Canada’s IT Services Industry Enters a New Era of Expansion and Pressure

Calgary, AB – June 2025 — Canada’s IT consulting and data processing industries are entering a period of aggressive growth, competitive restructuring, and policy-driven transformation. As businesses across the country race toward digital modernization, the demand for cloud computing, big data, cybersecurity, and AI integration is surging—bringing with it both opportunity and volatility.

Recent data from IBISWorld paints a compelling picture of an industry that is thriving, yet challenged by rising competition, talent shortages, and regulatory uncertainty. Alberta, in particular, is emerging as one of Canada’s fastest-growing IT markets, powered by private-sector innovation, public investment, and strong demand from energy and enterprise sectors.

A Rising IT Powerhouse

Alberta’s IT consulting sector has outpaced the national average in recent years, growing at 8.4% annually from 2020 to 2025, compared to 3.5% growth nationally. The province now contributes $9.1 billion in IT consulting revenue, accounting for 8.7% of Canada’s total output and ranking fourth among all provinces.

Calgary is central to this growth, with over 67% of Alberta’s IT consulting firms headquartered in the city. The region’s talent pool, bolstered by local universities and retraining programs, supports an employment base of 34,742 tech professionals, with wages averaging $96,742. The province has also seen strong uptake of cloud migration and hybrid work infrastructure, particularly in oil and gas, logistics, and healthcare sectors .

National Trends

At the national level, Canada’s IT consulting market is now valued at $92.7 billion, serving both large enterprises and the country’s growing base of small- and medium-sized businesses (SMEs). However, the industry is fragmented: more than 96,000 businesses operate in the space, and the vast majority are small or solo consultants. This high degree of fragmentation—driven by low barriers to entry—intensifies competition and places pressure on both pricing and differentiation.

While the big players are growing through consolidation and end-to-end service offerings, smaller firms face rising costs and a fierce war for talent, particularly in cybersecurity, artificial intelligence, and data analytics. The national average salary in IT consulting stands at $99,742, reflecting upward wage pressure and increasing demand for high-skill specialists.

The Data Processing Boom: Cloud-First is the New Norm

Parallel to consulting, Canada’s data processing and hosting sector has experienced robust growth, especially in cloud infrastructure, platform-as-a-service (PaaS), and data warehousing. Industry revenue is projected to grow steadily, reaching $15.2 billion by 2029, with significant margins driven by managed cloud hosting and cybersecurity integration.

In Alberta, this sector is growing at a 6.9% annual rate, slightly above the national trend. The province benefits from proximity to enterprise clients in energy, utilities, and transportation who require real-time data handling, compliance storage, and high-availability cloud solutions. Calgary alone hosts 56.7% of Alberta’s data processing businesses, positioning it as a strategic hub for regional and mid-tier cloud service providers .

Regulatory Watch: AI and Tax Policies Shape the Future

Despite positive momentum, Canada’s IT landscape is under pressure from emerging regulatory forces. Bill C-27, the proposed Artificial Intelligence and Data Act (AIDA), signals the federal government’s intent to regulate AI-based services—potentially affecting data processing, software development, and algorithm design at a national level.

Meanwhile, the Digital Services Tax (DST), introduced in 2024, adds a 3% levy on revenues from digital services delivered to Canadian users. While targeted at global tech giants, this tax has downstream effects on local service providers and SaaS resellers who operate in hybrid billing models or rely on cross-border software platforms.

Industry leaders are closely monitoring the potential compliance costs and legal implications of both policies. IBISWorld notes that regulation could reshape how services are priced, delivered, and even engineered—particularly in areas like algorithmic transparency, data localization, and third-party cloud integration.

What’s Next for the Industry?

With a projected 3.6% compound annual growth rate (CAGR) for IT consulting through 2028, and equally strong forecasts for data hosting services, Canada’s digital service economy remains one of its most resilient and promising sectors. Alberta, with its maturing innovation ecosystem and enterprise base, is well-positioned to lead in specialized areas such as cybersecurity, cloud transformation, and data science.

Yet the path forward will require strategic investments in workforce development, regulatory preparedness, and service specialization. As competition increases and technology evolves, the firms that succeed will be those that balance technical excellence with operational agility.