax credits for Scientific Research and Experimental Development (SR&ED) and E-business (CDAE)1:
▪ E-business covers up to 30%, including 24% refundable, of employee salaries up to $25,000 per job per year
▪ SR&ED covers 15% from the Government of Canada, and 14%, refundable, from the Government of Québec
SCENARIO SR&ED CDAE
Combination of the Québec refundable tax credit for FEDERAL QUÉBEC
the development of E-business (CDAE) and the
federal Scientific Research and Experimental Qualifying salaries and wages $1,600,000 (A) $1,600,000 (C)
Development (SR&ED) 3
Other eligible expenses @ 55% of A $880,000 (B) -
Total qualifying expenditures $2,480,000 (A)+(B) $1,600,000 (C)
ASSUMPTIONS2 Federal credit @ 15% of total
qualifying expenditures $372,000 -
▪ Foreign-controlled private company
Québec credit @ 30%4 of total
▪ 20 eligible employees @ $80,000/year qualifying expenditures - $480,000
▪ 100% of their work is related to eligible activities Total credit $852,000
Other scenarios are possible to maximize the total credit amount depending on the R&D intensity
Note:
1. Company has to choose between the SR&ED or the E-business tax credit for the Québec credit.
2. This model takes into consideration recent changes made to certain tax credits (2012, 2014 and 2015) and is thus valid as of fiscal 2019.
3. Up to 55% of qualifying salaries and wages, federal only: expenditures should be related to R&D activities.
4. If the company has no taxes to be paid, the Québec credit will be 24%.
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Source: Ministry of Finance of Québec, 2019 - Compilation: Montréal International, 2019.Québec offers corporations
an attractive tax treatment
Comparison of corporate effective tax rate (%)
Selected Canadian provinces and U.S. States, 2019
34.61%
26.50% 26.60% 27.32% 27.98% 28.11% 28.51%
New York
Québec (Montréal)
New Jersey
Ontario
Massachusetts
California
Illinois
Source: Ministry of Economy, Science and Innovation of Québec and Raymond
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Chabot Grant Thornton, April 2019. At Work Base © Montréal International04
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