Varcoe: Amazon to set up cloud computing hub in Calgary, creating more than 900 jobs and $4B investment – Calgary Herald

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Amazon Web Services will be setting up a new cloud computing hub in Calgary, bringing more than $4 billion in investment with it over time — and creating more than 950 full-time jobs across Canada.

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The tech giant, which provides customers with cloud-computing platforms and related services, announced Monday it will establish a major “infrastructure region” in the Calgary area.

It will be the second Amazon Web Services (AWS) regional hub in Canada, consisting of at least three data centres, and will add to the existing 25 geographic regions that the company has in the world.

Initial ground-breaking work has already begun on the local data centres. Senior AWS officials expect the new region in Western Canada to launch in late 2023 or early 2024.

“It’s a big infrastructure deployment in support of our customer base out here in the West,” Eric Gales, country manager for AWS Canada, said in an interview.

“We have broken ground on this launch. So it’s not something in the future. It has started now.”

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The Seattle-based company said the hub, with separate locations for each data centre, will allow customers to access a variety of cloud-computing products in Canada. This also means companies with data residency requirements can store such information within the country.

Since 2016, AWS has operated a central Canadian region in Montreal.

Monday’s announcement will see a new region created in Western Canada, based in Calgary, where it already has major energy industry customers, such as TC Energy and Keyera, along with locally-based tech firms Neo Financial, Benevity and children’s streaming service Kidoodle.TV.

“These regions need to be connected to infrastructure that service the customers out here in the western provinces,” Gales added.

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“This location was one that really satisfied all the requirements we had, so that’s why we chose to put it here in Calgary.”

Alberta Jobs and Economy Minister Doug Schweitzer called it a transformative investment, coming as start-up technology companies and larger “anchor” firms are expanding or moving into the region.

Premier Jason Kenney said the announcement should send a signal to Albertans that jobs are available in the expanding industry.

“This is the largest tech investment in Alberta history,” Kenney told reporters on Monday.

“For anybody who thought that all of the great news in the Alberta tech and innovation sector was just a temporary flash in the pan, this says no — that this is for real.”

Amazon, which has almost 40,000 employees in the country, also released a new economic impact study Monday on its AWS investments in Canada.

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The report indicates the company expects to invest an estimated $21 billion in its two Canadian infrastructure regions by 2037, which will support more than 5,000 new jobs.

“We estimate the GDP of Canada will increase by $4.9 billion by 2037 because of the Calgary Region alone,” states the study, noting the investment will support 871 local jobs annually by 2037, as well as positions outside the area.

Local officials welcomed Monday’s news, which comes after a series of decisions by larger multinational tech firms to expand in Alberta.

“Everyone knows Amazon and what they bring with them,” said Calgary Chamber of Commerce president Deborah Yedlin.

“We are getting the critical mass we need to be noticed by other companies that are playing on the world stage and see the value of coming to Calgary.”

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For Calgary, it’s another step in the sector’s evolution, with local companies such as Benevity, Parvus Therapeutics, Solium Capital (now Shareworks by Morgan Stanley) and RS Energy Group attaining the rare “unicorn” status with $1-billion valuations.

It’s not only home-grown firms gaining ground.

In June, Bangalore-based Mphasis unveiled plans to establish a Canadian headquarters in Calgary, creating up to 1,000 new jobs, while IT giant Infosys said in March it will bring 500 jobs to the city within three years as the company expands in Canada.

“It really is just a coming of age that is happening in Calgary today versus where we were just a year ago,” said James Lochrie, managing partner and co-founder of Thin Air Labs, which invests in start-up firms.

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“We should continue to see this accelerate.”

By Calgary landing hundreds of new jobs with AWS, along with up to $4.3 billion in expected capital and operating investment in the region by 2037, it marks another major shift for the sector.

Amazon’s cloud computing unit recorded net sales of US$16 billion during the third quarter and posted operating income of US$4.9 billion.

Calgary Economic Development has pursued Amazon in the past, making an unsuccessful pitch in 2017 to become the second corporate headquarters for the tech giant. In October 2017, Amazon unveiled plans to set up a distribution centre outside city limits in Rocky View County.

Amazon, which is the largest purchaser of renewable energy in the world, has also made major investments in Alberta this year, agreeing to buy electricity from an 80-megawatt solar project in Newell County.

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In June, the tech giant announced its second Alberta renewable project, a massive 375 MW solar farm in Vulcan.

While the recent announcements are adding to the local tech sector’s momentum, it has triggered concerns about the city’s ability to provide enough skilled workers, such as data scientists and software developers, to meet the needs of both local and international firms.

“Talent is just such a big issue,” said Bronte Valk of the Council of Canadian Innovators.

“When you have…foreign multinationals come in, they only exacerbate labour market issues.”

However, larger companies are also bringing their own training initiatives into Alberta.

Gales noted AWS will introduce a training component and it is collaborating with Mount Royal University. A Calgary training program, expected to begin in 2022, will help prepare displaced energy workers for entry-level cloud positions.

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Both the province and city have also been investing heavily in recent years to ramp up digital training efforts, such as the creation of the SAIT School for Advanced Digital Technology.

Jim Gibson, the school’s dean and a veteran of Calgary’s technology community, said local training initiatives are creating more skilled workers, although it will be a “fine balance” to have the talent pipeline meet demand.

“We have to work really closely with the bigger firms, which we are, but also with the start-ups,” Gibson said.

“We don’t have a lot of chances for making mistakes here on the talent side, so we have to be very much connected with each other.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com