Good afternoon, Mr. Chair, and my thanks to all members. I appreciate the opportunity to present at this committee.
My name is Karna Gupta. I'm the president and CEO of ITAC, which is the Information Technology Association of Canada. We represent 350 or more companies across the country, but 65% of our members are SMEs.
The ICT industry produces today about $160 billion of revenue for the country, and we make up probably 750,000 ICT and related jobs. It is a key to the future growth of the Canadian economy across all sectors. ITAC has long advocated a comprehensive digital economy strategy to improve Canada's growth and prosperity.
Today I want to talk about three key pillars of that strategy in the context of privacy policy.
First is innovation. When it comes to social media, we have only scratched the surface in innovation and spinoff benefits for consumers and businesses. Protecting personal information as this unfolds is essential. We need to find the best way to do this while promoting innovation and growth. Smart regulation is the second pillar of our strategy. The third is digital literacy. We need a national, digital skills strategy to help Canadians learn to use the tools for the 21st century effectively and safely.
You have probably heard a lot about Canada's innovation gap. The ICT investment gap between Canada and the U.S. is widening. The labour productivity gap between Canada and the U.S. persists at 10% to 20%. In a 2012 World Economic Forum report, Canada fell in the innovation ranking to 21st place from 15th the year before. No other top-ranked country dropped that much.
What does social media have to do with all of this? The adoption of ICT is the key driver for productivity, and the popularity of social media like Facebook, Google, or LinkedIn has spurred a tremendous amount of ICT development in all sectors. It shows an amazing potential for increased productivity and social change.
Let's look at some of the economic numbers. The World Economic Forum in 2012 ranks Canadians in 13th place in Internet use but in 6th place in the use of social networks. It is estimated that by the end of this year 60% of Canadians will own a smart phone, a rise in phone ownership largely driven by the use of applications and social media.
Canadians are adopting the technology, and we're well placed to capitalize on it. As for growth potential in the related industries, all of the current research predicts that Canada will add 70,000 jobs by 2015 as a direct result of cloud computing and more cost-effective ways of storing data.
One of the most promising spinoffs for Canada is data analytics, the ability to interpret large quantities of information and seize the market opportunity to solve social problems. It is estimated that the worldwide market for these services will grow to $15 billion to $20 billion by 2015. Canada has strong expertise in this space. For example, the Ontario Centres of Excellence along with the federal government, IBM, and seven other academic institutions have set up a virtual network to help small and medium enterprises manage the data sets to solve critical challenges. In Vancouver, police use data analytics to coordinate leads and resource deployment to improve public safety. They claim that property crimes are down as much as 24%.
Companies use data analytics to outperform their competitors and seek higher profits. Based on a recent survey, most companies that use cloud-based solutions outperform their peers by 68%. That's the link to productivity. All of this social media and social networking that spurs innovation drives productivity.
This is also a highly mobile and a global industry.
Our digital economy strategy needs to ensure that Canada is a destination nation for business to grow and prosper because the jobs and the economy we are talking about are highly migratory. They will go where all of the conditions are right. One important factor in ensuring this growth is a regulatory environment that supports what we call smart regulation.
Let's talk about some of the issues around privacy. Canada's current privacy framework is seen as a model by several countries in the world. It does a good job in the crucial area of protecting personal information and promoting innovation. Our members and a number of other sources tell us that the framework works well because it is principles based and it's neutral across technologies or business sectors. They say that the current framework adapts to the fast-changing area of social media and related industries where we cannot anticipate the future applications. It is very critical to underscore that we cannot anticipate a lot of the future applications. They also say that consistent rules across all sectors are better for investment and compliance by companies.
What do we have here? It promotes innovation by allowing collaborative and constructive dialogue with the Privacy Commissioner. New features come into play. This does not happen in the EU where the rules are more prescriptive. In fact, a study by one Harvard academic has found that the EU rules have led to reduced venture capital investment into companies that use online data.
Also, it's effective. The Privacy Commissioner's guidance, rulings, and impressive collaboration with her international counterparts has achieved a real change. It shows by the strong social media adoption rate in Canada. Ranking number six in the world is quite impressive.
Finally, I want to say a few words about digital literacy, another important pillar of our digital economy strategy.
To grow and prosper, Canadians need the skills to make effective and safe use of digital data. Our members play an active role in this. I also want to applaud the Privacy Commissioner for her active role in educating Canadians on the use of online media. There is an excellent opportunity to leverage existing organizations, like ITAC, to help build on this outreach program. We can be used as a portal to help IT businesses, especially SMEs, to understand and comply with the privacy rules.
In closing, Mr. Chair, the protection of personal information is extremely important and I know that our members take this very seriously. At the same time, Canada needs a digital strategy that promotes innovation and encourages businesses to locate here and grow here. As l have described, social media is helping to drive a number of our new and related industries in Canada, which shows great potential for our economy. It's at an early and fragile stage. We need to ensure that we have an environment that fosters these industries in order to realize that potential.
I thank you for your time, Mr. Chairman.
Thank you, members, for the opportunity to present to you.