Good morning, everyone. I would like to thank you for inviting me to speak to you this morning. I am going to make my remarks in English, but I will be able to answer questions in French or English.
Thank you again for having Microsoft at the committee. It's not often that Microsoft and IBM sit together. We're fierce competitors, but we sit together in the good of the industry, and we are now joined by our colleague Bernard Courtois, who hopefully will provide a broad context of the industry.
The IT sector—and Bernard might be speaking to this—is about a $40-billion industry in Canada. It's a growing industry, and $25 billion of that is software and services. The software industry, which Microsoft predominantly works within, is a $6-billion specific industry, and it is the number-one driver behind approximately 23,000 IT companies across Canada that deliver services through software. It supports approximately 58.6% of overall industry employment and it creates about $25 billion in annual taxes.
The reason we're suggesting the importance of software within the broad IT ecosystem and within the services is that there's a moving trend towards what's called “software and services”, and a merging of that. The services on the Internet are definitely a major transformation of our industry. Service, unfortunately, is a word used in a lot of contexts, but it really is transforming the innovation happening around services.
First is in the area of software as a service, which is about one-to-many delivery of software over the Internet. This is fundamentally changing the way services and software are delivered to individuals and to businesses.
A second area is the service orientation, which is the development approach that lets us compose multiple services. It shows up in the lightweight mash-ups that you see on the web today, all the way up to the more heavyweight services-oriented architecture.
A third area is the new innovation of Web 2.0. Web 2.0 is really transforming...it's where the Googles, the Yahoos, Microsoft, and others are working towards delivering software directly to consumers, directly to businesses, through the Internet. It is the way of the future, where services will be delivered online. Services will be supported through a very seamless infrastructure so the software component is the industry driver behind that.
Most of the industry seems to be on the same path to software-plus services. Companies like IBM are certainly going that route, as well as some of the other organizations we've talked about. The importance, though, when we move towards software and services is that it's really about a knowledge economy. Where Canada is struggling with respect to that is in the area of graduating our numbers of students in math and computer sciences. I think Bernard may speak to that, but my ITAC report indicates there will be 25,000 IT jobs in the next year, and only 8,000 graduates from Canada. This is not unique to just Canada. We're facing the same challenges in the United States as an organization. Hence, many of you may have heard of Microsoft opening a software development centre in British Columbia. The majority of our people from that centre—it's recruiting the brightest from around the world—will come from overseas, primarily from India and China.
I think the reason I put that in the context of where software and services are is that the transformation of the industry is moving towards software and services combined, and delivering the services and software through online experience. The software development side and the impact it has and the ability to transform on a global perspective and to have this centred in Canada and having a stronger regimen around that is a great opportunity right now for this country, based on some of our immigration policies, some of our infrastructure issues, and so forth.
One of the aspects we certainly want to bring to bear to the committee, and which I know the government is paying attention to, is the lack of a strong IP regime in Canada and the protection of IP, because as you're working towards software development, it's important to have IP supporting that.
The other one, as Matthew pointed out and as we just talked about, is the skills shortage in the area specifically of software development and computer sciences.
So we certainly look forward to working with the government on shaping a greater strategy for IP protection and for software development and working with the post-secondary institutions towards that end.
Lastly, I think that the onshoring of people is an important one. We've seen a lot of companies, like Microsoft, having an option of either offshoring the software development, or bringing it to North America. With the challenges in the United States with immigration policies, I think it's a great opportunity for Canada for the onshoring, and for the knowledge-based industry to really take hold here in this country.
I talk about that in the context that it is a $1 trillion industry globally. The software and services industry provides over $900 billion in taxes annually globally. If some of that part of the context can be developed here in Canada, I think it's a great opportunity for companies like ours and a country like ours.
Thank you.