Canadian Companies Struggle to Embrace Local Tech Solutions

Canadian companies are increasingly eager to purchase local technology, yet obstacles persist that hinder this ambition. Talia Abramowitz, managing partner at Deloitte Ventures, highlighted a cautious approach among Canadian firms, stating, “We are more risk-averse than our American counterparts.” This mindset permeates various aspects of business, from procurement policies to market dynamics.

At a recent panel hosted by Source Canada, industry leaders, including representatives from Deloitte, Interac, and BMO, discussed the complexities surrounding local technology acquisition. The consensus indicates that a combination of cultural attitudes, regulatory frameworks, and market structures complicates efforts to buy Canadian.

Understanding the Landscape of Local Tech Acquisition

Cultural factors play a significant role in shaping how companies approach local purchases. Abramowitz noted that Canadian firms are often hesitant to take risks, which can impede innovation. She pointed out that while the U.S. boasts over 5,000 banks, Canada has only 80, leading to a less competitive environment that stifles the need for rapid technological advancement.

Emily Athanasopoulos, head of vendor management at Interac, acknowledged the slow pace of change in local procurement practices. “It’s something we should be thinking about more seriously,” she remarked, emphasizing the company’s renewed focus on evaluating its vendor portfolio strategically. Athanasopoulos noted that recent global economic uncertainties have prompted Interac to revise its procurement strategies, aligning them more closely with national innovation goals.

Andre Zybul, head of strategic partnerships at BMO, echoed these sentiments, indicating that while the intent to support Canadian companies is strong, challenges remain. For instance, he mentioned the limited availability of made-in-Canada technology, particularly in sectors like cloud services, which complicates the decision-making process.

Barriers to Effective Partnerships

The obstacles to local tech adoption often manifest well before formal negotiations begin. Abramowitz emphasized that risk aversion is deeply embedded in Canadian corporate culture. “A small fish in a really big pond,” she explained, “makes startups swim faster in the U.S.” Conversely, Canadian companies are often slower to embrace new technologies due to their cautious nature.

Regulatory frameworks also influence the dynamics of local tech adoption. Zybul described Canada’s regulatory environment as narrowly focused on risk, lacking an emphasis on fostering competition and innovation. This sentiment is supported by research from the Organisation for Economic Co-operation and Development (OECD), which indicates that restrictive regulatory frameworks can hinder innovation by limiting competitive practices.

Zybul argued for a shift in regulatory focus to balance risk management with competition. “If we slowly moved where our regulators are looking at risk… but also have a competitive component, we could actually help move innovation forward,” he stated. Such changes could significantly benefit startups struggling to gain traction in a challenging market.

Deloitte’s research further underscores the disparity in investment between Canada and the U.S. In 2024, only 5% of Canadian corporations with revenues exceeding $1 billion are expected to invest in venture capital, compared to 40% in the U.S. This gap highlights the challenges Canadian startups face when trying to secure funding and build essential partnerships.

Zybul pointed out that within large organizations, friction often arises from basic issues such as identifying decision-makers and understanding regulatory requirements. He advised that startups need to be aware of these dynamics to navigate the complexities of the procurement process effectively. “A lot of times, fintechs focus to meet my needs, but I’m not the decision-maker,” he said, emphasizing the importance of recognizing the broader decision-making landscape.

The issue of compliance poses another significant hurdle for companies attempting to sell to financial institutions. Banks must adhere to the OSFI Guideline B-10, which outlines strict requirements for onboarding third-party vendors. Zybul noted that some startups underestimate the time and effort required to meet these obligations, which can stall potential partnerships.

Strategic Procurement and the Future of Canadian Tech

As more Canadian organizations align their procurement strategies with national innovation objectives, a distinct line is emerging between intention and execution. While the desire to support local suppliers is evident, it must also be underpinned by performance and quality. Athanasopoulos cautioned against selecting suppliers solely based on cost, advising, “Don’t always go for the cheapest company out there, because it’s not always going to be the best.”

In regulated environments, understanding both business context and regulatory obligations is critical to making informed procurement decisions. The same principle applies at the ecosystem level, where national identity can open doors but cannot sustain partnerships on its own. Abramowitz remarked that prioritizing quality is essential for maintaining long-term relationships. “The door should open because you’re Canadian,” she said, “but it stays open and your wallet stays open, because it is absolutely the best.”

Regulatory complexities can disrupt even the most well-intentioned efforts to collaborate with Canadian firms. Zybul noted that even when there is a willingness to engage with local companies, convoluted regulatory pathways often drive businesses to seek alternatives abroad. “Even though we want to participate with Canadian companies,” he said, “they’re moving to the U.S. because the regulatory environment is easier.”

The path to strengthening the Canadian tech sector does not solely rely on government initiatives or promotional slogans. Instead, it requires a fundamental shift in how corporations approach spending, partnerships, and risk management.

The future of Canada’s innovation landscape will be shaped by procurement practices as much as by policy. Businesses should integrate compliance and timing into their strategies, recognizing that understanding how large organizations operate is as critical as the products they offer. The “Buy Canadian” initiative will thrive when companies prioritize quality and execution while ensuring that Canada’s systems facilitate these objectives.