TORONTO — Canada’s AI talent makes it an attractive destination for software giant ServiceNow to look for deals, according to vice-chair Nick Tzitzon.

“There’s a ton of AI innovation in Canada,” said Tzitzon. The firm already has a sizable Canadian engineering and research staff working on the technology at offices in Toronto and Montreal. “We’re interested to watch the market,” he said, adding that the firm headquartered in Santa Clara, Calif., is open to deals that can help it add people with AI expertise.

Last month, ServiceNow announced its largest-ever acquisition with the proposed US$2.85-billion takeover of Moveworks, which sells workplace assistants. Tech executives and analysts have predicted the transaction could spark a rush of deal making in the sector, particularly in the AI agent space. 

The AI market “probably does need to consolidate,” Tzitzon said in an interview in Toronto last month. Customers “do not want the AI generation to repeat the sprawl that they saw in past technology evolutions.” For example, the market for on-demand cloud services eventually consolidated into a few large providers.   

A new and growing cohort of startups are selling AI agents for specific functions within a business, like customer service, HR or sales. The assistants are typically built on top of large language models from developers like OpenAI or Cohere, or available open source. 

“You always go through these phases with new technologies, where the market is dazzled by the new [startups] who come in promising greatness,” said Tzitzon. But he claimed big businesses want AI tools that work seamlessly across different teams, datasets and tasks. That gives ServiceNow an advantage, according to Tzitzon, because many large firms already use its software to manage their information and respond to IT outages or customer support issues. 

New acquisition Moveworks sells an AI assistant that helps workers answer questions and automate IT and finance tasks. The deal boosts ServiceNow’s “already industry-leading AI positioning,” wrote Gregg Moskowitz, managing director at investment bank Mizuho Securities, in a research report. 

ServiceNow owes some of that AI prowess to an earlier Canadian acquisition. In November 2020, it announced the purchase of Montreal-based Element AI in a deal ultimately valued at US$228 million. Co-founded by Yoshua Bengio, the celebrated Université de Montréal computer scientist, the startup had raised US$250 million in venture funding and hired a lot of the city’s most promising AI researchers. 

ServiceNow’s acquisition of Element AI was “one of the best ones we ever did,” said Tzitzon, claiming that at the time, it was “just about the best group of talent you could get.” ServiceNow “would never have made it halfway” if it had tried to assemble engineers and researchers of that calibre individually rather than buying an established team, he said.

Canadian tech executives raised concerns about the deal at the time, arguing that a foreign firm would reap the benefits of talent and IP developed in Canada. Some competitors criticized Element AI’s leadership for lacking a clear business plan, arguing they could only have assembled such a large AI workforce with the goal of selling it. 

Tzitzon acknowledged the backlash to the deal, suggesting it reflected Element AI’s leading role in the Canadian AI ecosystem. “Credit to us, we were great deal makers to get it,” he said.

Element AI co-founder Nicolas Chapados now leads ServiceNow’s over 50-person AI research group, the majority of whom are based in Montreal. The Silicon Valley firm now has almost 500 employees in Canada, and Tzitzon said its workforce in the country has grown 60 per cent over the past three years. ServiceNow has over 26,000 full-time staff around the world.