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Tech Hubs in Australia
Apr. 21, 2022 01:30PM PST
Australia has a buzzing tech market, but where are its biggest and most important hubs? Learn about the country's major markets and their development in recent years.
The global technology industry has grown at an impressive speed in the 21st century, generally increasing at a rate of about 5 to 6 percent year-on-year. Although 2020 was rocky as the COVID-19 pandemic shook the world, the market is expected to see this growth again as it returns to a normal pattern.
New technologies are emerging all the time, and keeping up with every sector can be daunting. It can be helpful to hone in on individual areas, and Australia is a compelling place to look.
Here the Investing News Network provides an overview of the Australian tech landscape, including the country's hottest areas for tech development and the major companies working there.
Australia's place in the global tech landscape
Australia's tech sector is still developing, but it's already the third biggest contributor to the country’s GDP, behind mining and banking. It brought in about AU$167 billion in 2021, and its economic contribution has grown 79 percent in the last six years. This rapid growth is partly due to increased use of technology during COVID-19.
Even so, Australia’s tech sector has faced challenges. Currently the nation's tech industry directly contributes 3.8 percent of the country’s GDP, compared to 10.2 percent in the US and the 8.1 percent in the UK.
According to a report by the Technology Council of Australia and Accenture, if Australia’s tech sector continues to directly contribute an annual 3.8 percent to GDP for the next decade, it would be bringing about AU$214 billion to the country by 2031. However, if Australia can match the 6.8 percent tech industry GDP contribution of Canada, a country with a similar economy, it would make for an additional AU$30 billion annually.
How Australia's government is encouraging tech growth
In November 2021, Australian Prime Minister Scott Morrison pledged to reduce the country’s dependence on China by investing billions into its own industries. This includes an impressive 63 technology sectors, ranging from cybersecurity to biomedicine to low-emissions technology.
Of this list of 63 technologies, the first to be funded is quantum technology — Australia will pledge AU$100 million for quantum research in the country. According to a report by CSIRO, Australia’s quantum technology industry could create 16,000 jobs and over AU$4 billion in revenue by 2040.
Where are Australia’s tech hubs?
As mentioned, the tech market is relatively young in Australia — although it's the third biggest contributor in terms of GDP, it's only the seventh largest Australian industry when it comes to total jobs. However, it’s been growing at a remarkable pace in recent years, and key players have emerged in the big tech hubs.
Read on for an overview of where most big tech companies are located in Australia. All market cap data included below was gathered on April 21, 2022, using TradingView's stock screener.
Tech hubs in Australia: Sydney
Unsurprisingly, Sydney is one of the big Australian tech hubs. This is because Sydney is Australia’s business capital.
Sydney is known primarily for its financial services, software and media industries. Some of the key players in Sydney’s tech industry by market cap, are:
1. Wisetech Global (ASX:WTC)
Market cap: AU$15 billion
Wisetech Global is headquartered in Sydney and develops cloud-based software for the global logistics industry. Its worldwide presence is undeniable, as it provides software for 12,000 organisations in 150 countries.
As Wisetech continues to grow, it has made many acquisitions. Some purchases made in recent years include Ready Korea, a South Korean customs solutions company; SISA Studio Informatica, a renowned Swiss provider of customs and freight forwarding systems; and US-based logistics company Depot Systems.
2. Audinate Group (ASX:AD8)
Market cap: AU$588.72 million
Audinate Group is a Sydney-based company that provides digital audio technologies. Audinate is best known for its platform Dante, which sends digital audio signals through computer networks.
Tech hubs in Australia: Melbourne
Melbourne is the second big hotspot for tech companies in Australia; alongside that, the city is well known for its biotech and biomedical services and research industries.
Interestingly, Melbourne is also becoming a go-to location for hot tech startups. This is because it has much more available and affordable office space than Sydney. Melbourne is ranked with cities like Boston and London when it comes to biomedical research, making it a global leader in the field. According to Savills’ Tech City Index, it’s also the only city in Australia ranked among the 22 best cities in the world for tech companies.
1. Afterpay
Afterpay is the biggest tech company in Australia, and has experienced significant growth in the last year. As its name implies, Afterpay is a buy-now, pay-later service. Currently it’s used by over 55,000 retail businesses. It also operates a secondary business function called Touch, which is a system for online payments.
On January 31, 2022, Afterpay was acquired by Block (NYSE:SQ) for AU$39 billion.
Tech hubs in Australia: Brisbane
Although Brisbane has long been overlooked by investors in favour of Sydney and Melbourne, it’s been growing its tech industry steadily over the years and is even trying to assert itself as an Australian tech hub.
Many big tech companies and small startups alike have their operations set up in Brisbane. Some notably large companies by market cap include:
1. Novonix (ASX:NVX)
Market cap: AU$2.92 billion
Novonix is a battery technology company based in Brisbane. Novonix primarily focuses on creating equipment for testing lithium-ion batteries. Thanks to the rapid growth of the electric vehicle (EV) market in Australia and worldwide, the company is expecting to break even this year.
Recent preliminary results for an environmental impact study show that its systems offer a 60 percent decrease in CO2 emissions. If the final results remain consistent, this will mean Novonix’s synthetic graphite EV and ESS battery anode materials are 2.5 times less harmful to the environment than products made in China.
2. TechnologyOne (ASX:TNE)
Market cap: AU$3.57 billion
Enterprise tech firm TechnologyOne offers software services to over 1,200 clients in Australia and New Zealand, plus some customers in the UK. Notable users include Sydney Motorway and the University of Melbourne.
TechnologyOne’s software is used to help migrate companies to online processes, such as transferring paper-based systems to a digital platform. The majority of its revenue — 86 percent — comes from annual subscriptions.
3. NEXTDC (ASX:NXT)
Market cap: AU$5.13 billion
NEXTDC is a data centre company focusing on energy-efficient services for businesses. It offers connectivity services, infrastructure management software and cloud readiness. Although its headquarters are in Brisbane, the company has 11 data centres set up across Australia, including some in Sydney, Melbourne and elsewhere.
NEXTDC is one of the top tech stocks listed on the ASX, and is widely regarded as one of the most reliable data centres in Australia thanks to its high-performance hosting. This is why it’s partnered with large names like Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG) Cloud and Alibaba (NYSE:BABA) Cloud.
Thanks to the growing importance of data services in recent years, NEXTDC has grown steadily in size and revenue.
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Securities Disclosure: I, Matthew Flood, currently hold no direct investment interest in any company mentioned in this article.
