While Toronto has grown to become one of the top tech hubs in the world, what was once a robust and flourishing sector has proven that it is not quite immune to recent economic changes post-pandemic.
Dozens of tech companies, small and large have set up new offices in the city in recent months, going on hiring sprees in the process to add Toronto talent to their ambitiously expanding operations.
Toronto just jumped to the third-best spot for tech workers in all of North America https://t.co/1emPw6e9iC #Toronto #Tech
— blogTO (@blogTO) July 19, 2022
But, some firms may have been a bit too far-reaching with their plans for success, such as Shopify, which famously laid off 1,000 staffers late last month after the CEO admitted to over shooting with the e-commerce giant’s goals for growth.
“We bet that the channel mix — the share of dollars that travel through ecommerce rather than physical retail — would permanently leap ahead by five or even 10 years,” the Ottawa-based company’s CEO wrote.
“It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful five- year leap ahead.”
A huge Canadian tech company just cut thousands of jobs in Toronto https://t.co/2IX8dHOddS #Toronto
— blogTO (@blogTO) July 26, 2022
And it seems that others have similarly miscalculated how the landscape would look at this point. Canadian tech companies like Hootsuite, Clearco, RenoRun and WealthSimple, plus e-commerce focused brands like Mejuri and Article, are among those dropping tons of staff unexpectedly in the last month, taking their workers completely off-guard.
Others have managed to evade layoffs, instead pausing existing expansion plans.
Experts are now calling it a “tech downturn” across Canada — a huge change from what was once a guaranteed thriving industry here — that is complete with a slowdown of venture funding (by 61 per cent year-over-year in Canada and 69 per cent in Toronto) and overall deal activity.
“After the intoxicating highs of 2021, 2022 has seemed like one long hangover,” BetaKit’s Douglas Soltys said in the outlet’s recent podcast on the topic, which goes on to mention mass layoffs, stock drops and valuation markdowns. These are fortunately moreso “the narrative” than the entire picture across the board nationwide.
I’ve been wondering (and noticing) this as well! Hoping it’s true that Canada’s tech market stays on top through this downturn.#CDNTech https://t.co/9B1Chg9ZPl
— elanparis (@ParisCmns) May 10, 2022
In Toronto specifically, comparing the second quarter of 2022 to the same quarter in 2021 shows a big fall, but one that was somewhat anticipated given the height of the sector’s success at this time last year.
“If you look at the year-over-year numbers, Toronto’s results are a lot closer to the investment levels we saw pre-2021… Q2 was kind of a reversion to the mean for Toronto tech,” Soltys’s guest, Isabelle Kirkwood , said.
“It kind of can seem like everything is doom and gloom right now, but it cerrtainly doesn’t look like a crash, at least not yet, but definitely signaling that this crazy period that Toronto has lived through over the last year has at the at least paused for now.”
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