Tech exports now make up New Zealand’s second biggest export sector. Graeme Muller highlights a remarkable success story.
Covid’s long tail continues to wreak havoc on the tourism sector, while at the same time super charging New Zealand tech exports.
In the first half of 2021 New Zealand’s tech exports exceeded tourism, meat, wood and fruit exports to become the second largest export sector behind dairy.
Massive growth in global demand for technology solutions is being driven by multiple factors.
As people around the world stayed at home during the Covid-driven lockdowns demand for interactive media and online games delivered $276 million in new revenue and 222 new jobs across the Aotearoa game development sector in 2021.
However, while Kiwi game studios such as PikPok and Rocketwerkz have been growing strongly, new Australian tax incentives for gaming companies and Covid border restrictions put 300 more jobs at risk, according to the annual New Zealand games industry survey.
Likewise, as more companies around the world rely on remote working, they are looking to digital solutions to transform the way they work.
Tech analyst firm Gartner reported that the global IT services market grew 7.9 percent in 2021 and is expected to reach $1.3 trillion in spending in 2022.
This insatiable demand for technology is helping drive the growth of New Zealand tech exports.
Software fills niches
Software-as-a-service (SaaS) exports, where software can be built locally in New Zealand and deployed over the Internet to global customers, is growing 30 percent faster than the rest of the economy.
New Zealand tech exports are helping businesses work more efficiently in multiple ways.
We are exporting business systems like Xero for accounting, Timely for appointment booking, Ask Nicely for customer feedback, or Fuel50 for talent experience management.
There are now hundreds of tech exporters creating and distributing cool business software from New Zealand to the world.
New Zealand software is also filling many niche market opportunities as Kiwi’s demonstrate their innovative approaches to complex problems. There are companies as diverse as Halter, an AI collar for cows to improve herd management, and Auror, an AI-based retail crime intelligence system that reduces shoplifting.
There are so many new and amazing tech solutions coming out of New Zealand that the Government has focused its new Digital Technology Industry Transformation Plan on helping grow SaaS exports.
It is also investing in telling the New Zealand tech and innovation story to the world so we are known as more than just a tourist destination. This will help attract the talent and investment needed to sustain this incredible growth.
R&D grants are back
NZTech, the lead tech industry umbrella group in Aotearoa, also sees benefit to the reintroduced grants for new research and development.
In the tech world, companies emerge fast and often need to invest rapidly in R&D while growing a global customer base.
These companies often don’t have established R&D teams as it is everyone’s job. The new grants are being structured in a way that helps to encourage more companies to invest in rapid R&D to accelerate their global expansion.
The digital technologies sector contributed $7.4 billion to the economy in 2020. Since 2015 it has, on average, grown about 77 percent faster than the general economy thanks to the creation and export of digital products.
According to StatsNZ, software businesses invested almost $1 billion on R&D in 2021.
Connecting and growing the sector
NZTech, the lead non-government tech organisation, is working to help connect and grow Aotearoa’s burgeoning tech sector to help accelerate the tech sector growth.
This will benefit all Kiwis as these companies have proven that they can create thousands of new high value jobs and valuable export revenues with little impact on the environment.
The collaboration between government agencies such as NZTE, Callaghan Innovation and MBIE with the tech industry is a demonstration of how fresh and dynamic this sector is.
The recently developed Tech Story was created as a partnership between NZTech and the government to help reposition New Zealand as a successful hi-tech nation to help our tech exporters overseas, help attract the best talent and help attract investment.
New Zealand’s economic future must rest with sustainable high value tech jobs producing goods and services with a much-reduced carbon footprint.
Tech in New Zealand connects people and markets, is the pathway to tomorrow’s jobs and helps combat climate change.
We have the opportunity to be a world leading digital nation built on trust and known for the ethical deployment of emerging technologies.
This is what success looks like
- At the end of 2021 New Zealand had 23,229 hi-tech companies, with nearly 112,000 employees. Each new tech sector job helps create five other new jobs.
- New Zealand’s tech sector contributes more than eight percent to GDP and every four percent in tech growth productivity contributes 2.7 percent to the country’s GDP.
- Its annual exports globally are worth $8.6 billion globally and they grew 10.8 percent between 2019 and 2020.
- The average annual tech salary is $100,000 and New Zealand’s top 200 tech exporters employ 57,262 people globally.
Graeme Muller (below) is CEO of NZTech. Visit https://nztech.org.nz Main photo: Lillian Kershaw, PikPok’s associate producer (left) with Juliann Lum, senior product manager.
This article was first published in the August 2022 Quarterly edition of NZBusiness.
