Last week at the launch of the 14th edition of the TIN100 report, which analyses the largest New Zealand hi-tech exporting companies, it was great to catch up with everyone and hear about so many fast growing tech firms.
The team at TIN have been doing a wonderful job of surveying tech firms over the past decade, allowing us to follow the progress of the sector and a bunch of very talented people. Highlights included revenue growth of the top 200 firms by 11%, employee numbers up by 4.7%, profitability rose by 38%, and international revenues (or as TIN like to call them, exports) were up by 12.4%. Read more in the free Snapshot report.
It was exciting to hear the predictions by TIN’s Managing Director, Greg Shanahan, that the tech sector will surpass tourism and dairy to become the countries largest export sector within a few years. I also believe that tech will be a large and critical export sector for New Zealand over the coming decades. Unfortunately, the very nature of the sector will make it difficult for exports, as measured by Treasury and Statistics New Zealand, to exceed dairy and tourism in the near term.
Economically, not every sale made offshore is actually an export. As tech firms grow, they often set up offshore offices, move manufacturing closer to customers or make acquisitions. Only direct sales from the New Zealand headquarters count as an export. For example, New Zealand’s largest tech firm, Datacom, has substantial businesses in Australia and Asia. The majority of revenues generated in those countries unfortunately never make it back to New Zealand to be measured as exports. However, they are our largest tech firm!
The official economic numbers for the tech sector in 2017 were:
• 20,940 firms
• employed 108,210 people
• contributed $15.8 billion in GDP, 6% of GDP
• produced $6.2 billion in exports (down 3% from 2016).
The interesting story behind the tech sectors exports is that ICT exports grew 12% to $1.24 billion whereas hi-tech manufacturing exports declined. This is due to some of our manufacturers shifting production offshore.
This is not a bad thing as the tech sector is big and getting bigger. The growth of New Zealand tech firms into substantial international operators can only be good for this country. So let’s not get hung up on the term ‘exports’ and focus on the great news that comes from massive employment growth and the growing number of New Zealand success stories!
Keep up the good work.