Canada Tops World List of Cost-Effective Digital Locations, KPMG Report

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The U.S. neighbor is the most cost-competitive country in which to operate a digital business outside of the U.S., especially in video game production.

TORONTO - Canada is the most cost-competitive country to operate a digital business, according to a new KPMG report.

Among 14 world markets, KPMG found Canada was 14.9 percent more cost-effective for digital operations than the U.S. market, followed by the UK at 8 percent more cost-competitive and The Netherlands at 6.6 percent.

The key cost measure in maturing markets is labor, which accounts for around 55 percent of on-the-ground production costs.

Digital production costs in Canada have been largely offset in recent years by generous tax breaks for foreign producers, especially in the fast-growing video game production sector where major players like Ubisoft, Electronic Arts and Warner Bros. Games operate local development studios.

Canada has been aggressive in attracting foreign games makers as they eye digital tax credits and other soft money in the face of falling sales and dwindling European government investment.

Other cost factors measured in the Comeptitive Alternatives 2012 report include running facilities, taxes and transportation costs.

With the U.S. market as a baseline, the KPMG report found India, China and Russia are the lowest-cost emerging, high-growth markets.

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