Toronto’s tech scene is scorching hot right now!
According to recent reports, Toronto created more jobs than the San Francisco Bay area, Seattle and Washington, D.C., combined last year. It has been hailed as the “up and coming startup centre in North America,” and continues to solidify itself as a major international player in the tech space.
While all the praise has been centered on Canada’s biggest city ranking number one in tech job growth, it took fourth place in tech talent, and drops all the way down to 37th in terms of compensation.
So there’s a conflicting narrative around what this data is suggesting. And while much has been documented about Toronto’s potential, it still leaves the question open if employees in the big smoke are underpaid – and despite this growth, is there actually a shortage of talent?
Are Toronto’s new tech workers feeling underpaid?
I don’t think it’s a question of being underpaid – it’s just that the cost to hire tech talent in Toronto is a fraction of what it is in Silicon Valley. Good developers will cost you north of $100,000 here, but it’s well over $200,000 in the valley; usually with a signing bonus attached to it.
From an employer’s perspective, a small bootstrapping startup that is watching their burn rate very closely couldn’t handle those figures. So a lot of this boils down to the cost of doing business.
Startups are naturally watching their margins very closely, and sometimes have to go as far as laying off half of their staff with large round of purges to play it safe.
When I talk to startups that have had a footprint down in the valley, they’ve all commented on how it’s so cost-prohibitive to hire and train people there. To the point where it actually became insane from a total compensation standpoint to be able to hire that many people to handle the bandwidth of work that clients were looking for. It was just unfeasible.
The costs here are a fraction of what they are in the United States
When it comes to overall costs, even if you assume upward pressure on office space, housing and labour, our major markets still constitute a significant bargain to the U.S. And Canadian VC’s are starting to invest more here, so startups don’t have to look to the States to get funding.
Toronto has the resources, the infrastructure, the lifestyle and a vibrant downtown core that attracts younger workers; so there’s just so much available at a fraction of the cost to do business in California and the lower costs associated with running a tech company here. Pundits have actually gone as far as predicting that these high costs could, quite possibly someday, dethrone the Bay Area’s edge.
There are so many contributing factors to Toronto booming – and you can’t just pinpoint one that’s igniting the boom that we’re seeing.
So is this a brain gain – or a brain drain?
While Toronto has been experiencing a ‘brain gain’ in the past five years, creating more than 82,000 tech jobs – how can it be possible that we’re still seeing a shortage of talent?
First off, I think it’s important to realize that “job creation” can be a bit of a misleading metric when evaluating startups. So while the figures that come from recent reports are all well and good from a headline perspective, I believe that we should be taking a deeper dive and looking at what the cost of doing business is as a quantitative metric to base this on.
Consider this. It’s not uncommon for workers in the tech space to have three companies in eighteen months on their resume. But to an employer outside of tech, it would be considered a red flag. Inside the world of tech, because companies are so short of staff, you kind of turn a blind eye to that, and you put a positive spin and think, “well this person has been with three great companies – we could learn from this.”
Toronto has all the makings of a sustainable and powerful tech hub
According to these recent reports, Toronto was ranked as the best for overall depth, vitality and attractiveness. On a more granular level, this is much in part because of how desirable a city Toronto is to live in, and how that resonates with the younger demographics that comprise much of the anatomy of a tech company.
And while there might be a shortage of tech talent, the city is starting to catch up by producing local initiatives that support new businesses and talent; BrainStation, HackerYou, Ladies Learning Code, TechGirls Canada, MaRs Discovery District to name a few. As Toronto continues to reverse the effects of talent loss to the Bay Area, it will need to continue to attract global partners and capital in order to strengthen its position, and garner candidate interest internationally.
This “Silicon Valley of the North” is in a very strong position now, and the tech ecosystem here has just scratched the surface on its potential.