10 charts on Australia’s fast growing technology sector
The Technology Council of Australia has commissioned consulting firm Accenture to conduct a strategic market assessment of Australia’s technology sector, with the aim of shaping policy development for what is now the country’s third biggest industry, behind just mining and banking. 10 charts from the report on the sector’s growth and outlook.
The technology sector is a critical pillar of the Australian economy, contributing $167 billion to the economy. The sector’s contribution has increased 79% since 2016 and has outpaced average growth of other industries by more than four times, in part due to an acceleration due to accelerated digital adoption during Covid-19.
The tech sector currently is the third highest contributor to GDP in Australia, behind only mining and banking and ahead of healthcare, construction, and retail.
The direct contribution of the tech sector amounts to $76 billion. This segment includes the value generated by categories such as software, analytics, business applications, technology intelligence, technology enabling infrastructure, e-commerce, digital media, and online payments solutions.
The majority of Australia’s direct tech contribution is derived from technology services and intelligence.
The indirect contribution of technology is however larger, at $92 billion. In today’s digital era, technologies are a strong part of the value chain and operations of most businesses in the economy from traditional areas such as agriculture, retail and manufacturing, to service businesses such as finance and professional services.
The growth potential of the tech sector means that it will actively cement its place as a pillar of the Australian economy over the next decade, surpassing the contribution of the primary and manufacturing industries.
Employment in the tech sector
The tech sector is one of the biggest generators of quality jobs for a diverse range of skillsets in Australia. Tech jobs are critical to the growth of tech firms and industries that use tech in their businesses such as banking, agriculture, mining, retail and manufacturing. Meanwhile, tech firms also create broader employment opportunities as they hire support occupations in non-tech roles such as sales and marketing, administration, human resources and legal.
Since 2005, tech sector jobs have grown 66% compared to an average growth rate of 35% across the economy.
In terms of the total number of jobs, the tech sector is seventh largest employer in Australia.
Growth in tech jobs has diversified away from major capital cities and is strongest in regional and suburban areas. The highest growth rates for ICT professionals are mostly on the outskirts of Sydney and Melbourne, including Sydney’s Outer South West (including Campbelltown, Camden and Narellan) and Melbourne West (including Sunshine West, Williamstown and Altona).
Five of the top 10 fastest growing regions for ICT professionals are in South-East Queensland, with the highest average growth rates recorded in East Brisbane. Regional cities, including Adelaide and Hobart, also experienced high growth in the number of ICT professionals.
Advancing the sector’s impact
According to the report by Technology Council of Australia and Accenture, while Australia’s tech sector has seen strong growth in recent years, ongoing barriers to innovation and development have constrained its size relative to its peers. For example, the direct tech sector contributes 3.8% of Australian GDP, which is significantly below the US (10.2%), UK (8.1%), and Canada (6.8%).
As a result, Australia has a substantial opportunity to increase the economic contribution of the tech sector to catch up with its global peers. If Australia for instance can match Canada’s tech sector contribution (Canada is chosen as a benchmark because it has a similar economy to Australia, with dominant agriculture and mining sectors) then it could generate an additional $30 billion in economic value per year by 2031.
If ambitious stretch targets were set and Australia met the UK or the US’ current sector contribution in the next decade, it could achieve an additional $54 billion to $124 billion in economic value per year by 2031.
This additional growth could provide a strong boost to tech sector employment. Under a growth scenario where Australia can match Canada’s tech sector contribution, the tech sector will employ 1 million people by 2025 or an additional 141,000 workers in the next five years. Under the stretch UK or US scenarios, between 277,000 and 638,000 additional workers could be employed annually by the tech sector in 2031.
Commenting on the report, Kate Pounder, the CEO of the Technology Council of Australia (and a former Accenture and McKinsey & Company consultant), said: “The tech sector has matured and accelerated through the Covid-19 pandemic and is now one of the most important drivers of growth in the economy, contributing 8.5% to GDP and employing one in 16 Australians.”
“By addressing challenges in the sector and catching up to global peers Australia can realise a tech-supported recovery, securing (hundreds of) thousands of new jobs and contributing billions annually to GDP. Government, in partnership with industry, should play a key role in capturing this opportunity.”
