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Google plans to increase its downtown Kitchener, Ont., operations to as many as 3,000 employees.


Google plans to more than triple its work force in Canada over the next three years to as many as 5,000 employees across Toronto, Montreal and Ontario’s Kitchener-Waterloo region.

The expansion will include three new offices, the company said Thursday, with the biggest growth in Kitchener, where it could have up to 3,000 employees working by 2022.

Google declined to say how much it would spend on the plan, which follows similar expansion proposals from Inc. and Shopify Inc. in Vancouver, and is expected to help stem the brain drain of Canadian talent to Silicon Valley – although it may also compound the shortage of tech workers for the domestic startup ecosystem.

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Ruth Porat, the chief financial officer for Google parent Alphabet Inc., made the announcement in Toronto on Thursday. “We see incredible momentum in Canada in our business, and we want to have the capacity for it,” she said in an interview.

Opinion: How Canada is building momentum for tech heavyweights

In last year’s federal election campaign, all major parties promised to tax the revenue of advertising-driven digital giants such as California-based Alphabet. But internal communications from the Prime Minister’s Office, obtained last year by The Globe and Mail, show that Justin Trudeau and his government have an interest in expanding Alphabet’s presence in Canada.

In an e-mail, Innovation Minister Navdeep Bains called the announcement “a testament to our country’s reputation as one of the world’s most innovative economies,” adding that Ottawa hopes it will nurture a tech ecosystem that will also allow Canadian companies to “thrive and scale.”

Hiring thousands of positions, however, can have cascading consequences. Benjamin Bergen, executive director of the Council of Canadian Innovators, said that while new jobs are always helpful to the technology ecosystem, “this creates serious pressures on Canadian companies trying to grow, employ more Canadians in both technical and non-technical fields, and commercialize their technology from Canada to the benefit of all Canadians.”

The expansion marks a significant investment in Canada by one of the world’s biggest companies. Google has bet big on Canadian talent before, hiring University of Toronto professor emeritus Geoffrey Hinton – considered the “godfather” of the deep-learning branch of artificial intelligence – in 2013. The company also announced Thursday that it would give $2.5-million for scholarships to charity NPower Canada, a digital-skills training organization, for certification programs.

Google’s Kitchener expansion is to include a previously announced new facility across the street from its current office to flesh out its cloud services, Gmail, Chrome browser and other teams. It will also include an accelerator for startups – part of a global network of startup hubs that have received mixed public responses. “We want to identify interesting companies from across the country where we think we can add value,” said Steve Woods, Google’s Kitchener-based senior engineering director.

Its Montreal team will expand to as many as 1,000 employees in an office on Avenue Viger Ouest as it builds out a previously announced development studio for its gaming service, Stadia. And its Toronto operations will be based in a new downtown building near King and Yonge streets, housing as many as 1,000 people in cloud, artificial intelligence and sales and marketing teams there.

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Alphabet’s Ms. Porat said the new Toronto office would not necessarily interfere with a proposal revealed in January by Google’s urban-planning sister company, Sidewalk Labs, to build a headquarters at Quayside, the 12-acre plot along Lake Ontario that Sidewalk Labs won the right to plan in 2017. “That’s certainly an opportunity,” she said, but deferred to negotiations with public agency Waterfront Toronto that are “still in the process.”

Sidewalk chief executive officer Dan Doctoroff suggested last month that a Google headquarters could be built at Quayside after Waterfront Toronto declined in October to grant Sidewalk access to a broader site for its plans for a technology-filled “smart-city” development.

Ms. Porat , CFO of Sidewalk’s parent company, declined to answer questions about Alphabet’s view of the Quayside project, including whether the parent company would be willing to absorb extra costs from deploying new technologies – except to echo Mr. Doctoroff in saying that it would need to be financially viable. (Either Waterfront or Sidewalk could still walk away before the public agency’s board votes May 20 on whether to proceed.)

Domestic and international technology giants have been on Canadian hiring sprees in recent months. Google’s expansion intentions come after a series of tech-sector job announcements in Vancouver, where Amazon will lease enough space for 10,000 workers, and in Ottawa, with e-commerce company Shopify planning to hire 1,000 employees for a new office. Unlike Mastercard International Inc., which just announced a new, $510-million cybersecurity office in Vancouver, Google said it had not accepted grant money from the Canadian government for its expansion.

Mr. Bergen, whose innovators’ organization represents more than 100 fast-growing Canadian tech companies, said he worried that Canada does not focus enough on its domestic industry. “Our politicians, policy makers and industry leaders need to focus their efforts on supporting the growth of Canadian-based companies that are already generating job growth, but also all the attendant wealth effects associated with being an anchor firm in Canada."

The consequences of such a hiring spree would spread beyond the tech sector, which would see salary increases and talent wars in Google’s expansion regions. In Vancouver’s case, where Amazon could employ as many as 10,000 people, local industry leaders expect postsecondary institutions and retraining centres to expand, while its real estate market would get tighter and more expensive.

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With a report from Sean Silcoff

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