Exporting professional services: An important way to boost exports and economic growth

When most people think of exports, lobsters, French Fries and 2X4s come to mind.   But we can’t forget about services-based exports as they are becoming a much more important part of the export picture.  Services exports range from hotel accommodations for out-of-province travelers to New Brunswick to someone from Alberta filing an insurance claim with a call centre agent in Moncton to a law firm in Saint John generating revenue from a client in Ontario.

Professional services exports* alone generated an estimated $431 million worth of interprovincial and international export revenue for New Brunswick firms in 2015.  This included $110 million for IT services (computer systems design and related services), $136 million for architectural, engineering and related services, $36 million worth of accounting services, and $135 million for specialized design services.  New Brunswick law firms generated $28 million worth of business from outside the province.

On the flip side, we imported $1.2 billion worth of professional services so we actually had a huge trade deficit in this area.  Imports included $108 million worth of legal services, $256 million worth of IT services, $146 million worth of custom software development, $216 million worth of management, scientific and technical consulting services and $80 million worth of advertising, public relations and related services. BTW, I am annoyed at this last one.  We only generate $8 million worth of advertising and PR-related export revenue so we import 10 times as much as we export in this sector. Manitoba generates nearly $40 million and so does Nova Scotia.

How do we boost professional services export revenue?  One way is to tie-up with a national or international firm that already has established global clients.

Moncton-based ShiftCentral, a kind of market research firm, sold to a larger US firm called LAC Group and now I read they are planning to double their Moncton office. If they accomplish this it will mean several million dollars in new export revenue flowing in every year.

I know some people get nervous when NB firms sell out to national or international firms. Decision making leaves the province.  Sometimes senior leadership leaves (e.g. NBTel).  Sometimes they close their NB office altogether.

This is a risk but it is one worth accepting.  When local firms get bought out, it can lead to a significant boost in sales and export revenue for New Brunswick.  Even it if doesn’t, the investment made in the firm – at least in part- will be reinvested by the original owners in New Brunswick in other ways – hopefully some into new startup companies creating a positive feedback cycle: startup leading to national investment = new risk capital flowing around New Brunswick = new investment into other startups.

If you are interested in the professional services trade balance, here it is.  We actually have a trade surplus in accounting services (go get ’em bean counters)!  We also have a small surplus in R&D services (giddyup RPC) and a surplus in photographic services (who knew?).   The rest?  Big deficit.  The management and related consulting services figure is a bit disturbing.  I know we need to bring in expertise from time to time but $217 million per year?  Maybe I’m just jealous that MDB Insight is prowling around down here stealing my business (just kidding!).

Adjust for population size, New Brunswick ranks 8th among the 10 provinces for professional services exports per capita (I accidentally highlighted PEI here).  We generate 14% less than Nova Scotia and Manitoba – sounds like a challenge.  I’ve been told by lawyers in New Brunswick that we can’t generate more export revenue.  Tell that to Nova Scotia lawyers – $60 million in export revenue in 2015 and a positive trade balance in this area.  I’ve been told by our advertising and PR industry that we can’t generate more export revenue because we are too small. Tell that to Nova Scotia marketers – $39 million worth of export revenue in 2015.  I’ve been told by New Brunswick consulting firms that we can’t generate more export revenue because it is hard to compete with the national and international firms.  Tell that to Nova Scotia – $110 million in management and related consulting services-related exports in 2015.

*Includes legal, accounting, IT, consulting, R&D, marketing and related services.  Does not include business services, information services, etc.

This entry was posted in Uncategorized. Bookmark the permalink.