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Small businesses left behind in rapidly-changing digital economy



As the global economy continues its swift shift towards digital dependence, a new report from Deloitte Canada sheds light on the struggles faced by many small businesses in Canada as they grapple to adjust to this evolving landscape. The report, part of Deloitte's "digital equity" analysis from the Future of Canada Centre, reveals a myriad of challenges, ranging from a shortage of digitally-skilled workers to the prohibitive cost of software and uncertainties about the most suitable technologies for adoption.


Surveying Canadian business executives, the report underscores the increasing difficulty for businesses, especially small and medium-sized enterprises (SMEs), to succeed without embracing digital transformation. The ability to participate and thrive in the digital world has become essential for organizations across all sectors, creating a divide between those that can harness digital opportunities and those left grappling with outdated methodologies.


One of the major barriers highlighted in the report is the prohibitive cost of new software. A staggering 67% of business leaders cited the cost of licenses and subscriptions as somewhat or very challenging, with an additional 25% considering it a significant obstacle. The financial strain of adopting new technology is compounded by the difficulty many organizations face in discerning which digital tools are best suited for their needs.


The challenge is particularly acute for SMEs, as they often lack in-house expertise to provide guidance on digital technology adoption. Consequently, they may end up investing in solutions that fall short of meeting their needs or proving to be less cost-effective than anticipated.


Adding to the woes of small businesses is the shortage of digitally-skilled workers. The demand for professionals capable of operating and maintaining new technologies far outstrips the supply, creating fierce competition, particularly for SMEs. Larger organizations, with greater financial resources, are better positioned to attract top digital talent, leaving smaller businesses at a distinct disadvantage.


The report also highlights a significant digital skills gap within existing workforces. Less than half of surveyed business leaders indicated that at least three-quarters of their employees possessed the skills to create and modify content online. Additionally, less than a third of leaders reported that at least three-quarters of their employees were adept at protecting digital devices and avoiding cybersecurity risks.


While the digital skills gap persists, the report underscores that many businesses, particularly smaller ones, are not actively providing opportunities for digital skills training for their staff. In 2021, Canada ranked 25th out of 29 countries for the proportion of businesses offering training to develop information and communication technology (ICT) skills for those not already employed in the sector. Only 11.3% of businesses with 10 or more employees provided such training, well below the OECD average of 19.5%.


As the digital economy evolves at a rapid pace, the report serves as a call to action, urging policymakers, industry leaders, and business owners to collaborate on initiatives that bridge the digital divide, empower small businesses, and equip the workforce with the skills needed to thrive in an increasingly digital world.


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