The Technology Investment Network’s annual TIN200 survey of our 200 largest and fastest-growing tech exporters shows a sector in rude health.
But job growth is slowing, and there are already signs the sector won’t get everything it wants from the incoming Government.
Total revenue increased 11.8 per cent to $17.1 billion in the 2023 financial year, while export receipts jumped 13.1 per cent to $13.05b, with North America the fastest growing market, and fintech the fastest growing sector.
For context, last year New Zealand’s dairy exports were worth $21.0b, meat and wool $12.3b, forestry $6.6b and horticulture $6.8b (Stat NZ, has no single tech category, with the sector dispersed over hardware, software, services, manufacturing and other categories; TIN200′s definition of local tech remains broad - see “Who qualifies?” below.)
The average tech salary rose 8.5 per cent to $99,740 compared to $81,000 for the NZ workforce as a whole.
But job growth slowed from 8.5 per cent last year to 3.1 per cent.
Our top 200 tech companies added 2127 staff overseas for a new high of 31,145.
But locally, jobs fell by 193 to 32,729.
This year marks TIN’s 10th anniversary. Managing director Greg Shanahan says one of the most striking measures of the industry’s growth is that in 2013, there were four tech firms with annual revenue over $200m ($261m in today’s money). There are now 16.
Another striking stat: The number of foreign-owned tech firms has increased from 21 to 44 (the TIN comprises NZ-founded firms, who remain on its index if they keep substantial operations here).
Foreign investment often gives a tech company the wherewithal to accelerate global growth.
But it can also shift the centre of gravity. Next year, TIN researcher and report author Alex Dickson expects offshore staff will outnumber those employed locally. Firms like Rocket Lab (with 1650 staff total, and 730 in NZ), Xero and Pushpay (sold to a US private equity firm earlier this year) now employ more staff overseas than NZ.
What would TIN like to see from the incoming Government?
“Support in terms of talent-generation, both in terms of offshore talent and generating the skills within New Zealand,” Shanahan said.
“And support for investment in early-stage companies, in particular where the funding is less available than more mature companies.”
He added, “I don’t necessarily think there’s a strong voice for technology within senior circles, but I think it’s arguably one of the largest drivers of New Zealand’s economic growth.”
National has already promised to address the latter point by saying its Cabinet will include a dedicated Technology Minister, expected to be the party’s tech spokeswoman, Judith Collins.
And pre-election, the party announced a sweeping new visa programme aimed at the tech sector. It also pledged to investigate the tax on unrealised gains on employee stock ownership plans, and whether it could be wiped.
But Collins also said one of the major items on the sector’s wishlist - tax breaks for investing in startups - was off the table, at current government debt levels. So was any refresh of the $300m Elevate VC fund.
Is that something Shanahan thinks Collins should have taken a second look at?
“Yeah, most definitely,” the TIN MD said.
Shanahan said some in the sector would be closely watching the expected staff reductions at MBIE, wary the new Government could cut too close to the bone and undermine innovation programmes.
He was set to have a shot at first-hand lobbying just hours after speaking to the Herald, with Collins scheduled to attend the TIN2023 launch (Collins has declined any policy comment until the coalition deal is signed.)
TIN’s definition of New Zealand technology firms remains generous. It includes a number which are now foreign-owned with much of their operations offshore. It includes F&P Appliances - now owned by China’s Haier, with three-quarters of its staff offshore and all of its manufacturing in China, Italy, the US and Mexico.
And, on the flip side, it doesn’t include Chorus, Spark, 2degrees or Infratil, whose stable of which is now dominated by One NZ and CDC Data Centres. Shanahan says that’s because the telcos are domestically focused. He said that Infratil - which also owns a majority of data centre operator Kao Data in the UK, half of CDC and Qscan Group in Australia and other offshore investments, could make the cut next year.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.